m......well put and worthy of a detailed response.

It's a big ball of yarn.....Let's begin to unravel it.

Firstly, this is not a black and white issue. Wal-Mart is NOT either all-bad or all-good.

Let’s use a poker simile to get going.......

How many times have you heard as an answer “It all depends” to a question about a hand or situation? Advanced players know all too well the nuances and implications of that answer. Less advanced players, who are looking for a black-and-white answer get frustrated easily with that answer. More often than not, they are unwilling or unable to accept that the scenario is much more complicated than it appears on the surface.

It is my opinion that in dealing with the “Wal-Mart” issue, we have somewhat of a similar situation.

I believe that for us to fully understand the complex dynamics, it is instructive to view them from three different perspectives:

The Vendor - Anyone who sells products to Wal-Mart for resale to the general public.

The Merchant - (In this case, Wal-Mart) but for the purpose of this exercise, any retailer engaged in re-selling products.

The Consumer – The end user who purchases the products from the Merchant.

If we keep the above in mind, and look at the dynamics of what happens in the day-to-day world of a Wal-Mart from each of these three perspectives, it will become clear that there are indeed no simple answers to the question of Wal-Mart: good or evil.

There are however substantiated, documented details of business practices that will shed considerable light on the subject, and form a baseline upon which one can make an informed opinion.

As my experience and expertise is in consumer electronics, I will use that product category to begin the journey.

It is important to understand that there is different ‘utility’ to be applied to different categories of products, and what may apply to one category does not apply to the other. I will address this issue later on.

Let us begin with the following product example: An AM/FM/CD Radio for the car. The brand name I am about to use is for example only, so please do not take the case I am about to make to have anything specific to do with them.

Let’s choose the brand name Sony. Why Sony and not brand unknown XYZ? Glad you asked. To answer we must digress and talk a bit about merchants.

It can be said that there are two primary types of merchants: Growers and Harvesters.

Growers: These are the guys that can ‘build a line’. They have a recognized credibility with their customer base. Their opinions are trusted and their recommendations of product selection are generally accepted to be objective and based in fact. For vendor XYZ, if you have a better product, these are the guys you want to sell to. You NEED them to establish your products credibility in order to ‘build your brand name’, which, everything else being equal will mean increased profit and growth for vendor XYZ.

Growers are also known as “Specialist Retailers”. They survive on lower volume at higher gross margins and justify the additional margin by the services that they provide that are not generally available at the Wal-Marts (or other ‘Big Box’ merchants). They can exist in the long run only if they truly ‘add value’ to the buying proposition. Those who cannot eventually will go out of business.

Harvesters: Harvester merchants serve the prime purpose of delivering to a vendor the largest and broadest cross section of consumers. A vendor must meet a select set of criteria before they can legitimately serve as a supplier to a big box. With few exceptions, they must have a reasonably known ‘brand identity’. They must be able to supply the volume needs of the big boxes.

Harvesters do not ‘build brands’....They ‘harvest’ the volume potential of a brand that has been previously built.

It is important to understand that I imply neither good nor bad to either Growers or Harvesters....It is simply a description of a mode of retail trade for the purpose of understanding how the big picture works.

Let’s get back to our Sony AM/FM/CD Radio now.

‘Critical Mass’ must be reached before a Wal-Mart and a Sony agree to engage in business. Some of the components of that critical mass are:

.....to be continued.

It’s late, I’ve moved a lot of snow today, and I’m tired.