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Wal-Mart & Productivity. Daniel Drezner is debating the validity of William Lewis' new book The Power of Productivity.

Quotable: "For example, in retail, the key thesis for Lewis is not just Wal-Mart increasing retail productivity, but the market response to Wal-Mart increasing productivity. The following comes from p. 92-96:

Starting in 1995, accelerated its productivity growth rate from 3.3 percent per year to 5.1 percent per year. The competition, however, increased its productivity at an even higher rate of 6.4 percent per year. When Wal-Mart captured 27 percent of the market in 1995, it could no longer be ignored. The race for survival was on. By 199, Wal-Mart had increased its market share onlu slightly, to 30 percent. One-third of the productivity growth jump in general merchandising retailing came from Wal-Mart's accelerated rate of improvement. Two-thirds came from the competitive reaction of Sears, Costco, Target, Meijer, Kohl's, MacFrugals, etc.... "

Let me confirm Lewis' claim. I work part time at one of these leading retailers, and I can vouch for the fact that the firm is cutting and slashing and re-organizing and doing everything it can to improve productivity -- it has to if it wants to stay in the game. Posted by Greg Ransom | TrackBack