Why Wal-Mart Can Be Good for Small Business
The Washington Post yesterday reported on how the conventional wisdom that Wal-Mart is the bane of small mom-and-pop businesses is being shattered in the wake of a new Wal-Mart opening in Landover Hills, Md., a close-in Washington suburb in Prince George's County, Md.
The article cites research showing that in urban areas Wal-Mart has not driven out small competing businesses, as it often has in rural and more distant suburban areas. It seems that Wal-Mart can drive up the amount of customer traffic in an area, which can actually benefit neighboring businesses, even if they are in direct competition with Wal-Mart.
From the Post:
Ted Decker of Chandler's Medical Supply said the opening of Wal-Mart has also been good for his business, which specializes in products such as diabetic socks and blood pressure units and competes with Wal-Mart in some categories. The store is a remnant of Chandler's Pharmacy, a neighborhood landmark that closed three years ago when the owner retired. Chandler's Medical Supply recently moved about a quarter mile from its original location and now sits next to a CVS. Wal-Mart is a five-minute drive away.
"People come in here looking for service," Decker said. "You go in [Wal-Mart], you don't ever know who you're going to see. And none of them can help you."
So if you know how to distinguish yourself and play up your business's strengths—such as service—in areas where Wal-Mart is weak, you can compete with even the biggest of the big boxes.
I should also note that while probably denser than most suburban environments, Prince George's County is not that different from the "sprawl" found throughout the country. So I don't think we're dealing with a unique case here.
Another interesting part of the article looks at how Wal-Mart is actually going out of its way and spending money to help local businesses in Prince George's:
In Prince George's, Wal-Mart has donated several thousand dollars to help four independent businesses near the store advertise in local newspapers. It also produced radio spots to air over the store's sound system. Wal-Mart selected the stores with help from local officials.
I think there are two ways to look at those ostensibly benevolent actions by Wal-Mart (and these points of view are not mutually exclusive):
1. Wal-Mart is participating in the kind of charitable capitalism that not only aids the community but helps the company's bottom line by refurbishing its image, showing that even the most notable target of critics of consumerism is not above giving back.
2. These activities are helping Wal-Mart only because of the looming threat of regulation. The company has been denied entrance to communities by local governments in many places around the country. Sponsoring these community activities might be Wal-Mart's way of placating what might otherwise be an unwelcoming local government.
Tags: Maryland | small business | Wal-Mart
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Is Wal-Mart Good For Local Business?
Check out this story, which ran yesterday - the same day as the Washington Post story. A little perspective on Wal-Mart's effect on local businesses and communities.
http://www.redding.com/news/2008/jun/23/john-wade-fought-the-wal-mart-and-the-wal-mart/
Buzz: John Wade fought the Wal-Mart and the Wal-Mart won [Redding Record Searchlight]:
They told John Wade you can’t fight Wal-Mart.
Wade, longtime owner of Ben Franklin Variety in Anderson, wouldn’t listen.
“They said close your store right now and don’t even try to fight them. I thought I’d duke it out with them,” the 80-year-old Wade said last week.
Wade was a member of the Anderson First Coalition, a group of residents who fought Wal-Mart’s plans to build a Supercenter in their city. The group lost and Wal-Mart opened its Supercenter in June 2006.
Unfortunately, Wade was no match for the world’s largest retailer. After 27 years, he will close his East Street store. His last day of business depends on when he can liquidate all his stock.
The building has been a store since the 1950s. Wade was in wholesale pharmaceutical sales before he got into retail.
“The day Wal-Mart opened, our business dropped and never came back — that’s been two years,” Wade said. “They have the same thing we do, and they have more of it and sell it for less.”
Wade has no regrets, saying he got healthy working retail.
“All we have to do now is find a job for our two employees,” Wade said.
for more info, check out:
www.walmartwatch.com
Wal-Mart
I am a Mentor Capitalist with 15 plus experience in start ups and turn a rounds. Over the years I have experienced first hand when ever large corporations like Wal-Mart, Costco and Home Depot come into a neighborhood it always has hurts the small business. Most of the time it hurts mom and pop so much they are forced out of business.
Wal-Mart's Impact on Small Businesses
The Post reporter interviewed the owner of a mall with an exotic pet store, a pancake restaurant, and a bank. Of course that mall felt no impact---it does not sell products that compete with Wal-Mart. I have also found in 15 years of talking with merchants, that they will NEVER tell reporters how their bottom line is doing, until the draw the shutters and close. The Post reporter told me this story was "local story only" but articles like this one show the danger of extrapolating from two or three ancedotal reports. It takes at least 2 to 3 years to see merchant impact. One study from Retail Forward in Ohio said two groceries will close for every one superstore that opens. Tom Mueller's studies in Iowa, as well as Ken Stone's, showed significant business losses. For proof, look at the change in market share that has taken place in the grocery chain store marketplace. Wal-Mart is the largest grocer now in America, taking share from Kroger, Albertson's and others. At the local level, the small merchants goes quietly out of business, while the IHOP and exotic pet store sees nothing harmful at all. The Post story was really just based on a couple of mall owners and merchants who have no idea what is going on in the larger community. Whether its independent book stores, or hardware stores, the independents have been hard hit by superstore chains. To suggest the Wal-Mart helps these competitors is like saying the rooster is responsible for the sunrise. See my story about Anderson, CA on the Newsflash page at www.sprawl-busters.com.
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