Wal-Mart effect
DESCRIPTION
Any of a range of effects stemming from Wal-Mart’s way of doing business and its large market share.
Any of a range of effects stemming from Wal-Mart’s way of doing business and its large market share.
KEY INSIGHTS
Wal-Mart, a large US and international retailer with annual sales that consistently put it in the top rankings of retailers in the USA and the world, is credited with having an influence on business as well as local and national economies. Wage rates, prices, pricing practices, and supplier relations are just some of the areas influenced. The Wal-Mart effect also includes an economy-wide effect of lower inflation and increased productivity that have resulted from the operating practices of Wal-Mart that have been replicated by the retailer on a large scale. On a local level, the Wal-Mart effect includes a tendency for communities with Wal-Marts to have faster per-capita retail sales and tax increases than communities without Wal-Marts, and where non-competing businesses in Wal- Mart communities experienced significant benefits while competing businesses experienced substantial revenue losses. On an industry level, Wal- Mart’s use of information and communication technologies, combined with automation and centralization of warehousing as well as the scale of their retailing operations, has resulted in industry changes that have made many previous industry operations obsolete or unrecognizable.
Wal-Mart, a large US and international retailer with annual sales that consistently put it in the top rankings of retailers in the USA and the world, is credited with having an influence on business as well as local and national economies. Wage rates, prices, pricing practices, and supplier relations are just some of the areas influenced. The Wal-Mart effect also includes an economy-wide effect of lower inflation and increased productivity that have resulted from the operating practices of Wal-Mart that have been replicated by the retailer on a large scale. On a local level, the Wal-Mart effect includes a tendency for communities with Wal-Marts to have faster per-capita retail sales and tax increases than communities without Wal-Marts, and where non-competing businesses in Wal- Mart communities experienced significant benefits while competing businesses experienced substantial revenue losses. On an industry level, Wal- Mart’s use of information and communication technologies, combined with automation and centralization of warehousing as well as the scale of their retailing operations, has resulted in industry changes that have made many previous industry operations obsolete or unrecognizable.
KEYWORDS Retailing, operational innovation, economic impact
IMPLICATIONS
Marketers should not underestimate the significance of the array of Wal- Mart effects on firm and industry practices (particularly in the retail industry), as well as local and national economies. The success of the innovations introduced by Wal-Mart, combined with the scale of their operations, continues to put considerable pressure on firms to find ways to reduce their costs and to meet customer expectations of a firm providing offerings at prices that move continually lower. While Wal-Mart effects to particular firms depend on the extent that firms are or are not direct competitors with Wal-Mart, marketers should seek to understand and anticipate such effects in preparation for future competitive moves (operationally or geographically) by the firm.
Marketers should not underestimate the significance of the array of Wal- Mart effects on firm and industry practices (particularly in the retail industry), as well as local and national economies. The success of the innovations introduced by Wal-Mart, combined with the scale of their operations, continues to put considerable pressure on firms to find ways to reduce their costs and to meet customer expectations of a firm providing offerings at prices that move continually lower. While Wal-Mart effects to particular firms depend on the extent that firms are or are not direct competitors with Wal-Mart, marketers should seek to understand and anticipate such effects in preparation for future competitive moves (operationally or geographically) by the firm.
APPLICATION AREAS AND FURTHER READINGS
Retail Marketing
McGee, J. (1995). ‘Local Merchants’ Response toWal-Mart,’ Proceedings of the National Small Business Institute Directors’ Association.
McGee, J. (1995). ‘Local Merchants’ Response toWal-Mart,’ Proceedings of the National Small Business Institute Directors’ Association.
McGee, J. E., and Peterson, M. (2000). ‘Surviving “W-Day”: An Assessment of the Impact ofWal-Mart’s Invasion of Small Town Retailing Communities,’ Proceedings of the USASBE/SBIDA National Conference, 131–135.
BIBLIOGRAPHY
Fishman, Charles (2006). ‘The Wal-Mart Effect and a Decent Society: Who Knew Shopping Was So Important?’ Academy of Management Perspectives, 20(3), 6–25.
Fishman, Charles (2006). ‘The Wal-Mart Effect and a Decent Society: Who Knew Shopping Was So Important?’ Academy of Management Perspectives, 20(3), 6–25.
Fishman, Charles (2006). The Wal-Mart Effect: How the World’s Most Powerful Company ReallyWorks—and How it’s Transforming the American Economy. London: The Penguin Press.