Looking at "the Wal-mart Effect"

I finished the Wal-mart Effect and it was a very interesting read. The writer Charles Fishman, wrote about Wal-mart from the outside, because he wasn't allowed inside the hallowed halls of Wal-mart. After the book came out however, he received an invitation to tour the headquarters, where they tried to talk to him about the company. This was after he had repeatedly contacted them and pointedly asked for an invitation to a meeting of Wal-mart and journalists. Wal-mart turned him down. But the book was still very insightful because it interviewed many people who work with Wal-mart as suppliers.

Wal-mart has a lot of good qualities and a lot of bad ones as well. They are able to allow people to shop at their store for very reasonable prices. They do not do this to cut out other business owners. Rather Wal-mart is following the principals of frugality of Sam Walton. Mr. Walton really believed in making things affordable for everyone. That saving a penny here and a penny there was worth every cut. His business model was to save money and pass on that savings to the consumer.

But the book "the Wal-mart effect" examines whether this savings is worth it? Wal-mart because of it's size has managed to force suppliers to cut their costs on good. How does this happen? Wal-mart demands that an item is sold for $X, and if not they go elsewhere to procure this product. Unfortunately this has meant that the quality of the goods produced has significantly declined to match this price cut. But how can a supplier compete with selling a lawnmower for $400 if Wal-mart sells a cheap $100 version? The answer is they can't. Thus if they don't play nice with Wal-mart, they could go under because they've lost their main source of revenue.