By Kung
After I read several articles about Wal-Mart, I found that most articles often prohibit it or mention it negatively, while I think that Wal-Mart business is not terrible at all. According to the article by Wikipedia, (2006, par. 3), "A 2005 study by Global Insight, the world's largest economics organization, that was commissioned by Wal-Mart found that the company has had a positive net economic impact on the U.S. economy. From 1985-2004, Wal-Mart ‘can be associated with a cumulative decline of 9.1% in food-at-home prices, a 4.2% decline in commodities (goods) prices, and a 3.1% decline in overall consumer prices’ and, that this has saved consumers $263 billion in that time frame ($ 2,329 per household). Also in that time period, it is responsible for the creation of 210,000 net jobs for the economy. The study indicates that ‘nominal wages are 2.2% lower, but given that consumer prices are 3.1% lower, real disposable income is 0.9% higher than it would have been in a world without Wal-Mart’”. To be exact, Wal-Mart is very important to the macro-economic system. In other words, Wal-Mart is becoming the U.S.' s representative by making trade internationally, because at the present, Wal-Mart is expanding its business out of the country, to Canada, the United Kingdom, China, South Korea, and so on. So we try imagining that if the U.S. had not had Wal-Mart, the U.S. would have not been able to compete in trade with other countries. In Wal-Mart’s international investment sector, it helps the U.S.’s economy fare better. Then it is pretty good, if the U.S. has trade leaders such as Wal-Mart. Besides, I think that Wal-Mart is one of the U.S. trade leaders. However, Wal-Mart is the biggest discount retail department store in the U.S.A. and in the world (Wikipedia, 2006). and is considered to be one of the big box stores. Wal-Mart is full of diverse merchandise, such as grocery goods, medicines, electronic goods, and so on. It is stated that Wal-Mart emphasizes selling a full line of both grocery products and non-grocery products like general supercenters (Wikipedia, 2006). The many causes of the conflict between Wal-Mart and small businesses come from its marketing and pricing strategies. Its pricing strategy is that offering cheaper product prices than local shops. Then, it results in small businesses in many areas were closed, because they could not compete in pricing strategy with a big box store like Wal-Mart. In the marketing strategy section, Wal-Mart wants to distribute merchandise and to spread its customer base to raise profitability. As a result, it wants to expand its business to small towns. According to the article by DollarDays International, after DollarDays International surveyed about the effect of opening Wal-Mart in local area, it showed that small retail owners are still concerned and likely to forbid locating Wal-Mart in a community, because they think that whenever Wal-Mart sets up in their city, their business will get affected immediately. Likewise, Aligail Goldman stated in her article about the concerns of small businesses in Inglewood that Wal-Mart has faced numerous battles from local small businesses (Goldman, 2006). Then the expansion of Wal-Mart around the U.S. and abroad results in small businesses to banning it more and more.
I became interested in the Wal-Mart prohibition problem in several local areas, because I think that Wal-Mart helps to increase the U.S. economy’s overall productivity, consumer purchasing power, and employment rate. I am considering the nation’s public benefit, and customers, who are most people. In my attention, I would like both Wal-Mart and small businesses to be able to do business smoothly or have the fewest problems, because both of them are a part of the economic system. If both of them can make business without a problem, it may make the G.D.P. of the U.S. better than in the present. Finally, a big box store, Wal-Mart, should carefully think about the business expansive policies that do not affect local small businesses.
Wal-Mart should use seven strategies to resolve the conflict between Wal-Mart and small businesses.
First of all, this should be done to be the first activity that Wal-Mart needs to do in order to create a great attitude among the public. That is the public relations in a community on television, radio, advertising and web site about activities that are useful to the society and communities; however, actually, I know that at present, Wal-Mart has been doing these. According to the article by Wikipedia, in 2004, Wal-Mart donated more than US$ 170 million to non-profit organizations. In 2005 Wal-Mart donated $2 million to the Salvation Army and the American Red Cross, and $15 million to the Bush-Clinton Hurricane Katrina Fund (2005). But I think that these were still very little, when I compare with a net income of US $10.3 billion in 2005. It can be summarized that Wal-Mart just donated approximately 0.17% of its net income in 2005. I would like Wal-Mart to help the local government to create the necessary infrastructure to a community more such as building roads, donating garbage trucks, and school buses. In building roads and donating garbage trucks, I would like people in communities to feel that Wal-Mart regards the welfare of people in the community and in donating school buses, I would like parents to feel that Wal-Mart regards the welfare of their children. Besides, in my reason, I would like local people to feel good about Wal-Mart. I do not want to people to feel that Wal-Mart is only the receiver from selling its products. If Wal-Mart can give good things to communities, there is a greater chance that people won’t ban it. Another example about creating relationship between Wal-Mart and businesses is that both Wal-Mart and businesses should have the campaign to help the society together in order to create a good relationship with each other. An example of this campaign is that both of them may cooperate to give scholarships to students in communities. It helps to create a good relationship among Wal-Mart, small businesses and local people. Besides, it helps to reduce the Wal-Mart banning campaigns of local people and small businesses. Whenever everyone feels good, it is easy for Wal-Mart to operate its business.
Second, Wal-Mart should cooperate with local small business to make business together. I think that it is difficult for Wal-Mart and local small businesses cooperate, because it conflicts people’s sense. However, in my opinion, both of them can work together, if the Chamber of Commerce in that area cooperates by functioning to be an agent to both of them in order that both local small businesses and customers do not want to ban Wal-Mart. As a result, both of them can get the high profit together. For example, they should advertise together in the period of time that is different in order to reduce the prohibition of local small businesses. In other words, local small businesses should feel that they do not have pressure from a big box. According to Mestas, two supermarkets, Rocky Ford and McClain's Super Market, were closed last year, because they could not sell merchandise, after Wal-Mart opened in La Junta Colorado (2005). This is a problem that has been found in other places in the U.S. and it causes Wal-Mart's prohibition. However if both of them could have cooperated, local small businesses such as Rocky Ford and McClain would not have closed their business. On the other hand, in this point of view, the government should not overlook them either, because it may be the cause of trade monopoly.
Third, Wal-Mart should target the characteristics of clear customer target groups. Wal-Mart should have different customer target from small businesses in order to reduce the prohibition problem. According to Gerson, "Many small-business owners have responded enthusiastically to the overtures, a striking contrast to a frequently heard criticism that if the retail giant enters New York it would be detrimental to commerce in the city" (1998, par. 2). Also, opening Wal-Mart in small towns results in competition with each other between Wal-Mart and local small businesses, because they have same customer target groups. Then if they can separate customer target groups, Wal-Mart will not be forbidden to enter by local small businesses. For instance, Wal-Mart may have a policy to emphasize the customer group which has a low salary, while local small business should emphasize a customer group who has a high salary and wants better goods quality. In addition it is easy to make the sale promotion, because Wal-Mart knows its customer target group certainly. I think that when both of them have different customer target groups, various problems do not occur.
Fourth, Wal-Mart should arrange different kinds of merchandise. The difference of merchandise helps customers be able to choose goods to follow their desire. As a result, both Wal-Mart and local small businesses can sell their merchandise. In other words, it helps to reduce competition with each other. According to an article "Worried about Wal-Mart plans for third supercenter brings protests" by Edgemon (2005), businesses that got affected much were food retailers, because they could not compete in goods price with the mega-retail store such as Wal-Mart. Then food retailers might have a high opportunity to be closed. However, if Wal-Mart arranges kinds of merchandise that are different from food retailers, this problem would not happen. In addition, food retail businesses would not be closed.
Fifth, Wal-Mart should do the research to know local people and local small business owner’s needs exactly. For example, in a survey, it may help Wal-Mart learn that local people want to have the Wal-Mart, but they want it to be small, because they want to conserve the culture of the community. Then Wal-Mart may set up its business in a small size that is not prohibited by a local people or local small businesses. According to the president of the New York Statewide Hispanic Chambers of Commerce, Frank Garcia, who has duties to take care these small businesses, claimed that Wal-Mart should not do its business in a community where he was taking care, because it affected small businesses and local people (Gerson, 1998). It means that it is not only small businesses but also other organizations that are involved with small business that wants to ban it. I think that the research is likely to help every group that is involved with War-Mart not to want its prohibition, because most research is made to discover the needs of people, particularly, people who are involved with that matter.
Sixth, Wal-Mart should adapt its size to be smaller. I found that most small businesses are concerned with its huge size, because its wide area can contain vast quantities of merchandise, while small business areas are smaller. Then most customers prefer to go to Wal-Mart. As a result, small businesses are closed. According to Sager, ".........And that's after Wal-Mart's been around for five years. Losing four small stores might be a big blow out in Palookaville, USA, but not in the big city, where competition constantly breeds winners and losers” (2005 para. 12). Then if Wal-Mart reduces its size, it may make small businesses feel better, because usually, a big size of anything has results for an individual’s mind. Then reducing Wal-Mart’s size is similar to reducing the concern of small businesses also.
Seventh, Wal-Mart should share some space both inside and outside of its store to arrange selling area for small businesses. Of course, it contrasts with people’s feeling. However, in my opinion, if Wal-Mart decides to do this, it will result in small businesses feeling that Wal-Mart did not set up to destroy their small businesses. In the same time, Wal-Mart still helps them have more product distribution places. For instance, Wal-Mart’s inside space, it should have some areas for selling local production of small businesses in order to help small businesses to be able to operate their business and to be able to create the convenience for customers. In outside areas, I think that Wal-Mart should arrange some car park zone to be a zone where small businesses can take their product to sell. A kind of merchandises may be similar to inside area, because I would like small businesses to feel that a big box store such as Wal-Mart opens a chance for them in making business together. In my opinion, sometimes, Wal-Mart should accept to cut some areas to create a good relationship with small businesses. Besides, I think that customers will feel better also.
From reading Wal-Mart’s articles, I found that most problems are Wal-Mart’s opening prohibition in a community; however, we can not stop the opening of Wal-Mart. Then both Wal-Mart and small businesses should turn back to think about how they can make business under this crisis.
BIBLIOGRAPHY
DollarDays International (2005, July 25). Survey reveals unique and competitive pricing helps small retailers compete against big box/chain stores. PR Newswire, U.S. Home Edition. Retrieved Jan. 23, 2006 from
LexisNexis.Edgemon, E. (2005, Dec. 4). Worried about Wal-Mart: plans for third supercenter brings protests. The Daily News Journal. Murfreesboro, Tennessee. Retrieved Feb. 20, 2006 from
The Daily News JournalGerson, D. (2006, Jan. 16). Wal-Mart woos entrepreneurs and minorities. The New York Sun. Retrieved Jan. 23, 2006 from
LexisNewis.Goldman, A. (2006, Jan. 10). Wal-Mart still raises concern in Inglewood. Los Angeles Times Home Edition. Retrieved Jan. 23, 2006 from
LexisNexis.Mestas, A. (2006, Oct. 6). Small-town grocer hangs up apron. The Pueblo Chieftain (Colorado). Retrieved Jan. 23, 2006 from
LexisNexis.Sager, R. (2006, March 3). Myth-Led New York. Wal-Mart Facts. Retrieved Feb. 20, 2006) from
Wal-Mart FactsWikipedia. (2006). Wal-Mart. Retrieved Jan. 27, 2006 from
Wikipedia