As the largest retailer in history, it’s no surprise that Walmart is the target of both vicious attacks and effusive praise. According to its own website, Wal-Mart Stores, Inc. operates more than 8,000 stores, employs more than 2.1 million people, and sells more than $400 billion worth of goods in every year. Though this bulk intimidates those who fear for the viability of “mom and pop” retailers, Walmart’s great strength is that it devotes its considerable power to American consumers. Its size enables it to provide services that other retailers cannot, and it has deservedly become an integral part of the modern American economy.
Criticisms of Walmart’s effect on small retailers fall flat because of Americans’ role in that effect. Consumption is the only democratic component of the corporate world: small retailers fail because Americans choose Walmart. Walmart provides cheaper, better, more accessible services than its competition. While competing stores’ closings produce touching hard-luck stories, the shift to Walmart is beneficial for society, because Walmart is much more efficient at every stage of its business.
The benefits of this efficiency are less personal and more broadly spread than the costs to smaller competitors, but such dissemination of value demonstrates one of the best qualities of Walmart – its egalitarianism. Walmart provides a good that is accessible to virtually all Americans. The 2006 book The Walmart Effect estimates that 97% of Americans live within twenty-five miles of a Walmart, and Walmart’s low prices assure that the store is also economically accessible. As long as consumers continue to choose Walmart (for understandable reasons), the onus is on small retailers to find better ways to compete.
The second main argument against Walmart deals with its impact on suppliers. Because Walmart has such immense buying power, it carries great influence with manufacturers. Fortunately, Walmart uses its substantial bargaining power in the interests of American consumers by demanding ever-decreasing prices. Though manufacturers often complain about this pressure, it forces constant innovation, which ultimately benefits consumers.
Walmart has much to teach American businesses. Despite its size, Walmart is a paragon of corporate efficiency. It has compiled the largest sales data-set of any American retailer and analyzes this data using the second largest supercomputer in the world (trailing only the Pentagon). Aided by this number-crunching, Walmart excels at knowing what its consumers want. Walmart’s purchasing decisions thus reflect American preferences. In short, Walmart is a driving force in the American economy leading to smarter, more streamlined production, and (as always) lower prices for consumers.
The benefits of Walmart’s efficiency are not only economic, as illustrated by the company’s response to Hurricane Katrina. Walmart’s response to the hurricane was lauded even by its critics: it donated more than $20 million worth of merchandise, including food for 100,000 meals, and it promised jobs for all of its displaced workers. But what I wish to extol is not Walmart’s largesse, which bore immediate public relations benefits, but rather the utility of their efficient distribution system.
The first supply truck to arrive at the Superdome after the hurricane came from Walmart, not from FEMA. The administrative particulars of Walmart’s response to the hurricane, detailed in a study by Steven Horwitz, are both fascinating and inspiring. Walmart’s existing distribution chain was – and is – able to deliver needed goods faster and more efficiently than a government agency, which (besides being inept) had no existing infrastructure to respond to the disaster.
The Coast Guard, another organization praised for its post-Katrina efforts, was great for rescuing people from flooded houses, but it was incapable of providing them with sufficient supplies afterwards. Without the aid of Walmart, the aftermath of the hurricane would have been even more catastrophic.
Regardless of its reputation or its value to society, Walmart is here to stay. Consumption drives our daily lives and accounts for some 70% of America’s GDP. As long as Walmart continues to increase the accessibility and quality of consumption, it will remain America’s top retailer and continue to grow. Whether or not you choose to shop at Walmart, everyone
should appreciate it as an outstanding American institution.