In the early 1980s, I became the president of a small lighting fixture company operating in East Los Angeles. We supplied small lighting fixture showrooms around the US, but the large home-center chains were beginning to take their place. These chains made huge orders, and we expanded our facilities and hired more employees to support their ever-growing demands.
The chains demanded our newest and most popular items at lower prices than we could offer our other customers. Then they ran big promotions on our bestselling products advertising very low prices until they ran their smaller competitors out of business.
As thousands of small lighting fixture stores went under, the power of the large stores grew even more. Their buyers asked us to provide designs for new products and then asked us to compete with the prices of Asian companies that turned out copies of our designs with low-cost labor. The final blow was the chain stores' demand that, since we were a local company, we should provide better in-store service than the Asian suppliers.
Eventually, I moved the company's production facilities to a maquiladora in Mexico. I laid off over 100 local manufacturing workers because otherwise we would go out of business. But this is not the whole story.
I quickly found out that there were few regulations in Mexico. Despite my orders to the contrary, our local managers allowed workers to weld lighting fixtures using lead wire, which was harmful to the workers. There was no equivalent to OSHA or EPA there. We were under less supervision regarding discharges of paint fumes into the environment. Our workers were represented by a union that made sure employees did not cause owners any problems. Consumers got low prices from this plant, but at what expense?
In 1993, I managed a small independent chain of pet food stores and once again found myself up against large discount chain stores. The large pet chains were able to purchase products at lower prices, they had large amounts of venture capital, and they would often open stores near ours. They were not smarter merchandisers, nor were they more efficient. They were bigger, though, and had more money. They did extensive advertising of poorer quality pet food priced below our cost in order to attract our customers. Their size allowed them to press suppliers for lower pricing and better deals.
These large chains were selling beautiful, but endangered, saltwater tropical fish. These fish were collected from coral reefs by stunning them with poisons or explosives. Both methods killed many fish and ruined the health of endangered coral reefs. The stores sold temperamental species of tropical birds that the staff was not trained to handle. Some stores sold puppies from breeders as opposed to encouraging adoption from pounds, where animals were being slaughtered every day. It was only a business to them, not a place to respect living beings.
At the stores I managed, we used only freshwater fish that were bred domestically. We sold only hand-fed birds from breeders we knew personally, and every store had staff trained to handle them. We encouraged dog adoptions from the local shelter. We trained and paid our employees a fair wage. Our employees were pet lovers who came to work with spirit and enthusiasm. We offered true service, not catchy advertisements, and our customers responded.
When it became obvious that despite their pricing and marketing efforts, we wouldn't be forced out of business, the competitors bought the business from the aging owner and closed us down. Most of our employees were offered minimum wage jobs and chose to move on. Our customers lost a pet-friendly alternative. I understood that the owner was frightened about his future, but I felt like a traitor to the employees who had worked so successfully to out-compete the large chain, only to lose in the end. In hindsight, I wish the owner had sold the company to his employees.
I now understand that these are not isolated examples; they are practices that have become widespread over the last 40 years as we've moved from Main Street economies, populated by local independent businesses, to a global Wall Street economy, dominated by huge discount chains located in vast parking lots. While huge chain stores like Wal-Mart, Home Depot, and others offer cheap prices, the costs to all of us are becoming increasingly evident. These costs include loss of local businesses, loss of family-wage jobs, a degraded environment, increased dependence on automobiles, and loss of support for community infrastructure. Are the cheap goods worth the price?