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An unsparing look insidethe biggest of the big boxes'-• THE WAL-MART EFFECT: HOW

THE WORLD'S MOST POWERFULCOMPANY REALLY WORKS -AND HOW IT'S TRANSFORMINGTHE AMERICAN ECONOMYCharles FishmanPenguin Pr*» / 304 p*jn /$2595

BY A N D R E W RATHER

O NE INDICATION OF HOW THORoughly Wal-Mart has transformedretail Is (o read news coveragefrom the early 1990s, when aParis-based company introducedIt* Leedmark 'superstore* inMaryland.

•Skeptics uy the 'hybrid market' has yet to prove it is anything men.' than alumbering 'diruwtore,' • said a story tn The Sun

300.00Cnquare-root store In Glen Bumlc. •Hy-permarkets haw been popular in Western Eu-rope since the 19605, but the term has acquiredthe reek of failure In U.S. retailing circles.'

Although little more than a decade old. clips

Ing depleting primitive man's aversion to havinga big-screci 'IV and underarm deodorant In thesame shopping can.

Leedmark eventually did fold, but Wal-Mart,which look over Leedniark'* Gen Bumle site, hasgrown to unlmagtned proportions. Annual sales,which Ilrst surpassed 11 billion in 1979, now ap-proach Ijoo billion.

The Wal-Mart Effect, * new book by CharlesFishman, is a fascinating dissection of the mostcontroversial corporation In America today.Fishman Is a senior editor at Rut Company wholast year won a coveted Gerald Loeb Award forbusiness magazine wn ting.The world's largest retailer cant stay out of the

news. Its myriad labor pmbkms made headlines•gain last month when a California Jury orderedthe company to pay more than $170 million tothousands of workers who claimed they were de-nied lunch breaks; the company Is appealing. Thecompany also was embana.wd this month whenits Web nie prompted people shopping for Afri-can-American films to purchase Planet of theApes and Wtlty Wonka and the Chocolate factory.

Chief Executive Officer H. Lee Scott Jr. acknowl-edged recently that he must spend Increasinggota of time defending the company. Union-backcd campaigns such as WakeUpWalman.comand Wat-Mart Watch are textbook models of howoouniwd labor will engage Its corporate foes Inthe Internet age.

Ftshman's is neither a wholly two-fisted attacknor a fawning account. The author Illuminatesthe vut and complex Impact the company has ex-erted economically and socially.

The 1980s are often described as the *Me Dec-ade,' but Wai-Man through the 1990s helpedmake acquisitiveness a central tenet of Americanlife. Allcr saks of Harm underwear shot up atWal-Mart a Tew years ago. for example. Hanes ex-ecutives were initially twilled about where elsethey might be losing sales as a result. They even-tually concluded that shoppers weren't buyingless of their product elsewhere: They were simplystuffing their dressers at home with ever moreundergarments, driven by Wai-Man's persuasivepricing, Fishman writes.

With Its unsophisticated Image, low-rent mar-keting «nd bland and Jumbled stores, Wai-Mancertainly makes a fun target for critics. The ani-mated political cartoon site Jthlabcom offered awithering parody recently to the tune of "Oh Su-sanna."

But the company's Impact is undeniable. Wai-Man changed the way American families shop.their perceptions of what they need, and howmanufacturers prepare goods, package them andget them to market The chain altered the for-tunes of mom-and-pop stores on Main Street, de-throned the once-mighty enclosed suburbanshopping mall and the venerable departmentstores, ajid paved the way for more fashionablediscount competitors such as Target Corp. andKohl's Corp. It made 'low prices' king and ren-dered "service* less vital In the service economy.

Few knowledgeable salespeople are left In retailing anymore, only cashiers.

Simply to feed turnover, Wai-Man must rcpUo600,000 workers a year, the Economist magazimreported — roughly the population of the dty oBaltimore, More Americans now vrort In storethan in factories, an epic shift that occurred quietly a few yean ago, Fishman points out

But the company's might partly results from Itzeal to push responsibilities onto others, Flshmaiuyv Suppliers are strongly discouraged troapassing on cost increases, regardless of whet hethey're driven by raw materials or envlronmenlal-protectjon laws. Many contend that Wai-Marfoists responsibility for health care coverage foits workers onto the public system — an argumen! that recently moved the Maryland legislature to require Wai-Man into Increasing Its emptoyw health care.

As Fishman describes, Wai-Man's 'social contract* has frayed since the 1991 death of foundc.Sam Walton. The company has become a welteof contradictions: II espouses patriotism and lamUy values but placet extreme demands on itmanagers, requiring inordinate houn away thinfamilies, and squeezes suppliers so unrelentinghthat jobs move overseas. Walton touted *BirAmerican' in the 1980s, but the company helpe<contribute to the hollowing out of that lentimenas it began buying billions of dollars worth oKoods from China and other countries.

The author Implies that Wai-Man could ancshould use Its power to do more good even as Ithrives, such as improving working conditions tothe likes of Chilean salmon farmers and Bangfedeshl garment wotters who supply Its labor anproducts so cheaply.

Walton Isn't widely vtewed as an industrial genlus, hut he transformed shopping for the masseas much as Henry Ford did the automobile areBill Gales the personal computer. The Wcl-MorFffcct may seem breathless at times, but perhaps It's because the author cant help but maivel at the unlikely influence one dryfoods putveyor In the Ozarks has exerted on the planet

Andrtw Ralner is deputy bustneu rdilor o/ Th*