TCS Daily


Understanding the Wal-Mart Effect

By Max Borders - April 11, 2005 12:00 AM

"I'm writing this column in West Virginia, USA having just come back from shopping in Wal-Mart, the extraordinarily successful supermarket chain that makes our own look slow and tiny -- not to mention expensive! I had to keep blinking at the price labels. With my notion of prices tied to British expectations, Wal-Mart's just look as though the staff can't do their sums."

- John Blundell in the New Scotsman

Wal-Mart is rarely the object of such praise. To be the best is usually to be the object of scorn. Wal-Mart knows this well. They are the best, and their critics would have you believe that the mammoth retail chain earned its laurels through unfair competition, civic destruction, even third world exploitation. The stories are familiar: In order to offer such low prices (always), Wal-Mart:

        - Puts Mom-n-Pop shops out of business.
        - Contributes to the burgeoning of third world sweatshops.
        - Degrades communities by introducing a big box aesthetic.
        - Makes the Walton family and shareholders even richer.

But it's time we looked a little deeper into what can only be called the "Wal-Mart effect."

Boone, North Carolina (named for the famous Dan'l) is a college town nestled in the rustic mountains of Appalachia. The population is divided roughly among groups of students, locals, and the academic elite. Such a microcosm of American diversity works in its own way. The locals realize how much money the university brings in. The students love the Smoky Mountain amenities and the bluegrass music. Academics find the local folkways charming and complementary to their status as, well, elites. But when Wal-Mart decided to come along in the 90s, locals, students, and academics also had a common purpose to bind them: to keep Wal-Mart out.


As it often does, Wal-Mart won. And since then, Boone has experienced the Wal-Mart effect. First, some Mom-n-Pop shops in Boone may have gone out of business due to the intense competition. But something interesting has happened: many new businesses have sprung up and they're cooler, more interesting, and more highly specialized than most of the old ones were. Mom-n-Pop have decided to move into more boutique-style businesses -- and not even Wal-Mart can compete with that.

For example, Hands Gallery -- formed c. 1998 -- is an interesting fixture for visitors to the downtown King Street area, offering indigenous art and sculpture for more refined tastes. While taking in the spring verdancy or autumn foliage of the high country, visitors can take jaunts through nearby Blowing Rock and Banner Elk for the utterly zoned and picturesque experience (and, of course, denizens of these planned towns take advantage of Boone's big boxes along highway 321).

But big boxes and all, downtown Boone offers its own home-grown order, complete with quirky restaurants and shops one might have found on the corner of Haight and Ashbury. An eclectic mix of businesses line the main thoroughfare. Earth Fare, an organic foods store, has come to King Street. Older fixtures such as the Appalachian Antique Mall and Mast General Store (retail) have enjoyed continued success and remain favorite establishments for shoppers. You'll even find "Josh," a vagrant everyone in Boone knows, selling poetry and beaded jewelry to passers by.

The question becomes: do we really need small, inefficient and expensive shops to supply us with our shaving cream and plastic laundry baskets? How vibrant is a downtown where such items are being hocked? Since Wal-Mart consolidates these kinds of goods into "big boxes," we, like John Blundell, can get them for dirt cheap all in one place. Charming downtown areas can then evolve into gorgeous window-shopping and restaurant-hopping districts for both locals and tourists. In the meantime, everyone knows where to go to get the bare necessities quickly and at a lower cost.

The Wal-Mart effect is happening all over the country, allowing many municipalities to renew their town centers. In fact, residents able to reduce their day-to-day shopping budgets at Wal-Mart have more money left to spend on the things that make life great and towns charming -- whether it's hand-blown glass or delicious roadside produce grown by local farmers. (Take it from me, no big box can do Silver Queen corn like North Carolina farmers on the side of the road.)

Wal-Mart has also made concerted efforts to work with communities to stylize their stores, especially in cases where such is desired by the locals. The result is that the big box look is not always battleship blue corrugated metal with plastic letters. Wal-Marts come in all manner of brick, stone and Mediterranean styles.

The Wal-Mart effect may be destructive from time to time, but it's also profoundly creative. Wal-Mart has inadvertently hastened the pace of specialization and municipal renewal. As consumers, of course, we only benefit from the presence of Wal-Mart and other big box retailers. People in developing countries and at home are being lifted from squalor because Wal-Mart seeks out the great, low-cost products they offer. Wal-Mart is also giving a lot of people opportunities to earn a living -- including retirees who want to stay active as well as immigrants prepared to accept the wages Wal-Mart offers. Don Boudreaux puts it succinctly here:

        "And because Wal-Mart indisputably keeps prices to consumers low, by 
        far the most plausible conclusion is that Wal-Mart promotes the economic 
        prosperity of the places it which it operates -- it creates better jobs and 
        increases the availability of goods and services. In short, Wal-Mart makes 
        its workers and its customers (and, yes, its stockholders) wealthier."

The Wal-Mart effect is overwhelmingly beneficial.

As prices continue to fall and quality continues to improve, critics of Wal-Mart will have a tougher time resisting the temptation to shop there. In the meantime, I'll be enjoying shorter lines, lower prices, quality products, and smiley-face stickers.

Max Borders is a writer and Wal-Mart shopper in the Washington, DC area.

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