Tour De Farce

One of the charges frequently made against Wal-Mart, both at the local and national level, is that Wal-mart mistreats its suppliers. Personally, as long as the suppliers are selling their goods and getting paid, I don't see how this is a problem. Nonetheless, Barry C. Lynn, in a recent issue of Harper's Bazaar, called for Wal-Mart to be broken up because he claims Wal-Mart has created a monopsony. A monopsony is a market in which goods or services are offered by several sellers but there is only one buyer.

Then there's that paragon of retail virtue, Costco. This recent story in Bicycle Retailer and Industry News caught me eye:

Redline Retailer Gets Duped by Bogus Buyer

AUGUST 01, 2006 -- KENT, WA (BRAIN)—Seattle Bike Supply has long held a strict policy of not selling the Redline brand through big-box or mass-marketing outlets. So it came as quite a shock last week when they heard that Redline bikes were spotted on the floors of Southern California Costco stores.

Weeks prior, an SBS retailer in Southern California was approached by a “marketing company” supposedly on behalf of a major foreign airline to purchase 250 fully-assembled Redline bikes to be sent overseas as premium in the Airline’s frequent flyer program. The supposed marketing company even supplied a copy of the product “request” on the airline’s stationery to make the purchase look more authentic. SBS believes that these were the bikes that instead were diverted to Costco. The product involved was 200 of Redline's 20-inch “Roam” bicycles.

Because Costco is not an authorized Redline dealer, and the SBS retailer appears to have been deceived in releasing the bikes outside the authorized chain of distribution, the questions remain on whether the bikes sold at Costco are to be covered under Redline warranty.

SBS is investigating the incident, and announced that it would put into place stronger identification requirements to prevent a similar incident from happening again.

A knowledgeable source informs Palousitics that:

Costco allegedly has a long history of acquiring products using such questionable methods from companies, distributors or retailers who will not sell to them. When you stroll the aisles of Costco, part of the thrill is finding items that you would normally only be able to buy at a specialty retailer mixed in with the regular stock from willing Costco vendors. Costco will typically have a very limited quantity and those items may only last hours or days and they will not be getting more.

Ever wonder why you will see a few certain power tools, electronics, shoes, sporting goods, etc, that are only found in specialty stores? It's due to the alleged underhanded tactics used by Costco's buyers to acquire them. A specialty retailer often has dealerships or agreements with manufacturers of speciality goods that they will assemble, service, train and educate the consumer in the use of the products , perhaps dedicate a certain amount of their floorspace or purchases to a manufacturer in order to carry the product, etc, etc .

So in a nutshell, here you have a company that appears to hurt small retailers by acquiring the same products, without any of the commitments normally associated with presenting them, then selling those items at cost or even a loss just to add a bit of glitz to their stores.

Hmmmmm. Questionable labor practices, now questionable business practices.

I'm not suggesting that Costco is either guilty or innocent of any of these charges. Heck, I like Costco. I'm a member. There's not a time my family goes there that we don't walk having spent at least $100 or more (and see about 5 other families from Pullman). I'd be the first one to welcome Costco to Pullman.

I'm merely pointing out that any corporation is run by human beings, subject to human foibles, with the primary goal of making money, not perfect saints who pursue some altruistic purpose. No business is as good or as bad as people think it is. It is a fool's proposition, as PARD has done, to try and play one retailer off as being somehow more "morally superior" than another. At the end of the day, it's all about the bottom line.

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