Monday, August 29, 2011

Walmart Wasn't First Big Retailer to Be Condemned for Serving Its Customers With Everyday Low Prices

Does this sound familiar?

1. At its peak, the retail chain had nearly 16,000 stores nationwide, with a retail presence in almost every state. Critics charged it with competing unfairly by offering too-low prices. 

2. The major retailer's business philosophy is simple: If the company keeps its costs down and prices low, more shoppers will come through its doors, producing more profits than if it kept prices high. The more stores it opens, the greater the take.

3. But the company had a public-relations problem.  For generations, small "mom and pop" family stores have served as community anchors. There were thousands across the country.  If low-priced chain retailers drive out such stores, what will happen to small-town America?

4. Chain retailing has become a political issue, one that continues to nag the big-box retailer. The critics' persistent charge is that the chain retailer's prices are too low. Because the chains are so big, they could offer special deals to wholesalers. They can also build their own bakeries and canneries, options unavailable to the independent "mom and pops."

5. "We, the American people, want no part of monopolistic dictatorship in American business," remarked a popular Congressman from Texas commenting about the chain retailer. "Think of Hitler. Think of Stalin. Think of Mussolini."

6. The chain retailer defended its aggressive efforts to cut purchasing costs, narrow its own margins, and reduce consumer prices in order to build business by saying that its strategy is  exactly what a company is supposed to do in a market economy.
MP: Of course the chain retailer being discussed above would appear to be "evil" Walmart, but it's actually a discussion about a low-price, chain retailer that was founded almost a century before Walmart opened its first store in 1962.  What the two retailers had in common was a relentless focus on controlling costs with supply chain efficiencies and economies of scale, with the ultimate goal of providing "everyday low prices" to their consumers.  And despite their joint success in serving their consumers with service, quality and prices unmatched by their competitors, both chain retailers received a fair amount of public condemnation for providing alternatives to higher-priced small, "mom and pop" merchants.  

Find out more about Walmart's retail predecessor in today's WSJ (text above was modified slightly).    

Note: Walmart currently operates about 4,400 stores in the U.S. (including Sam's Clubs), far fewer than the 16,000 stores the other giant retailer was operating in the U.S. at one time.    


At 8/29/2011 7:38 PM, Blogger Buddy R Pacifico said...

16,000 stores and forced out of many markets by local taxing schemes. Very interesting and I would guess most people are not familiar with this former ubiquitous giant.

At 8/29/2011 7:49 PM, Blogger juandos said...

You know I couldn't readily lay my hands on any info regarding Woolworths...

When I was a kid it seemed like they were everywhere in Texas, even the relatively small towns...

At 8/29/2011 9:14 PM, Blogger Larry G said...

List of defunct retailers of the United States

At 8/29/2011 9:53 PM, Blogger Mike said...

I was actually kinda proud of myself that I knew it was A&P while reading the post (sorta the way you feel when you're killing it during Jeopardy) but I feel like Thomas Sowell may have mentioned this in one of his books.

At 8/29/2011 9:56 PM, Blogger Seth said...

It's odd how folks view competition as unfair, but rent-seeking via government edict as totally fair.

At 8/29/2011 11:48 PM, Blogger Benjamin Cole said...

The private sector is wonderful, weeding out even huge companies if they become can we weed out the $1 trillion-a-year Department of Defense-Homeland Security-VA boondoggle-o-rama?

At 8/29/2011 11:51 PM, Blogger Michael E. Marotta said...

I am 61 and grew up on Cleveland's near west side. We had an A & P in our neighborhood and at least three small stores within five blocks. They offered different things in different ways. If you wanted a pop or a popsicle or a pack of baseball cards, sure, Jim's or Halal's or Falino's were on the way to school, but you could not buy groceries there. A loaf of bread, a pack of cigarettes (with a note from your Mom) maybe... A&P was a few blocks away, and they did not cater to kids. Jim's was next door to a commercial printer. Halal was closer to the knitting company. Clearly, they were the "Quickie Mart" of their times.

The romance for Mom & Pop stores seems not to apply to banking, interestingly enough. No one gets blurry-eyed over the local banker, though Ann
Arbor Bank is capitalizing well on this billboard theme:

Non-local banks think...
...the 777 building is a casino.
...Suwanee Springs was a Bond girl.
...By The Pound is a weight loss clinic.
...The Fleetwood is a gas guzzler.
...The Chop House is a martial arts academy.
...Red Shoes sells red shoes.
...The Arch is a podiatrist's clinic.
...Vinology is an undergraduate course.
...Rackham is a pool hall.
...Michigan Union is part of the UAW.
...Ann and Ashley are the Olsen Twins
...Hogback Road is the sequel to Brokeback Mountain.
...The Fab Five is a royal flush.
...Woody and Bo were in Toy Story.
...Mary Sue Coleman is three people.
...The Big House is a Starbucks selection.
...TK WU is a text message.
...Mr. Spots is a carpet cleaning service

(Living there from 2005-2011, I only 'get' about half of them.)

At 8/30/2011 12:25 AM, Blogger Mike said...

I’m not sure why you spent the time to type that all out, but I do a lot of ‘creative’ marketing work with my clients and I WILL be stealing that…thank you! :)

At 8/30/2011 8:39 AM, Blogger morganovich said...

if only there was an alien attack on walmart, we could escape the recession by rebuilding them.


At 8/30/2011 9:30 AM, Blogger Stan said...

Same claims were made about Sears 40-50 years ago.

At 8/30/2011 5:42 PM, Blogger Marko said...

I can't remember the name of the first big discount book store. Same claims, destroying ma and pa book stores, bad selection, etc. Was it Crown books? They were eventually crushed by the big fancy Borders and Barnes and Nobles. Libs didn't mind them because they served coffee. Now they are crushed by the internets - no coffee, but cheap books.


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