I’ve been resisting the urge to write a post comparing Walmart to Costco, mostly because it’s been done, a lot. Robert Reich saved me from having to think up my own Walmart post by writing one that I like even more than the Costco comparison. In his blog post Mr Reich compares Walmart’s business model to Henry Ford’s.

“Walmart could learn a thing or two from Henry Ford, who almost exactly a century ago decided to pay his workers three times the typical factory wage at the time. The Wall Street Journal called Ford a traitor to his class but he proved to be a cunning businessman.

Ford’s decision helped boost factory wages across the board — enabling so many working people to buy Model Ts that Ford’s revenues soared far ahead of his increased payrolls, and he made a fortune.

So why can’t Walmart learn from Ford? Because Walmart’s business model is static, depending on cheap labor rather than increased sales, and it doesn’t account for Walmart’s impact on the rest of the economy.”

Reich also notes in his blog that Walmart’s customers are its employees, employees who earn a median hourly rate of $8.80. $8.80 is not going to buy a lot of goods, no matter how low the price. After three consecutive quarters with reduced sales it may be time for Walmart to make some changes.