What's to love about Wal-Mart

By Jeff Macke, Minyanville

If it were possible to find the nation's largest merchant pitiable, Wal-Mart Stores (WMT, news, msgs) just might deserve our sympathy.

The goods Wal-Mart sells aren't hip enough for self-styled trendsetters on the U.S. coasts. To those who would never deign to set foot in a Wal-Mart, the chain's labor practices are widely regarded as only slightly more civil than a slave galley. The retail giant is belittled for driving mom-and-pop shops out of business and bullying vendors into cutting profits to the bone.

• Why you should hate Wal-Mart

What's wrong with this picture? In a word: everything. Wal-Mart isn't what's wrong with capitalism. Wal-Mart is capitalism.

Joining Sam's big club

Fifty years ago, a man named Sam Walton took a look at the corner stores serving agrarian America and decided he could do better. He didn't do it by inventing the spreadsheet and selling Ma and Pa indecipherable derivatives that left them homeless. He didn't see a country full of suckers who would work long hours for slave wages and pay top dollar for whatever Walton opted to throw on his shelves. Walton didn't even go the Standard Oil route and drive the competitors out of business before jacking up prices.

What Walton did was build a better mousetrap. He built a chain one store at a time and revolutionized the distribution of goods to far-flung stores serving communities previously thought to be too small to support big-box retailers.

In so doing, Walton made it more affordable to live and do business in those communities. Were there losers in the Wal-Mart rollout? Absolutely. If you ran an inefficient dry-goods store with one style of shoe in four sizes and Wal-Mart bought the lot across the street, your business wasn't long for this world.

Wal-Mart steamrolled lousy merchants like a jumbo thresher plowing through the heartland. Walton asked no quarter and gave none; the company is legendary for grinding down the vendors whose goods stock the shelves of his stores.

Video: Secrets behind Wal-Mart's success

Walton had a capitalist's genius for creating a mousetrap that could expand at warp speed, but Wal-Mart is slow to change. It has an insular management structure that doesn't jibe with the enlightened members of the Fourth Estate. While other retailers burned through rain forests designing and redesigning customer service policies, Walton hired locals out of retirement and posted them at the front of his stores with the instruction to "Look customers in the eye and smile."

The greeter was born.

Obsessed with low costs, low prices

Wal-Mart's weaknesses spring from its strengths. The company is obsessed with controlling costs -- all the better to hold down prices. When a chain consists of only a handful of stores, it's relatively easy to ensure such a policy is deployed with common sense. When the chain has thousands of stores in 15 countries, the results are less predictable -- such as when a Wal-Mart manager was accused of locking his cleaning crew in the store overnight with neither a break nor exit. Such violations are inevitable, not evidence of evil. Peer closely enough and you'll find cracks, warts and failings in all of us.

In a chain the size of Wal-Mart, I defy a trained merchant to walk through any single store and not find something objectionable. Wal-Mart has made mistakes of merchandising, judgment and execution. To the glee of Wal-Mart's critics, it's all but inevitable that the company will err again. (On this topic, check out "The Bad Boys of Business: Wal-Mart.")

Wal-Mart shows it can change

What separates Wal-Mart from Gimbels, Sears (SHLD, news, msgs), Kmart and their ilk isn't its perfection, but its ability to adapt.

Like the country it grew up serving, Wal-Mart is a behemoth that's slow to change. But it can. Wal-Mart dealt head-on with its highly publicized labor woes nearly a decade ago. It withstood an embarrassing "Made in America" debacle before that. Wal-Mart has withstood competition, one of the worst "fashion" rollouts in history and the contempt of highbrows nationwide.

Wal-Mart has lowered the price Americans pay for basic goods, brought respectable retail to our heartland and managed to deliver for shareholders, all without using any scam derivatives or feasting on the customers they serve. Wal-Mart won by competing every step of the way and by refusing the apathy that success so often breeds.

In short, Wal-Mart is one of the few corporate giants still standing using the same strategy upon which it was founded: It sells discount goods at a fair price.

It's hard to see what's so loathsome about that.