Mom and pop shops are the traditional back bone of the retail industry employing a significant amount of the populace. They are located conveniently near residential areas and have fewer operational costs.
There are fewer aspersions nonetheless that the shops have been facing survival threats from large conglomerate such as wall mart. Several researches that have been conducted agree that the introduction of large wall mart stores have had predominantly negative effect on mom and pop shops.
The entry of the large Wal-Mart stores brings about price competition that is highly skewed to favor large stores because the enjoy economy of scale. Traditional mom and shops cannot afford the price wars and thus are often forced to close down due unprofitability.
In addition, the large stores have a
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It is not all types of mom and pop shops that have been severely threatened by those entries. The significantly affected are usually groceries, bakeries, fresh produces such as milk and pastries.
The reason why these types of shops are severely threatened by Wal-Mart stores entry have to do with the sourcing policy of the supermarket. Wal-Mart prefers a one on one supplier agreement with farmers, and other manufacturer of ingredients in those departments while for reasons of financial capacity, mom and pop shops relies on middlemen to get supplies.
Traditional kiosk shops are nonetheless not entirely threatened by the large Wal-Mart stores, and research conducted by several independent sources has shown little effect on the traditional convenient kiosks.
There is however some aspersions to these findings. Some researchers have pointed out that in the last three years; there has been a surge in profits made by mom and pop shops. As more people congregate into residential areas, the need for personalized experience and convenient buying has skewed competition to the advantage of these small
In order to gain the success it has had, Wal-Mart has no doubt affected small businesses. But in the place of small business Wal-Mart has been able to do far more for Americans than small businesses could. It provides consumers inexpensive necessities for life, it provides work for those who would otherwise have none, and it has a stake in the global economy that benefits our own with trading. Wal_mart
The threat of rivalry is high because there are several firms in the industry such as Safeway, Sobeys, Atlantic and Pacific, Metro, convenience stores, and online grocery shopping. Moreover, with the addition of Wal-Mart in the mix this increases the threat among the rivalry which will cause an intense price rivalry. This is also caused by firms unable to different their products in the industry, in this case they are forced to compete on the basis of price which will result in price competition.
Wal-Mart has had a significant economic impact on the US, as well as the economies of countries that have relations with the US. Wal-Mart is the world’s biggest company of any kind, with 80 percent of the households in America purchasing something from the superstore; it is the nation’s largest retailer. Wal-Mart’s continuing price reduction has given Americans the advantage of being able to afford 15 to 20 percent more than they previously could. (Hansen) In a world governed by globalization and greed, competition has become rigid; as a result firms like Wal-Mart have utilized advanced marketing strategies to insure that they are on the ‘neck’ of competition, and are the core deciders of the market. (Ortega) However, Wal-Mart made decisions that were of a disadvantage to aspects of the economy, including the depletion on a small scale of Small Town USA.
The retail giant’s policies to offer lowest prices on the market is one that gives the company an upper hand since it can leverage on its massive economies of scale, but ultimately the low prices throw the local economy into turmoil. The many small businesses within the regions find it extremely difficult to compete with the low prices offered by the retail giant, Wal-Mart. According to Wolff-Mann (2016), the opening of Wal-Mart in North Carolina resulted in a 30% drop in the sales of a 44-year-old grocery store. Whenever the grocery store cut prices to retain its clients which were being lost to Wal-Mart, the giant retailer would always undercut or match the price. This unfair practice led to the close down of the store, while other businesses in the region succumbed to the stiff and unfair competition. Therefore, when Wal-Mart moves into a small town, things do not get better; the company introduces unsustainable economic models which makes thing worse within the
When Wal-Mart establishes itself in a town, it makes its competitors to close their businesses since they cannot compete in the current market. There are several businesses that go out of business when this company sets up a branch in the town. However people don’t agree with this since customers are the ones who go to purchase goods from Wal-Mart. If there are people who should be blamed are the customers since they flock into the retail market to buy from them. This is the reason why these retail businesses are out of business. The reason that makes customers go to shop at Wal-Mart is that, there is ample parking, low prices and they also provide superior goods and services to the customers.Down town destruction started earlier before Wal-Mart was established. Wal-Mart is trying to bring with it new technologies that are aimed to cope with the current technologies. We ought to find new ways of doing things and this is exactly what is happening with Wal-Mart. For instance, Wal-Mart might be embracing technology to supplant it. Internet shopping might be some of the new business technologies that they are trying to embrace.
These conditions are brought about by the enormous pressure Wal-Mart has put on their suppliers. Their sheer size enables them to negotiate whatever they want. Suppliers rarely dare to request a price increase, and they are very conservative when giving price quotes to Wal-Mart. To lose Wal-Mart as a customer can mean the end of business for many suppliers. It’s hard to combat this downfall when Wal-Mart has so much buying power-- countries send government officials to Bentonville, Arkansas to lobby for production in their country.
The success of Wal-Mart is so great, that many people believe that Wal-Mart is becoming a monopsony . Suppliers are forced to deal with Wal-Mart because of the large percentage of sales at Wal-Mart cash registers. As such, Wal-Mart also has the ability to dictate prices of the goods it receives from the suppliers. Every day, more and more retail stores close their doors for good because Wal-Mart controls such a huge margin of the retail sector.
Thirdly, there are areas both domestic and abroad relatively untouched by Wal*Mart: large cities. Though it may seem like untapped potential in these markets, it is not recommended to expand in these highly populated areas. The axiom, “If it ain’t broke, don’t fix it,” applies: If Wal*Mart were to do an about-face and start expanding in this form, it would send mixed signals about not only changes in the corporate strategy, but also about the future of this conglomeration of stores. This is especially poignant at this volatile time in the price of their stocks. They should also be extremely cautious in the acquisition of existing discount retailing companies. As the industry becomes more concentrated, Wal*Mart’s selectivity in large acquisitions extends beyond just profits. Many times, Wal*Mart could better spend their resources by improving existing stores or building new ones because they can build them around their ideologies at a much lower cost than through purchasing other companies. Again, this is not to say they should not expand in this manner, just that they need to be extremely selective when doing so.
There are several key competitive edges that keep Wal-Mart successfully maintaining its leading position in the industry. First of all, Wal-Mart’ multiple store formats allows Wal-Mart to extend their customer base. Since Wal-Mart opened its first store in Rogers, Arkansas, July 2 1962, it has extended its store number from 9 stores to a total 4,906 throughout the four types of store: (Discount stores, Supercenters, Sam’s club, and neighborhood markets) Wal-Mart is able to embrace more customers to fulfill all kinds of demand such as live supplies, groceries, pharmaceuticals, and entertainments. As a result, Wal-Mart’s sales and profit increase significantly. Backward expansion strategy is another key for its success. Unlike other retail stores, Wal-Mart opens its stores in small town first before entering into metropolitan area.
Wal-Mart had remained increasing in size because of Walton’s drive to bring prices lower and lower. With consumers always looking for the bargain deal and the sales Wal-Mart never had to have sales because they sell what the have for the lowest possible prices. The concept of supply and demand works perfectly with the way the business is run.
It's headquarters if filled with sample furniture from vendors trying to peddle their goods through Wal-Mart. It doesn't stop there either. Wal-Mart demands the same of it's suppliers. All suppliers are required to provide a toll free number for consumers at the cost of the supplier. Shifting cost to suppliers to keep prices low has become the norm for the coorporation and at no risk for Wal-Mart since they have all the power. Despite inflation Wal-Mart will demand it's suppliers to sell for cheaper. Since Wal-Mart is usually the largest buyer by a large margin most companies cannot refuse Wal-Mart's order, resulting in cheaper materials used, less features, moving factories overseas, etc. One specific example is that of deodorant. Before the 1990's deodorant came in a cardboard box. Wal-Mart decided that the cardboard box was a waste of money. It cost money to make, to ship, and took up shelf space. Wal-Mart asked the deodorant makers to get rid of the box with the power they have. Now today you will see no deodorant
...ir employees without their knowledge at all. Because of their prices being low, wage is even lower to make an over decent profit. Wal-Mart is a growing competitor to those who have enough trouble just surviving. It is easier for everyone just to back-off and let them do what they want, but they have taken advantage of that and the people do not like that.
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
These businesses could compete with the lower prices, mass production of products, and better pay that Walmart offered. Lower prices and better pay are still consequences of today. People blame walmartization for the “disappearance” of the middle class. Because of their “low prices” people walk in with a list and walk out with a cart full of stuff not on their list. This causes them to spend more money even though they are “saving money” by shopping at Walmart.
...nal supermarket retailers will reinvent themselves over a period of time, in order to attract and maintain a loyal customer base. New concepts, neighborhood marketing, and innovation will be the key to success over the next decade.” (Imlay, 2006) What is propose is that a smart mix of products, perhaps catering to demographic tastes and needs, may tempt the shopper not drive out to the big box store, but instead loyal to their local market.