Dissect this anti-mega-corporation statement

Preamble: I’ve often heard it said that capitalism is the best way for the market to produce what the consumer demands at a price he is prepared to pay; I’m not suggesting that I have a better idea than this (because I don’t), and incidentally, I am not a communist.

I was reading a book that is harshly critical of the way that in UK, small shops and markets have crumbled in the face of large supermarkets; it deals with a lot of different issues, from buying pressure, to quality of merchandise, to staff working conditions and a lot of other stuff, but one argument in particular I found particularly striking - it goes like this:

*Imagine a thriving town centre with a lot of small shops catering for individual needs and product types; everybody buys their vegetables from the greengrocer, their meat from the butcher, their fish from the fishmonger and their bread and cakes from the baker.

Then one day, a large supermarket opens on the edge of town.

Only one quarter of the people start to routinely shop in the supermarket and they only do one third of their total shopping there - a drop in the ocean, you might think - certainly not a massive, deliberate swing.
This redirects only 16.5% of the total turnover away from the small shops in the high street, but because small shops don’t have the economies of scale and the buying power of the large supermarket chains, this loss of turnover is enough to set them in a state of decline that results in some of them having to wind up their businesses.

When the last baker in the high street closes, people have little choice but to buy their bread from the large supermarket. Now that they’re going to the supermarket anyway, the extra effort of going to the high street for the items they can still obtain from the small shops is hard to maintain.

The result is that the presence of the large supermarket has caused the demise of the small retailers, but it happened without anybody explicitly choosing it; nobody has consciously ‘voted with their feet’; they’ve all ended up stuck in a situation that nobody really wanted. *

Thoughts? Criticisms?

This is the same argument that people use against Wal-Mart and others. It is true that many shops do close when they face Wal-Mart. However, that is when they try to face Wal-Mart head or the giant supermarket head on rather than working with their strengths. Wal-Mart sells meat and wine but it cannot hope to compete with the wine stores that have high end products and knowlegable employees. Likewise, it cannot compete with a butcher that can cut quality meat to order.

IMHO, Mom and Pop shops carrying mundane goods don’t carry any more moral weight than the large stores. The large stores are providing a service that is more inefficient than someone else can provide it and deserve to die. It costs consumers money to have to shop there. OTOH, there is a demand for high end services served by businesses that have expertise and provide personalized customer service. There will always be a market for such services.

Capitalism means that each business needs to find its niche and if it can’t then it will fail. It is as simple as that.

I don’t think it correctly counters the “vote with your feet” argument.

If a quarter of the people move to the supermarket, then assuming the system was at a nice equilibrium before the supermarket arrived, you will now have too many smaller stores. Some of them will have to close or adjust their profit margins. However, the argument makes a giant leap from “some of them having to wind up their businesses” to “when the last baker in the high street closes”, without explaining this leap in any form.

I’m not buying that. If people exist who value the small shop experience over the supermarket and are willing to pay for this, then there will be a market for the smaller stores and at least some of them will survive. If absolutely everyone valued lower prices over this experience, then there would be no market and no small store would survive. I would definately consider this “voting with your feet”.

When the author mentions “a situation that nobody really wanted”, I suspect it is really a mixture of “a situation that I don’t want” and wishful thinking.

The big supermarket will generally have a wider selection that the specialty stores (except, of course, for the highly specialised stores) and at cheaper prices.
And for just the reason that the little stores will die off so easily, the supermarket will be providing a lot more job security for it’s employees (particularly in the management echelons.)

And really, all of the McDonald’s, Pizza Huts, Von’s etc. of the world were started out as Ma & Pa single storefront shops. And those people were able to go off and become big names because they weren’t surviving day by day where 16.5% loss would kill them. Whatever they did that was creative and interesting allowed them to save up and buy other stores and become a chain. Given a world where there aren’t inconquerable monopolies, even a Ma & Pa can hold their own if they come up with that one great idea–and that idea is (theoretically) what we want and what, thereby, the free market is going to cause to happen.

So indeed, a few people are going to be the losers in each battle, but (theoretically) the winner got to be the winner because he came up with the idea that is going to improve the lives of much more people than lost out. And so society advances, and I can order (over the internet!) pizza to be delivered to my door within 30 minutes or my money back.

And it’s the internet where the next battle is being faught. Specialist smaller stores can now reach a wider audience, and therefore increase their profits. Just look at all those online stores on ebay. If fact smaller stores may more easily respond to consumer demand than large corporations.

That would be one point, in a free market when everything becomes all big-conglomerates, the demand for personalised stuff grows and providing ways for Ma & Pa’s to fight back becomes a business in itself. Ebay: All the little specialty items you would never be able to find at K-Mart.

I agree absolutely with Driver8.

First, the author makes a sudden leap from “some shops wind up” to “the last baker… closes”. There’s a lot of things that happen in between those two items, and to hand-wave over them as if it didn’t matter shows an unwillingness to deal with the real facts of the debate, and to instead create strawmen.

Second, the last paragraph is counter-factual. “It happened without anybody explicitly choosing it”, for example. But, wait- the author posits that the decline occurs because people who go to the supermarket to buy bread decide to buy other items there. Isn’t that a choice? If they actually wanted the local butcher to keep operating, they’d go over and buy from him despite the additional costs, wouldn’t they? If they’re not willing to take the extra time or pay the extra cost, then despite their protestations and tongue-clucking about how bad a situation it is, then they really didn’t mind the shop closing, did they?

So it’s a direct situation where not enough people in town cared enough about the small shops to bother with the extra time and cost to go over and shop at them. The author can lament that, and whether that is lamentable or not is certainly debatable. But to describe the situation as people woefully stripped of loving high street stores because of the callous existence of large supermarkets… eh.

Also note that many of these “huge mega-stores” are actually just regional stores. Many have no presence outside of one state (obviously, Wal-marts and so on are exceptions). Increasingly, I see restaurants which have 2-5 stores in a city or states getting patrons over either tiny local places or huge chains. They’re fashionable, tasteful, have excellent food, good decor, and great service.

On the other hand, small restaurants seem to mostly have bad food and/or service. The good small stores tend to grow into the regional chains if the owners wish to put in the work required.

In addition to the problems with the hypothetical that others have noted, the writer simply assumes that having a plethora of little shops is a good thing. Maybe it is, and of course it’s a good thing for the shopowners who wanted to own a bakery, but why is their happiness more important that the happiness of the hundreds or thousands of shoppers who now save time and money while getting goods of (let us assume) equal quality? Maybe the incresaed efficiency and cheaper prices lead to additional leisure time and discretionary dollars to spend on entertainment – if so, then the indiviudal shopper’s happiuness is increased considerably. Yes, this demands that we venerate an economic utilitarianism, but why not? (Especially since capitalism is a perpetual motion machine, whereas any efforts to limit it or to have goods distributed by an alternative method introduces waste into the system.)

–Cliffy

It doesn’t even have to be equal quality. People will sometimes exchange convenience for quality. It’s almost always possible to get something of better quality if you are willing to spend more time getting it. But people don’t have unlimitted time, so they compromise.

And why did 1/4 of the people start shopping at the Supermarket in the first place? Wasn’t that a choice? If the local baker was a good businessman, he’d realize he had new competition, and offer more value to his customers. This idea that the world should remain static, with everyone running their little shops w/o competition sounds more like a medieval mindset to me. Thanks, but no thanks.

Does it cause harm to someone to choose not to buy a product from them?

If not, fuck 'em.

Totally misses the point; we don’t buy cabbages from the local greengrocer to be nice to him, we buy them because we want cabbages; specifically, we want fresh, (ideally)locally-produced, high-quality cabbages in season; we also value his expertise in his field, which translates to good advice on what is good to buy at the moment and what to do with it. Supermarkets could offer all this, but they just don’t - partly because it’s cheaper not to and partly because they don’t have to.

And the point is that the majority of people made the choice to keep on shopping from the small vendors, but the choices of the minority set in motion a change that affected everyone.

BTW, thanks everyone for not noticing (or not mentioning) my miscalculation; one thrid of the shopping of one quarter of the people represents the diversion of only 8.75% of the turnover; not that the precision of the number itself makes a difference to the point.

Ok, the bit in the middle consists of:
Some more have to wind up their businesses; faced with reduced choice in the smaller stores, a few more people go the way of the supermarket through simple necessity; a few more of the stores have to wind up their businesses; the ones that remain try adjust their margin to remain profitable, but since they have no leverage on their suppliers, this entails increasing a few prices; driving away some of the customers… when the last baker on the high street closes…

No, this misses the point, which is that even a minority of people choosing to divert a minority of their spend can effect changes that impact everyone; changes that nobody particularly considers desirable.

Then it’s mutual. The absence of harm isn’t necessarily being “nice” to someone. Whatever the motivation of the customers to shop at the supermarket, it’s not provable that the decision to shop there instead of the small store harms the small store, any more that it is provable that Bill Gates is harming you by not offering you $50 million for your toenail clippings.

In dissecting the statement, capitalism does not require an individual to be “nice” to anyone. It does not recognize that someone not being “nice” to you (by not purchasing your offered goods and services) constitutes harm. Unless the person making the statement is advocating some kind of legislative control that declares that harm does exist (and subsequently reducing customer choice by force rather than the natural evolution of the marketplace), he can only lament but not solidly argue against the gradual economic shift described.

And if he simply can’t do that he deserves to go out of business? The little guy, with limited buying power, without the advantage of economies of scale, happy to provide what is essentially a service to the community and making a modest living in doing so, deserves to close because he can’t compete with a powerful, multinational machine that doesn’t really care all that much about the things that made the local baker valuable?

Except that, as the small shops disappear, nearly everyone says that they didn’t want that to happen; the demands of the majority are failing to be met.

When the minority decide to do a portion of their shopping in the supermarket, they are diverting turnover from the high street; there’s nothing immoral about that - it’s theirs to spend as they choose, but a store that suffers a permanent reduction in turnover experiences harm nevertheless.

[quoteIn dissecting the statement, capitalism does not require an individual to be “nice” to anyone. It does not recognize that someone not being “nice” to you (by not purchasing your offered goods and services) constitutes harm.[/quote]
And nobody is suggestion otherwise - the point is that changes which not a single consumer desired and only a minority actively chose (and then only weakly chose) is brought about.

The author is actually hoping to inspire people to rediscover the tangible benefits of shopping elswhere than the supermarket.

The goods and services available from smaller shops are better in measurable ways - again, this isn’t about being nice to the little shopkeepers, it’s about how a community can quite inadvertently lose something of value.

Possibly, but cheaper doesn’t always (in fact doesn’t often) mean better - sure, i can buy a chicken or a salmon for a lot less than I would pay in the butcher’s or fishmongers (had they still been trading), but very often that lower price has often been achieved at the expense of quality (and the choice to me the consumer is now reduced to ‘buy it, or bugger off’ - there’s nowhere else to go), so that when I get back from the leisure complex, I can’t tell whether it’s the chicken or the salmon that I’m eating.

No; most people wanted (and chose)to do all of their shopping at the smaller shops, the rest wanted (and chose)to do most of their shopping at the smaller shops.

Mangetout, do you still have the book you read this in? I’m a bit curious about what the original source material cited for this argument is.

Deserves? I don’t know. The point is that he won’t go out of business if he offers a service that people value. But he does NOT deserve the right to keep his shop tomorrow just because he had it yesterday.

Valuable to whom? If MegaGrocer doesn’t provide value, why do people shop there?

Sounds like a good business opportunity for someone to open a bakery. (Of course everyone always says they want what they don’t have. Problem is, there are unwilling to pay for it).

I live in an area with huge shopping centers, and there are still at least 3 local bakeries all doing fine. Maybe the flaw in your reasoning is that you assume that the baker went out of business while he was still providing real value. If most people really want a local baker, and they’re willing to express that want with real $$, then there is no reason why a local bakery can’t survive. You postulated that it wouldn’t, but that’s just something you made up.