Monday, August 28, 2006

Wal-Mart

Most people either hate or love Wal-Mart.

You hate it because it comes in and 'destroys' the local stores, the so-called 'mom & pop' shops. You hate it because it sells cheap crap made in China. You hate it because it pays minimum wages. You hate it because it is anti-union. You hate it because of the type of 'people' that shop their. You hate it because the aisles are crowded and the store is dirty. You hate just because.

You love it because it offers a real choice - aka competition - to the local stores. You love it because it sells goods at affordable prices. You love it because it offers you a decent paying wage. You love it because you don't have to pay union dues. You love it because your friends shop their. You love it just because.

When you are number one, it is only human nature that people attack you whenever possible. The classic argument against Wal-Mart is that it 'undercuts' local shops, 'forcing' them to close and somehow 'destroying' the local community. I guess that is one way to look at it - if you hate Wal-Mart. But there is another way to look at it.

Most local shops get their goods from a handful of national wholesalers. The wholesale prices should not be that much higher than Wal-Mart's. But the local shops have an initial edge - the nearest big-box competition may be 1 to 2 hours away. Not too many people are going to travel 1 to 2 hours to get their everyday or even monthly needs. Based on that edge, the local shops charge more for their goods, increasing their profit. So when people say that Wal-mart is undercutting local shops, what they are really saying is that the local shops have lost the edge to charge more or rip-off the local consumer.

Any shop that closes within, say three to six months of a big box retailer opening, was already on the verge of closing down before the big box retailer came into town. They may have been charging too much for their goods, the range of goods carried may have been too narrow or the store was behind the times. Many of these 'mom & pop' shops - as those opposed to Wal-Mart always call them - thrived because they had a virtual monopoly, not because they provided exceptional service.

I keep reading about communities who are 'fighting back' against Wal-Mart. Oddly enough, these same communities have no problem allowing other big-box retailers into their communities. Do the people in these communities really believe that these other retailers have no desire to undercut the local shops? Target in the US and Canadian Tire in Canada are just as 'ruthless' when it comes to offering goods at competitive prices. Why are these people opposed to allowing people on fixed or low incomes being able to buy more with their limited income?