[klaatumail] Re: Fwd: Re: Fwd: Fw: How Big is Walmart?
- From: Edward Martin III <edwardmartiniii@xxxxxxxxx>
- To: klaatumail@xxxxxxxxxxxxx
- Date: Fri, 29 Apr 2011 14:38:10 -0700
Okay, I sniffed around more deeply. Found this study (which,
admittedly, is somewhat informal):
cite: http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3033
To summarize their findings, it appears a Wal-Mart has either very
little or imperceptible effect on the economy of a region.
Which I found fascinating.
Does that mean they are a BAD neighbor, blasting away at Mom & Pop
shops? Nnnnno, not necessarily, and I was wrong about that. Does
that mean they are a GOOD neighbor, raining down wonderful jobs and
traffic to a desperate economy? Nnnnno, not necessarily, and that is
an incorrect characterization as well.
Net effect, based on the criteria and findings in this doc, are
actually pretty interesting, and I find myself agreeing with their
conclusion, based on the evidence offered.
Now, THAT said...
Economy's a tricky subject...
Regarding Mom & Pop stores:
I think if you're going to toss out a shingle and call yourself a
store, you must pay attention to what your competitors are doing. Me,
or David, or Jaimie, or Joe Bob Briggs can pretty much shop ANYWHERE
now, so if you want to sell me the latest cut of 3:47 EST, then you
MUST recognize that I can order it for x+shipping on Amazon.com. If
you price over that market, you can't bitch about losing sales to
Amazon.com without looking petulant (I've had this lesson driven home
to me very forcefully, recently, I'm embarrassed to admit).
As Marc pointed out, people shop for a VARIETY of reasons. For
example, I like to have a pleasant chatty relationship with the guy
running my local record store, and that's part of my transactional
value. If that guy turns into a jerk, then I lose that value by
shopping there, and I'll likely go somewhere else.
I also like shopping locally when the proprietor shows me that they
have a good set of brains about the product. A shopkeeper telling me
how the audio mastering of 3:47 EST is tremendously better than Peaks
is more likely to earn my loyalty -- which has value to me.
A Mom & Pop store that ignores all those OTHER reasons for choosing
them, well, maybe they DESERVE to die out, y'know...?
Wal-Mart employees offer absolutely no value to me in this respect.
When I shop there, I already know what I want, and I'd be stupid to
ask for advice or help.
Regarding zoning:
A lot of local businesses (not all, but I've seen it enough in person
to describe it functionally as "a lot") act a bit like "big frogs in
little ponds." That, combined with the (apparently unsupported)
notion that Wal-Mart drives out little businesses, naturally suggests
that people who own such businesses are going to be a little...
defensive about it.
As such, it makes sense that they'll try to use existing laws and
legal structures to block Wal-Mart. Whether it's "right" or "wrong"
is academic -- it's the tool to which they have access, therefore it's
the tool they'll use.
In the examples above, that tool happened to manifest as "well, you
can't build it here because there's no infrastructure."
This is bad planning, however, and reflective of not understanding how
one's competitor works.
While a 30 million dollar price tag for infrastructure development
would cripple a local business, to Wal-Mart, it's simply one of the
many prices of doing business. As a callback to my example, if
someone triumphantly told me I couldn't set up my home business unless
I paid the $12 Home Business Tax, I would simply pay it. No big deal
to me.
Regarding undercutting suppliers:
Yep, in order to keep prices low, Wal-Mart must purchase even lower
than a typical retailer. The thing they can offer suppliers is
Serious Market Penetration. Hard to beat that deal -- assuming you
(as the supplier) are okay with the margins.
For example, if Wal-Mart wanted to pick up one of our products, I'd be
happy with a MUCH smaller margin, because I know I'd move a MILLION
units, instead of a few hundred.
Some suppliers are okay with that and some aren't -- and that's fine.
Hm.
This has been some neat brain-grist, all based on a goofy freak-out
list initially posted. Learned quite a few things I didn't learn
before!
Thanks!
Cheers,
Edward
(who mostly just listens in on the conversation and has for a few
years, but just seemingly got bit by the Chatty Kathy bug this
morning)
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