Friday, February 17, 2006

 

More Walmart and Small Town Business

The last day I've had an ongoing conversation with a fellow (I assume) over at Knoxview.com regarding Walmart. I reacted to comments there that strongly suggested that Walmart was putting mom and pop pharmacies out of business in small rural communities.

For the past 16 years, I've live in a small rural community of slightly under 17,000 people for the entire county with no significant population growth for the entire 16 years. There are about 300 more people here now than 16 years ago. Walmart came to town about a year after I moved here.

There are more pharmacies here now than 16 years ago. I know of three privately owned pharmacies which is either equal to or one more than the total of private pharmacies 16 years ago. Walmart has no price advantage in prescription medication as prices are determined by insurance, Medicaid, Medicare, etc.

I don't know about Walmart nationwide but here it is not driving small pharmacies out of business. In my research for this I found a privately owned pharmacy in the yellow pages that I had forgotten about and drove to make sure it was still in business. It was.

An interesting side item I discovered, or actually more completely realized, was that there had been a tremendous growth in business in this small town, many more restaurants, motels, retailers, etc. I wondered how this community that has not grown support what has been at least a doubling, maybe a tripling in retail businesses.

My only answer far is that it pulls more people from surrounding areas than before. It seems the process has been something like this: Walmart comes to town. More people from surrounding counties and towns come to this town to shop at Walmart. In the process they may eat at a restaurant, visit a few other stores, etc., Smart retailers recognize the growing market and open more stores that fill niches that Walmart doesn't. With more businesses to attract shoppers even more people from surrounding areas come here to shop. This town of less than 9,000, in a county of less than 17,000 has become the commercial center for the equivalent of 100,000 people. Pretty amazing.

Contributing factors to this: highway patterns put this town at a logical crossroads for the 5-6 county region, Walmart opened a store here, the county/city governments work well with businesses to insure there success. Maybe Walmart doesn't hurt the community it's in, maybe it hurts the communities where it isn't.

Comments:
Wal-Mart's economic impact on communities really depends on the communities themselves. Mom and Pops depend more on the population they serve than any other thing.

I used to be one of those "Wal-Mart = evil" boneheads, but I grew out of it.

I don't like Wal-Mart now, and usually don't shop there because I don't like many of the things about them. But I'll make my displeasure known with my feet and my dollars. I try to spend my hard earned cash at local businesses anywhere I go rather than any chains. Most of the time it works, sometimes it doesn't.

But it's not something I throw in the face of others, or make a big to-do over.

What I really don't like is the local bidding war that goes on when Wal-Mart comes to an area. Then a municipality, in an effort to woo the retailer, changes zoning laws & offers to pay for the infrastructure improvements just for that business. They do this even if they already have infrastructure that will support the retailer elsewhere.

I really don't like any business making money off the taxpayer when such improvements are not needed. But then again, so many do that (especially sports franchises) that it is difficult to keep up, and morally exhausting to maintain.
 
Patrick - I'm much like you in this area. I minimize my shopping at Walmart, primarily because I've received poor customer service there. I've also found many of Walmarts grocery produtcts to be of low quality.

Give me reasonable prices, better service and more expertise. A good example is our local Radio Shack affiliate store. This store opened after Walmart came to town and is located close to Walmart. He can't compete on price product for product. So, he carries better quality products, he can answer your questions accurately and during Christmas offers electronic toys that you can't find anywhere else in town. A couple of months ago the owner told me he did onver $100,000 in business per month. He bought a new house a year or two ago so I know he's doing well. His wife doesn't work. The smart, responsive businesses can compete against Walmart quite successfully.

There are quite a few businesses in town that compete using this formula, more expertise, better quality and better selection of products in a specific area, such as hardware.
 
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