Introduction
Wal-Mart is one of the most popular international retailers. It is present in 24 countries worldwide, provides customers with a wide range of products, and claims to have a proactive social stance. However, one of its most notable features and justifications for its popularity among buyers is its affordable prices.
At the same time, there are several issues regarding Wal-Mart’s corporate policy, particularly wages for employees. Most of the company’s employees earn the minimum wage, which may seem very low to many. Therefore, this paper will analyze why Wal-Mart’s low wages are worth keeping.
Why Wal-Mart’s Low Wages Are Worth Keeping
Low Prices for Low-Income Customers
For most shoppers, Wal-Mart’s main selling point is its availability. The company’s management says that the low price of goods is one of the key aspects of the company’s strategy (Walmart). The company’s activities are primarily aimed at meeting the needs and requests of customers.
Consequently, low commodity prices make Wal-Mart more attractive to low-income customers. In addition, company strategies and directions are shaped by various social factors (Pandey et al. 16). Therefore, by understanding the characteristics of its target audience, the company can change the prices of goods to remain affordable for its customers.
Low Wages for Employees Are Keeping Prices Low
One way to achieve low prices for buyers is to keep wages low for employees. Minimum wages for staff allow companies to adopt more flexible pricing tactics and better adapt to customer needs. Pandey et al. note that about 140 million people in the United States shop at Wal-Mart each week (113). The company must have obvious customer advantages, such as low product prices, to maintain and increase these figures in a highly competitive environment. However, keeping low prices is possible only if wages for employees are kept low.
Higher Wages for Employees Would Raise Prices
Increasing the wages of employees will inevitably lead to higher prices for goods. These two indicators are interdependent, since each affects the company’s profitability. An increase in wages can lead to an imbalance between the costs and profits of the company.
Now Wal-Mart has 2.3 million employees worldwide, of which more than 1.6 million are in the US (Walmart). Most employees receive an hourly wage of $15 an hour. An increase in this amount will lead to a massive increase in the cost of maintaining the company’s activities. The easiest way to offset these costs is to raise the cost of the products. However, due to the high competition in the market, raising prices can lead to loss of customers and, as a result, income.
Conclusion
Thus, raising wages for Wal-Mart employees is possible, but this will significantly affect the cost of goods for buyers. For an extended period, the company maintains its status as an affordable retailer for its customers. A sharp rise in the price of goods, caused by a rise in wages for workers, can lead to severe losses in profits for the company.
In addition, because of the relatively high level of competition, customers are more likely to choose another retailer with lower prices for the same items than remain loyal to Wal-Mart. Moreover, it should be taken into account that the company’s strategy and policy primarily consider the interests and needs of customers, since they form the company’s income. Therefore, keeping wages low for Wal-Mart employees makes good sense.
Works Cited
Pandey, Rudresh, et al. “Factors Influencing Organization Success: A Case Study of Walmart.” International journal of Tourism and hospitality in Asia Pasific (IJTHAP, vol. 4, no. 2, 2021, pp. 112-123. Web.
Walmart. “About.” Walmart Inc. Web.