As I said, my company involved in the construction of these things, I’ve seen tons of site plans for them, and I’m not making it up either. For that matter, I can name four or five of the closest Wal-Marts to me (that I know of anyway) and I think maybe one is part of a strip-mall and, really, 90% of that strip is dominated by the Wal-Mart and neighboring Sam’s Club.
I’m just not convinced that the existance of a Wal-Mart spurs neighboring growth. Whether or not there’s areas that’s just love to have a Wal-Mart isn’t really relevant to the statement “It doesn’t help them by being WM; it helps them by being an anchor in the strip mall”.
You have some evidence that this is the case? It seems to me that Wal-Mart is completely vulnerable to competition on price. Wal-Mart’s customers are extremely price sensive. If another, more efficient retailer can open and undercut Wal-Mart on price for equivalent quality, they’ll grab plenty of market share. Or more to the point, if Wal-Mart tries to use monopoly power to increase prices above the natual market-clearing prices for those goods, new competitors will spring up and eat their lunch.
And I don’t buy the notion that they can shut down chains of supply to competitors. In the internet age, with modern inventory practices, suppliers become available very quickly when there is a demand for them. Costco competes pretty well with Wal-Mart. So does Target, and a number of other big-box retailers. Best Buy, Future Shop in Canada, etc. In fact, almost anywhere you go in Canada where there’s a Wal-Mart, you’ll find a Future Shop within a few blocks.
Wal-Mart sells the same name brands as other stores. Their grocery section looks like any other store’s grocery section. Their electronics are mostly name-brand.
Sure, they sell cheap products. Have you ever been really, really poor? What you call ‘inferior’ other people call ‘affordable’.
As for inflation, Wal-Mart alone has been credited with significant reductions in inflation. How is it in their power? Because they represent a major increase in retail productivity. Because of Wal-Mart, consumers get goods cheaper than they did before, because Wal-Mart has leveraged efficient business practices and scales of economy to lower the cost of delivering goods to market. It’s that simple. It’s why Wal-Mart has such great market penetration. It’s because they’re better than everyone else at what they do, and the consumers benefit. If they didn’t, they wouldn’t flock there in droves.
So you’re own personal experience with Wal-Mart is fine. Mine too. But you’re sure they’re ripping people off anyway.
It’s a not only not a big deal, it’s completely backwards. By providing goods and services cheaper than local alternatives, Wal-Mart improves the local economy. As for the ‘profits taken out’, you’re operating under the assumption that a local economy is like an oil well to be plundered. That’s not the way it works. Wealth is generated through increases in efficiency. The wealth is split between the community in the form of lower prices for their goods, and Wal-Mart in terms of profits for the service offered. No one is being bled.
Oh, and if you’re against ‘profit being taken out of the community’, shouldn’t you be doubly concerned about Amazon and other internet retailers? They put those same mom and pops out of business, and they don’t hire anyone from that community at all. So by extension, is internet commerce a bad thing? What if it were shown that 80% of internet companies were clustered in one region of the country? Would that scare you, or would you care?
Wal-Mart has made the Forbes list of best companies to work for in America several times. It offers competitive salaries, above-average benefits, generally good working conditions, and a promote-from-within policy that gives opportunity to all employees.
The people who complain that Wal-Mart offers lower than average wages are using the wrong comparison. What you need to ask is if Wal-Mart offers a low-than-average wage than the jobs it replaced in mom-and-pop retail establishments. Hands up, all of you who have worked in a small local retail business? I have. Twice. Guess what? The pay sucked, and the beneefits were the absolute minimum required by the government. Because of inefficiencies, mom and pop outlets are often threadbare operations - they rely on minimum wage employees and even family members to keep themselves afloat. When I was in Jr. High School I worked in a locally owned small convenience store as a boxboy/cashier. My friend got a job with a big-box grocery chain. He made more than twice what I did. The big chain store was more efficient, and could therefore afford better salaries for its employees.
Good riddance to mom and pop retailers. They generally suck. Poor selection, often poor management meaning shortages of stuff people want, And they really just act as yet another unnecessary cog in the retail chain. Those little mom and pop’s would in turn buy from larger regional warehouses. The warehouses sell to the retailer at wholesale. What Wal-Mart did was basically make the store the warehouse, so that the public could get a price somewhere between wholesale and normal retail, and they could grab market share.
The same has been said for Blockbuster. And about Clearchannel radio. And there’s some truth to this. Large market leaders have bargaining power with their suppliers. If Blockbuster says it won’t carry a movie rated X, then suddenly X rated movies lose 2/3 of their commercial value. So fewer are made. I don’t know if there’s anything we can do about this, unless you’re advocating the end of big business distribution of artistic material altogether, which rather sounds like throwing the baby out with the bathwater.
In any event, I think this is a self-correcting problem. The internet in particular is good at filling these kinds of niches. Amazon is accessible to almost everyone at competitive prices. That puts pressure on companies like Wal-Mart to be careful about their censorship, lest they drive their customers to the internet and lose them.
I think the big thing Wal-Mart does is free up local resources to pursue commerce in areas where they retain a comparative advantage. Preventing a Wal-Mart from forming to protect local business may ‘protect’ those businesses, in the same way that preventing the sale of cars at the turn of the 20th century would have ‘saved’ the blacksmith. All it does is force people to live in a less efficient local economy.
Mom and pop stores can survive, but they have to learn to leverage what they are good at. And that’s generally specialization. Providing goods unique to the needs of the area, which Wal-Mart won’t carry. Offer better service. Offer more expertise. Offer ‘boutique’ services. Or get out of retail and contribute to the economy somewhere where you can do more good. High-end stereo stores still exist in the Wal-Mart era. But where before they survived with higher markups on cheap goods, today they survive by providing more service, installations, or the more expensive equipment Wal-Mart won’t carry. The community then gets even more choice - lower prices than they used to get for the cheap stuff, and services at the other end that didn’t exist before.
I’d like to pose a question to the Walmart haters: I’m rather poor, why should I not shop at Walmart? Should I be forced to pay above market rates to smaller retailers because you smarmy rich suburbanites think Walmart buildings are ugly? The efficient market has done a good job of bringing me, the poor guy, goods that I could not otherwise afford, through Walmart, why should I be trying to artificially turn it back?
Look, I was a big WM fan as a kid. And I appreciate Sam Stone’s arguments.
But some things still bother me:
Wal-Mart claims to “roll back” prices. In effect, it’s pretending not only to slow inflation but to reverse it. The problem is, it can’t reverse inflation; inflation is built into the monetary & government system. Wal-Mart can’t overrule the Fed here.
But to maintain their image, they keep demanding that their suppliers lower WM’s costs. Please read the Harper’s article I linked to above. Monopsony is a real problem.
Wal-Mart’s low costs are at this point tied to globalization. They have an enormous amount manufactured in China. OK, they’re not alone in that. But that means the “low costs” & “efficiencies” are an artifact of varying purchasing power, & may be unsustainable in the long term.
And Sam, I didn't tell you about the shoes I got at WM as a teen that had really nice uppers, but were made with soles that were designed apparently to be non-repairable. The local shoe repair guy said he couldn't fix them. So did I really save money? I'm not convinced.
That’s simply incorrect. The Fed doesn’t set an inflation rate. If goods become cheaper over time, then actual deflation can and does occur either in a particular sector or as an average across the whole economy. Look at computers and digital devices; we continue to get more and better features and processing power for the same or even less money.
Wal-Mart and other retailers can reverse inflation by reducing distribution costs.
In the automotive industry, auto makers require price deductions from their suppliers every year. WM is not doing anything particularly different than many companies with power.
I’ll believe that monopsony is a problem with Wal-Mart when I see Target and Kohls and other competitors folding beneath WM’s critical mass.
I don’t see your point. Either WM is an efficient buyer and distributor or it’s not. That’s it’s value-add.
Save money over what? WM doesn’t coerce you into buying any particular type of shoe.
You’re not old enough. You’d have to go back to the 19th century to read stories about how Sears, Roebuck was destroying the small merchants not only by offering better goods at lower prices but also by the fact that, since Sears made more expensive items only an order away, people started saving more money for that iron stove, further depressing the local economy.
I remember reading quite a while ago that in 1972, 2.5% of the US GDP went through Sears. Today Wal-Mart’s $344 billion in earnings is a comparable 2.7% of the US’ $12.49 trillion GDP. It’s a large number… but not out of the historical norms.
That was the Great Atlantic and Pacific Tea Company, or A&P, who opened over 15,000 stores in a 20-year span starting in the 1920’s. Now a regional chain of 115 supermarkets in the NE and Canada, they are a shadow of what they once were.
As is Sears, a company that was bought out by a discount retailer that itself so got its ass handed to it by Wal Mart that they were in bankruptcy a mere three years prior to buying Sears: K-Mart.
Tell you what, Aeschines, if you can find me a cite saying that WalMart isn’t a growing company, I’ll go to the trouble of finding two that say it is. I’ll even throw in a free bonus cite saying that Microsoft has a large share of the computer software market.
See my first post and read again that part I wrote about March 2, 2017.
And now, if you would, please answer these question; WalMart’s share in the commercial storefront business had increased at a consistent pace and the number of competitors WalMart has in this business has decreased at a consistant pace. Based on these trends, one of two things will happen in the future:
1 - The trends continue in the direction that have been moving. If this is what you predict will happen, where will the ultimate equilibrium state be?
2 - The trends do not continue in the direction they have been moving. If this is what you predict will happen, what factors do you feel will arise in the future that will reverse these trends? (Hint - any answer involving factors that exist now and have therefore been shown to not be sufficient to reverse these trends will result in your answer scoring zero points.)
No, I don’t believe the trend will continue. It is amazingly hard to reach 100% market share or anything close to it. Wal-Mart’s market penetration will begin to level off. Eventually, someone else will come along and start eating back into their market and Wal-Mart will be the next big company in ‘crisis’.
Go find how many companies in history have attained a monopoly in a market without A) government help or B) ownership of a finite resource (land, diamonds, whatever). Wal-Mart does not qualify in any category. Barriers to entry in the retail market are very low, what with internet sales and relatively cheap suburban real estate where Wal-Mart operates.
Either Wal-Mart will maintain its market share by continuing to offer lower prices for equivalent products, or it will start to develop big-company sclerosis and start bleeding some money, leading it to increased prices and increased competitive pressure.
One thing I’d bet a lot of money that Wal-Mart will never be able to do, and that’s to completely own the retail market in such a way that it can make humongious profits by selling products at higher prices than its erstwhile competitors would have.
But when it comes to WM, that, while true, seems almost a straw man. They don’t want to do that. They know that they keep their customer base by underselling everyone else.
The problem is in what the consistent & insistent application of that policy does to their suppliers, their products, & their employees.
I did in the 80’s. I made more than twice what minimum wage was at the time. If I recall I started around $8 an hour and was making $10.25 an hour by the time I left. I had full medical and dental and a week of vacation a year. I also had flex-time hours. I worked there for about 5 years and loved it.
The company shut down when the owner decided to retire. The retail space is now a Starbucks-owned Coffee shop.
Really? In order to establish a monoply, you have to have to have government help or control of a finite resource? Which one did Microsoft have in gaining its share of the computer operating software market?
Let me guess, you’re going to say Microsoft doesn’t have a monopoly. And you’d be right - the most recent statistic I found says that as of August 2006, Microsoft only had 96.97% of the market. That other 3.03% no doubt keeps the playing field level and prevents Microsoft from acting like it’s in control. I’m sure free market forces are fully in play.
I have worked in advertising-supported media most of my adult life, and I have watched advertising revenue shrink as big-box stores and national chains have put local retailers out of business. I wouldn’t even mind it that Wal-Mart puts Main Street retailers out of business (if they can’t compete, tough luck) except that they don’t advertise with us themselves. So they delete the revenue from businesses that have been here for decades, make it impossible for new businesses to open, then fail to replace that revenue.
I’m not at all lazy about Wal-Mart – quite the contrary, I put considerable effort into not walking into the place, shopping only with local or regional retailers.
So what? Wal-Mart didn’t force anyone to start shopping at Wal-Mart instead of these stores. The local people chose Wal-Mart over these stores. Wal-Mart offers people a better choice and people take advantage of that. Wal-Mart does not walk up with a gun to these stores and put them out of business.
It buys local meat here, but that’s probably due to the fact that Perdue chicken is located in this town.
Seriously, the Wal-Mart here is active in the local community. It busy local advertising, it contributes money to a variety of local causes, etc.
Are you sure Wal-Mart employees are working at minimum wage? Some may be, sure, but I don’t think that most are. I could be wrong, but I’d like to see some info on wages.
Furthermore, local stores don’t pay much better than Wal-Mart. I have relatives in the hardware business and they don’t pay very well.
When Wal-Mart locates in small town America, it gives people an option to buy a huge number of new things at a low price. That’s a very good thing for the people who live there.
I went to Walmart once–years ago. The store was so messy & depressing that I walked right out. I’ve heard about labor & community issues with WalMart, but I don’t need convincing. I’d prefer to spend my money in a non-dump.
Here in Houston, most of the “mom & pop” stores went out of business long ago unless they had something special to offer. I gladly patronize small retailers when possible.
It’s purer to avoid Big Boxes altogether–but there’s a new Target about 4 blocks from my house. The land was long empty–formerly used by warehouses & small industry. And there’s the beginning of a strip center–more tenants are needed in this near-town location. Patrons include all economic & ethnic groups.
New WalMarts in Houston are usually standalone. And most of the patrons are NOT the “deserving poor.” Co-workers with higher family incomes than mine visit WalMart once a week.
That’s also what I see from the DC area on south. The only ones I see as part of a shopping center with smallish stores are the older, smaller WallyWorlds.