fication on the industry that works to its advantage. For example, through Retail Link, it's simpler, at no out-of-pocket cost, for manufacturers to know how their items are performing at Wal-Mart, instead of the convoluted process suppliers and retailers go through for similar insights. In terms of efficiency, Wal-Mart has a clear strategy of its own, and if it could drive change for the industry, it would be happy to do so.
Wal-Mart's biggest contribution has been reducing the price of food. I believe the greatest industrialist in the U.S. was not Henry Ford or John D. Rockefeller or J. Paul Getty but Sam Walton. Tell me one other human being who brought the cost of living down for everyone in the U.S. Sam did it with general merchandise prices, and the company is doing it with food.
Wal-Mart has contributed to the eradication of a lot of games, allowances and kickbacks endemic to the food industry, and in doing so, it's simplified the relationship between manufacturers and retailers to the overall benefit of the consumer. To do that, Wal-Mart has taken a leaf out of the book of European chains like Carrefour, Tesco and Sainsbury, who over the years have taken a tough position with manufacturers because they were not using the kinds of convoluted, complex arguments used by U.S. retailers. Manufacturers traditionally had a stronger bargaining position with supermarket retailers because they were highly fragmented with small individual units, but Wal-Mart has changed that.
Wal-Mart's first impact is as a large competitor. It influences everyone simply by being a major factor in the marketplace.
Wal-Mart has contributed to the food industry big time, in several ways. First, Efficient Consumer Response was significantly motivated by the industry's recognition of what Wal-Mart was doing in terms of efficiency, specifically cost-cutting measures, best practices and more efficient assortments. Second, Wal-Mart developed information technology to lower costs as it consistently focused on the flow of information and doing things in a highly productive fashion that lowered costs, lowered inventory and provided more accurate product assortment on the shelves. Third, Wal-Mart is beginning efforts, that will intensify, to put a greater focus on strategy and innovation. I've noticed more chains hiring vice presidents of strategy as they recognize the need to develop value strategies to keep customers from going elsewhere.
Wal-Mart has definitely contributed to the impetus by supermarkets to minimize their cost structures as they try to be competitive with Wal-Mart. It has also focused the industry on taking a really hard stance with the unions, as we've seen recently with Safeway's efforts in Chicago. And besides labor, Wal-Mart's biggest cost advantage has been the superior logistics that it's developed that other chains have tried to emulate.