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Is mega-discounting good?

A recent article in the Christian Science Monitor's Ethical Investing section asks the question "Who benefits from rock-bottom pricing?"

Discount retailers are known to pay low wages and force local shops to close. But, they give people with limited means access to a broad range of products at low prices. On balance, are they good or bad for society?

The article points out that it's not easy to answer this question, saying that, "discount retail is a complex business with more winners, losers, and tough ethical tradeoffs than public debate routinely acknowledges." Although many workers and entrepreneurs are worse off, a much larger number of consumers are better off. What do you think?

Steve Yastrow posted this on 06/05/05.

Comments

http://www.huffingtonpost.com/theblog/archive/john-dicker/were-all-walmarts-bitc_2144.html

Posted by Steven J. Ackerman at June 5, 2005 3:52 PM


Good troll question...

Here's how I see it:
------------------------------------------------
A.1 Choice is good.
A.2 Freedom is good.
A.3 Being able to afford things I need is good.

B.1 Unethical behavior is bad.
B.2 Power used to gain unfair advantage on purpose is bad.

C.1 Thinking you have a right to a market without competition is wrong (for those complaining about Wal-Mart's incursion into their space).
------------------------------------------

In this debate, I always want to try to separate how any one company acts with how they could act. If it is impossible for a mega-discounter to operate without resorting to the B's, then mega-discounters are unequivocally bad.

I believe that it is possible to operate as a mega-discounter ethically, including using the value-chain power (that you must accumulate to get your costs down) ethically.

That is, however, only my belief. I suspect there are those out there who believe any use of power in negotiations is unethical...

Posted by Rockster at June 5, 2005 5:57 PM


The last time I looked under a rock...at its bottom...the complex things were not very pretty. Low prices are addictive too. Yummy.

Posted by Wendy at June 5, 2005 7:34 PM


I read an article a few months ago (we may have even discussed it here ...) that said how Wal-Marts low prices were actually better for their customers than for their shareholders. That's an interesting angle.

Posted by Steve Yastrow at June 5, 2005 9:12 PM


First time on your blog through Rashmi Bansal's blog!!..Nice to meet you..

Posted by Gangadhar Ambati at June 5, 2005 11:45 PM


There was an interesting news item on Radio 4 (UK) this morning about towns in the US blocking chain stores and whether this will happen in the UK. The main reason is that every town now looks like another. People (presumably the well off!) are now being drawn to towns with soul and individuality - Is this the start of a major backlash?

Curious about your comments Rockster. Especially choice. Does big give you more choice? In my experience more line items is not more choice. It's like the influx of multi channel TV - I would prefer 4-5 channels of high quiality than 100s of channels of rubbish. One of the critisms of walmart and their ilk is that they are actually large enough to be able to censor films and CDs (i.e. don't conform to our moral views and you don't get self space) When a retailer starts impacting the creativity of bands and film makers thats when I start to worry.

Posted by PaulH at June 6, 2005 2:14 AM


"..While the national poverty rate dropped 2.4 percent between 1990 and 2000, the rate fell by just 0.2 percent on average in counties that added a Wal-Mart."

Well, that study is insufficient to draw conclusions and could be interpreted in many ways..
1. Although the 2.4 percent refers to the national average, the difference between the poverty rate of the counties under study (before adding a Wal-Mart) to the 0.2 percent (after adding a Wal-Mart) is the only parameter that would help to understand the impact of Wal-Mart on the community as far as poverty goes.

2. It could also be argued that Wal-Mart opened stores in counties where there was high poverty rates and thus, increased the purchasing power of those customers already in poverty. Thus, Wal-Mart didn't necessarily have anything to do with poverty rates - neither increase nor decrease. That is a possible scenario too.

The Berkeley study makes a clearer observation by considering just Wal-Mart employees and their cost to the state of California. Maybe a tax structure based on the corporation's liability towards the employees' health costs (vis-a-vis the state) would be a good starting point.

Although it is not wise to conclude without insufficient information, I would strongly go against any means by the government or any authority to control the 'mega-discounting' schemes by big corporations. It would just make things worse for the low-income customers given the changing global economy.

Posted by Hesh at June 6, 2005 2:21 AM


Just curious. Does anybody here have an alternative to Wal-Mart?
It is never about the people who can afford because they can afford anyways. It is about the people who primarily care about low prices, much less the other factors. I would assume the rich constitute a lesser number in a town (where Wal-Mart plans to setup shop) which makes me think it is never a major backlash..
Paul - I would rather sense a backlash when Wal-Mart has a selective product policy, as people are smart enough to find other avenues to shop. It would be nice to know what the reaction of customers has been in any particular case of selective product policy among a major chain that you might know?

Posted by Hesh at June 6, 2005 2:36 AM


Hi Tom,

A question unrelated to this entry in particular, but to the feed as a whole. ;)

I just discovered this blog and I'm amazed by all I see here. I tried to subscribe to the RSS feed, but my Thunderbird RSS Subscription Manager says the feed is not valid.

Could you please do something about it?

Thank you,
Olga.
P.S. I'd normally send it through Contact Us, but you require so many fields there... ;)

Posted by Olga Farber Becker at June 6, 2005 4:51 AM


like every designer - and as a man of class and style - i can only say: Hail, hail to the likes of Wal-mart, H&M, Aldi, IKEA, DECATHLON. You are the rightful heirs to the thrown of Walter Gropius, Le Corbusier and Mies van der Rohe!

honestly, discounters first of all deserve every respect for tuning the conventional model of a company. optimizing the processes with focus on the output!!!!! – not primarily on the company profit (or shareholder value). - (if you want to learn designer thinking, start with studying the process model of the discounters).
this is also what TP says when he quotes steve jobs: design is not a veneer!
and this is so smart, so sexy and transparent, that everybody can understand it.

back to basics: quality and price. and for CHOICE… two thoughts: personally i find it extremely refreshing to shop at discounters. i do not need a wider range of toilet paper or detergent than they offer. how deliberating not to stand in front of the conventional 500m supermarket shelf filled with 5.000 brands and sub-brands and having to think: … wait a minute, which was the floor-cleaner that goes with my star-sign….?....
and with other products, shaving cream and fruit for example, i shop where they have a wider range. (but that is my personal profile)

ethical questions… i am not too familiar with wal-mart. but if they have got a problem there, they have to integrate more aspects of the “system” they are dealing with - and that they are responsible for - into their value-chain definition. like IKEA for example, or like the traditional swiss MIGROS (an early stage discounter if one wants to say so).

aesthetical question… monotony kills beauty! every time!
to me there is no difference between discounters, conventional malls and high street boutiques. same thing. a shopping culture that is only built on one of these archetypes is sad, dead and dull.
that to my concern holds as much for matters of urban planning as it holds for individual choice.
somebody who only buys in discounters is just as limited as somebody who only buys at cartier and channel or as somebody who thinks that the second hand lifestyle promises a warehouse or mall has got to offer are just enough to lead a funny life.
monotony kills beauty! every time!
and also on the lower end of budgets you can always find room for diversity and creativity.

Posted by jens at June 6, 2005 5:29 AM


har, har... i think i wanted to write: "throne"
so much for class and style...
:)

Posted by jens at June 6, 2005 5:51 AM


Variety is the spice of life - I agree Jens.

I remember a time when I would go in paint shops over here in the UK and the choice of paint colours was fairly limited - magnolia or magnolia he says cynically.

Now it seems to me there are shades of shades ... god knows how many colours I can choose from to emulsion my wall.

My question is ... who the hell really knows and can really appreciate the subtle difference between shades? ...and does it really matter anyway? ... but then this is just me ... ooops!! and the fact that I have a red/green colour blindness may skew my comments :-)

Every person should have the choice to shop where they want.

I pick and choose. For me, the toilet paper just needs to be soft - being pretty to look at is not the highest priority for that. After all the close up view of that stuff does not come from my eyes :-)

Cheap does not necessarily mean bad in my view - some of the economy 'own brand' fruit juices I buy from Tesco or Sainsbury’s are just as good in my opinion as Del Monte and probably one quarter of the price.

It is 'swings and roundabouts' of course - my dad always said you get what you pay for - he was probably right.

Posted by Trevor Gay at June 6, 2005 5:57 AM


Its nothing to do with the ethics here. Its very simple " its Economy Of Scale", it do really affects the SME's and SOHO's who operate out of a particular locality. Just an example from the Indian Market: A giant store was about to get open and the objections from the local vendors were there, but at the end of the day the store got open (METRO cash and Carry) since Metro has a capacity to buy in bulk they can afford to sell it at lesser price and more over they have goods which are probably out dated ( Consumer Durables ) not sure on FMCG products. So the logic is irrespective of how big or how small you are, its the ECONOMIES OF SCALE which matters. Some times even the small players beat the larger ones due to lower over heads and they try to compete with the larger ones by keeping their margins at a minimal.

Regards
Kiran Jain

Posted by Kiran at June 6, 2005 6:32 AM


THE STORY THAT OCCURS TO ME: Say you just bought a 2nd home in Santa Fe, USA - and now you find you can completely furnish it [plus all new electronics, TVs-CD-DVD-Laptop[s] - all for $20,000 due to the BIG BOX EFFECT of Costco, Wal$Mart, Best Buy, Amazon, et. al. $50K to do it not that long ago.

BIG BOX SAVINGS IS ENORMOUS - and there is no turning back baby.

One of Dr. Tom's Cool Friends' interviews makes the same points - people are AFFLUENT like never before:

Michael Silverstein
Coauthor with Neil Fiske of Trading Up: The New American Luxury

Posted by Sean at June 6, 2005 7:47 AM


olga, here's the feed address:
http://www.tompeters.com/rss.php

Posted by Erik Hansen at June 6, 2005 8:46 AM


For me, it's elementary, my dear Watson:

Neither small local stores nor Wal-Mart hire more people than the number of customers who shop there. And the locals don't pay that much more in hourly wages than Wal-Mart. So the employment picture wouldn't change much, concerning how many people are working or how much (little) they're being paid.

A lot of customers want good value for their money; getting a good product without paying too much for it. And Wal-Mart, as we know, tries to price its goodies below what anyone else is charging. If people didn't like that, they'd shop somewhere else - and many do, because they look down their snobbed-up nose at Wal-Mart. But for those who do, they now have more disposable income to do whatever they want to do. Therefore, it ends up being good for their communities.

Besides, how many people who protest Wal-Mart would shop at Wal-Mart if it was in their area, if they know they can get what they need for lower than at their favorite stores? I know there are some who wouldn't, but it's just a thought.

A side note: I live in the suburbs of Everybody's Favorite City, the population of my area is roughly 260,000. I dated, and married (11 months ago!), someone from a Texas town of 12,000. Both areas have Wal-Marts, the one in my suburb is much larger. I haven't seen any stores go out of business in my area since Wal-Mart opened. The closest competition Wal-Mart has is Tarjay (okay, TARGET), and it's still busy. And in the Texas town, I saw many mom-and-pop stores open, too. Methinks the advent of the freeway put more stores out of business than the advent of Wal-Mart, but I wasn't around in the `50s and `60s to know first-hand.

Posted by Ron at June 6, 2005 8:55 AM


What about the money spent at Walmart etc. This doesn't stay in the community! A local entrepreneur isn’t doing well out of Walmart and putting that money back into the same place.

Should everything come down to economics? – surely we should also consider whether a community has a soul.

Posted by PaulH at June 6, 2005 10:47 AM


I agree with the soulful response - yes community matters - however, there are so few "communities" out there any longer to be loyal to.

STORY ON THAT: I lived in the incredible sprawl of the D.C. metro area for 2.5 years and all the dry cleaners had the same [high] pricing schedule [and they all happened to be Korean [American] owned/operated]. $5 per pair of pants for example.

Anyway, as soon as the "$1.75 Dry Cleaner" giant stores opened [$1.75 cash up front/garment] - I was there baby - can't identify with the Korean "community" or latin or [your preference here] - there really IS ALMOST NO "COMMUNITY" LEFT OUT THERE - we are a world-community perhaps - loyal to what? I'm loyal to Wal*Mart, Nordstrom, Costco, Nike, Oakley, Lexus, et. al for some reason - mainly perceived/real -- quality/value.

Posted by Sean at June 6, 2005 11:12 AM


Interesting how any discussion such as this automatically goes right to Wal-Mart - good, bad, evil? Wal-mart's ethics re low cost would never come into the discussion if they weren't the 1000 lb. gorilla. Their impact - good or ill - on trade, local economies and their vendors (and by extension the consumer market...and by further extension Wall Street...) is so tremendous it skews everything. I could go all day about Wal-Mart...but here's just one response - to an earlier comment re Wal-mart provides the same number of jobs as the local employer. In reality, there are well-documented net job losses - when you take into consideration the total value chain - suppliers, service providers, etc. Every $ spent at Wal-Mart is going mostly out of your community.

Posted by Mary Schmidt at June 6, 2005 1:55 PM


Good discussion...

When I talk about choice, it is plain & simple: I'd rather decide for myself whether I go to Wal-Mart, K-Mart, Peavy Mart, or any Mart. I can make my own price/quality tradeoffs, thanks. If you'd rather have one good quality place to shop instead of 50 different choices... good for you... that's your choice!

Second, is it the mega-discounter that killed the local economy or the consumers that flock there in droves, "abandoning their neighbors?" Do you blame them for trying to save money?

Third, if you can't compete with a mega-discounter on cost, you should be able to compete on some other dimension. If not, well... what could we going to do about that (assuming all the while that the mega-discounter is an ethical operator) that wouldn't take us down a corporate welfare/protectionist road?

Fourth, my guess is that a lot of the bad associated with mega-discounting is transitory effects that speak more to our ability or inability to change. When low skill jobs are lost, it is VERY difficult for the system to adjust. And this takes us down the road of education systems, lifelong learning, even rates of saving/investing and maybe even into the ability of your health system to promote wellness. In other words: the big, bad mega-discounter takes the blame for weak policy that leads to weak foundational systems.

Posted by Rockster at June 6, 2005 4:31 PM


I want to return to the community aspect. I mentioned communities lacking soul. This is not just a "nice to have" but is raw economics too. It is starting to become apparent thet affluent people are attracted to communities with soul. So towns need to start making more sophisticated economic decisions about who they allow to trade there. Yes a big mart drives down prices and that is great but if the impact of this is that affluent people move out of the area are you actually better off? This question is way more complex than "cheap local prices is a good thing"

Rockster - I appreciate that you want to choose for yourself but if a large retailer actually reduces choice what then? When you get pressure put on artists (DVDs CDs etc) to change their content because a studio is scared of Walmart then you don't get any choice. It doesn't actually matter if you choose not to chop there the choice has still gone. This is where the impact of a large retailer actually goes way beyond the purely economic cost and actually enters the social and political arena around censorship etc.

Posted by PaulH at June 7, 2005 2:38 AM


"SERVICE MANAGER TO REGISTER 12, PUH-LEASE!!! CAN I GET A SERVICE MANAGER, PUH-LEASE, TO REGISTER TUH-WELVE!"
-Customer Service Mantra at Wal-Mart

Having lived in a SMALL town where the Wal-Mart was practically the only store left to go to, I have to say that I got sick and tired of CHEAP!!

Examples:

1. Furniture and technology items with their own living will--planned obsolescence on steroids!*

2. Really peculiar SUFFIXES ON VENDOR PRODUCT NUMBERS** that don't appear on the same product in other stores.

3. Rollbacks--what the HELL are those. If you ever spent a year shopping only Wal-Mart you'd quickly notice that "RollBacks" are always the same price from two weeks before with a new price hike featured under the "WAS" heading?

4. Cheap service - I have never ever been able to find that friendly Wal-mart Associate from the commercial***.

I'm not asking for some kind of local-flavor-soul. Although that does sound nice. I just want a straight deal.

Look, sometimes Wal-mart finds some great deals and passes on the savings. And sometimes Wal-mart is a lousy rip-off artist that sells lousy JUNK!!

------------------------------------------
But Always Low Prices! ALWAYS!!!
------------------------------------------
Yech.

*Maybe it's because I was in college and a little hard on my stuff, but no Wal-Mart furniture ever lasted me two semesters in tact.

**Look closer when those sale items are 10-15% cheaper than anywhere else. For instance, I remember how products like the HP 1210 all-in-one were always $10 cheaper at WMart, but then you look and its actually the 1210x,y, or z. Try calling the manufacturer and asking what the difference is. Usual answer: "This is a special packaging for a specific retailer only"--meaning sometimes lower performance specs and sometimes even lower quality specs.

***I remember once standing in a return line corral for 45 minutes (15 month old twins in tow). The first half-hour I watched associate after associate walk by and eye the line and do nothing. Finally, when it overflowed into a high-traffic aisle, my very antsy twins now screaming, THEN someone else came over.

Posted by Jason Kerr at June 7, 2005 3:12 AM


If Wal-Mart reduces choice, censors, sells junk... why do people shop there? Are they stupid?

Should we appoint a panel of wise people to select the goods that we are allowed to buy?

I'm not disagreeing that there are potential negative effects to mega-discounters. I do disagree that regulation of any kind is the solution.

The solution is found in: investing in education, health, the arts, etc. so that the entire system is more robust.

Posted by Rockster at June 7, 2005 7:59 AM


It's a conspiracy, I tell you! Wal-Mart is trying to destroy America! They're trying to kill the small towns! They're trying to tell the manufacturers what to make! They don't care about people, they care only about money money money! I bet Sam Walton was even (gasp) a REPUBLICAN!

Yeah, right.

Look, if you're incensed about the way Wal-Mart does business, then shop at their competitors to keep your money away from them, write to their management to voice your concerns, even picket them. But don't try to regulate them out of town. Because that would be an Orwellian nightmare come to life, and it won't stop at Wal-Mart. Let US decide what kind of soul we want in our communities, not politicians and bureaucrats.

Posted by Ron at June 7, 2005 10:06 AM


Interesting responses - Don't regulate them. But that is exactly what Walmart are doing to you! They are regulating what you can buy (and not only in Walmart!)

Rockster - I take your point if they reduce choice why shop there? the point is that it's not just the choice in their stores it's every store. If Walmart says that CD does not go out with those lyrics it doesn't matter which shop you buy it at you won't get those lyrics.

When does an organisation get too powerful? Should we stop all regulation? What about Microsoft? Stop all anti trust proceedings?

Posted by PaulH at June 7, 2005 11:27 AM


Rockster, I don't think you get it.

brand viagra echeck I had to drive to the next town a half hour away to go somewhere else for most needs. For some things, I had to go two or three towns over to avoid Wal-Mart.

Believe me, I tried!

Now I live in So-Cal. I don't even have to see a Wal-Mart if I don't want to. Believe me I don't.

Posted by Jason Kerr at June 7, 2005 1:56 PM


Two Wal*Mart effects no one has raised yet.

1) By paying low and by hiring a lot of part-time just under the floor for benefits, Wal*Mart's compensation structure puts a significant # of their workers on food stamps and other "poverty" programs. Meaning Wal are getting the gummint to subsizdize them. Since Wal are already, in many cases, getting variances, tax easements and other indirect subsidies to locate in localities, they are heavily subsidized by taxpayers. The argument that local capitalist stores might pay the same low wages is a good one, with the caveat though that entrepreneurs have no political clout and that The Unseen Hand works at that level to leave them with fewer staff choices if they persist. Since Wal*Mart decimates entrepreneurial, capitalist retail, people whose career choice is retail have fewer choices and less leverage. If choice is good as a consumer, why is choice not good for hiring organisations or prospective staffers?

2) Wal*Mart squeezes entreprenuerial capitalists who produce goods that flow through retail (that is, Wal*Mart's suppliers). Dunno if you already know their payment model, but it's very very brutal, anti-business (in many cases you give them product on consignment -- that's "for free" -- and they pay you net-something where that's calculated only after the actual sale of the item). Their business model is essentially not retail any more. And last time I checked, very high fixed price of entry into their channel -- making it harder for smaller choices to get stocked, reducing choice.

Again, in a world with choice, capitalist manufacturers and distributors could bypass Wal*Mart, the Commissars of cheap Communist Chinese chatchkas, but with capitalist retailers decimated by big box stores, their choices are decimated, their freedom to operate in their own enlightened self-interest is decimated That undermines capitalism.

Is it better for our economy to have 100 manufacturers make an extra $Million each, or for Wal*Mart to make an extra $100 Million? From a capitalist point of view, the former seems slightly more productive/creative though it may be a wash. But there's certainly no overall benefit to Wal*Mart getting all of it. It just undermines businesspeople, reduces choice and saps economic viability.

Posted by jeff angus at June 7, 2005 3:28 PM


Decades ago I bought a baseball glove at Wal*Mart in the backwoods of Texas. Hadn't even heard of the place. But with those prices, they clearly benefitted the poor in the area.

So, Wal*Mart helps the poor, who labor away at jobs that are the primary targets for outsourcing. They support the company most likely to outsource their job.

The ones who need it the most are the same people who are hurt by it the most.

Anyone see an irony here?

Mind you, I'm pro-outsourcing/offshoring. But isn't there a better way to help the poor without hurting the poor?

Posted by Mark Winburn at June 7, 2005 8:42 PM


(Jason)
"I had to drive to the next town a half hour away to go somewhere else for most needs. For some things, I had to go two or three towns over to avoid Wal-Mart."

In this case, I would assume you fall under the few people who want to avoid a Wal-Mart. If most people cannot meet 'most needs' by shopping at Wal-Mart, I would suppose Wal-Mart to be a flopshow in your town or the two towns close to yours. But that would surely not be the case as you would have lots of people in the community shopping out there. Wouldn't it be practical to have a good number of loyal customers to run a certain business? Maybe your town is just not the place for such businesses. It is like complaining about not having a D&G store in a small town in Arkansas. That just doesn't sound practical from a business point of view.

(Jason)
"Now I live in So-Cal. I don't even have to see a Wal-Mart if I don't want to. Believe me I don't."

Now considering your So-Cal community, it doesn't have the customers for Wal-Mart to be profitable (or rather more 'customers with more choice' for non Wal-Mart goods) and the smaller businesses there recognize the same. Hence, they are able to cater to the 'customers with more choice'.

I live in NY and there is a growing trend among New Yorkers to avoid the Starbucks and the chain stores. Thats the reason you have choice in picking your coffee shop or restaurant or cloth stores. Customers in smaller towns are just not ready to let go the McDonalds and Burger Kings. That doesn't make the corporations the bad ones.

(Jeff)
From what you are saying, if Wal-Mart doesn't exist or is in less numbers, we would have a bunch of creative entreprenuers offering a lot more choice for the customers. And wouldn't the case of 'low prices' come up then for people whose affordability level is low? Thinking otherwise, I do not see a dearth for creativity due to the presence of Wal-Mart, but rather a motivation to cater to the 'customers with more choice' - like the So-Cal community Jason refers to or the NY coffee houses or Firefox web browser or Linux.

Posted by Paradox Valley at June 8, 2005 12:03 AM


Paradox - IMHO, part of the reason for the dearth of Wal-Marts in SoCal is that it is completely built out. Unless you go to the outer areas of Lancaster or San Bernardino, all of the huge tracts of available land were developed 30+ years ago. Wal-Mart demands several acres for their one-story behemoths and Disneyland-sized parking lots, and it just ain't available anywhere down there. Which is good news for Jason, I'm sure.

Although I'm sure there are people in the entertainment industry who would love to raze the Disney studios because of their labor practices, and put a Wal-Mart there just for spite.

Posted by Ron at June 8, 2005 10:35 AM


Ron - Good point. I was recently in the midst of a debate on the sucess of Wal-Mart in India (which is planning to open its retail market to FDI) where there is a lack of HUGE real-estate tracts in major cities or its proximity unlike in the US where Wal-Mart acquired real-estate and established itself back in the days.

Coming back to the discussion, I would also assume that there is a lot of cheaper real estate in the 'town' example that Jason mentions but there still aren't stores to offer what he needs (unlike the mom-n-pop stores in the smaller town in Texas you mentioned earlier). It makes me think that the fundamental question here is 'still' the CUSTOMERS! It would be nice to hear your comment on this.

Posted by Paradox Valley at June 8, 2005 12:59 PM


My story: I need widgets of various kinds. I go to Store A to get Widget X. I go to Store B to get Widget Y. I go to Store C to get Widget Z. There is a Wal-Mart, but it's not very close and in an area I almost never go anyway. A few years ago, Wal-Mart opens a few miles down the freeway, in a space vacated by Costco. They cell Widgets X, Y, and Z, at slightly lower prices than at Stores A, B, and C. I'm low on money at the time, so this is attractive. I also need this, that, and the other, and Wal-Mart carries them. So I end up buying Widgets X, Y, and Z, and this, that, and the other. And after I buy my BMW, I continue to shop at Wal-Mart because of the convenience, selection, and prices.

I'm not saying that Wal-Mart is for everyone, nor that they should try to be. If the customers didn't think or feel that they were benefitting from Wal-Mart, they'd shop somewhere else. Indeed, Wal-Mart doesn't have everything (for example, Widget W), and no one is prohibited from shopping at the stores that would sell Widget W. But there are literally a million potential Wal-Mart customers in Los Angeles, and - irony of ironies - their real estate practices prevent them from locating there! Target isn't tied to Wal-Mart's building module - the San Fernando Valley has a 3-story Target with a multi-story parking garage connected to it - so they're exploiting this weakness of Wal-Mart.

But . . . Metro LA has a large minority of people who speak English as a second language, or no English at all. Wal-Mart doesn't really cater to other cultures besides the white-bread middle and lower classes. So would the store be a success there, even if they found the land? It's worth pondering.

Another negative that's even bigger, in the large town five miles outside my in-laws' town of 12,000. Wal-Mart HAD a store on the US 69 frontage road. Then they opened a larger store . . . and vacated the one on US 69. The old store couldn't be leased out, so it was an eyesore for a long time, until it was finally torn down. Thank you, Wal-Mart.

Posted by Ron at June 8, 2005 3:30 PM



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