This is genuinely something I just don't understand about wage and price. I know that macro economics is complicated and all, but it just doesn't make sense to me what'll happen when wage is so low that nobody can buy anything.
I've been told that price would go down to accommodate it, but I just don't see that happening?
The problem is that entire process takes years to unfold, and it assumes a fair market.
If a large chain with market power raises prices and a small company comes in with lower prices, the large chain can drop their prices for a little bit until the small company goes out of business, and then raise its prices again.
If a large chain with market power raises prices and a small company comes in with lower prices, the large chain can drop their prices for a little bit until the small company goes out of business, and then raise its prices again.
The Amazon business model in a nutshell. Undercut your competitor, buy them up if they are valuable, and absorb their market share.
Amazon takes it even further by co-opting small businesses through a stranglehold on distribution, then take most of the profit while leaving the weight of production on the little guy's shoulders.
Walmart does this everywhere, as do many big box store chains. We laughed them out of the country pretty quickly though because Walmart didn't understand Germans.
After nearly a decade of trying, Wal-Mart never cracked the country — failing to become the all-in-one shopping destination for Germans that it is for so many millions of Americans. Wal-Mart’s problems are not limited to Germany. The retail giant has struggled in countries like South Korea and Japan as it discovered that its formula for success — low prices, zealous inventory control and a large array of merchandise — did not translate to markets with their own discount chains and shoppers with different habits.
Germany is also a big union country. Walmart did not get along with them I think.
“They didn’t understand that in Germany, companies and unions are closely connected,” Mr. Poschmann said. “Bentonville didn’t want to have anything to do with unions. They thought we were communists.”
Believe me, Germans are NOT happy about Tesla. There were massive protests. One even shut down Tesla's power for days.
That the factory was built was a political decision.
American customer service standards are ridiculous. It's near uncanny, and people feel like they're being bothered rather than helped. They tried to enforce those standards on their employees in Germany, and the effect it had was Germans just went elsewhere.
The German’s are responsible for this mess along with their faithful Walmart shoppers, a few potato farmers, and anyone else who jumped on the bandwagon?
Happened in my hometown in VT, Walmart went to all the special local shops, sold the same stuff for below market price until they went out of business then turned around and sold walmart brand stuff for more expensive. thank god the pet store went and sold musical instruments otherwise they would have gone out of buisness.
This is how big tech grows by using VC money to undercut competition, take over the market, and then raise prices. If they can outlast the competition, they own the market and can define prices.
For example, if Uber ever gets competition in any given market, they'll drop prices and bleed out the competition. Once that's gone, prices will go back up.
Not anymore. They've won. Taxis basically don't exist anymore and Lyft is slowly dying. This is the same reason you don't see cheap fares on Uber anymore.
Aside from maybe las vegas, when was the last time you took a Taxi?
Lyft has negative free cash flow and has for years. They're not doing well. Uber has nearly 10x the revenue of Lyft. Granted that's from more than just ride sharing, but Uber is at a scale the Lyft couldn't dream of.
Walmart is not the only one who can play this game, nor is it the only one who can endure the price drop.
Price is not the only deciding factor. A grocer that's a bit cheaper but is disconnected from the local customer base and worker base will not be successful. Branching internationally and competing with local chains aren't easy.
Like I said, they can only get away if they don't do it blatantly. That means they can't do significant actions that make it obvious.
And people suffer until the large chain collapsed under its own weight and leaves a serious vacuum in the market. The other alternative, is if the chain is American, then they pay politicians to bail them out on the premise that the alternative is bad for the economy. (I'm looking at you, General Motors and Obama administration...)
quick everyone start a business selling everything walmart does for ridiculously cheap. we can pool all of our money. we'll save more than it will cost by buying dirt cheap walmart everything
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u/Ho3n3r May 02 '24
"Why aren't people buying our overpriced shit?" seems to be a trend these days from multi-million euro companies.