Monday, May 23, 2005

Wal-Mart Has Brought Many Problems on Itself

Wal-Mart may simply be too successful for its own good. How else to explain why, in the DC area, the retail Goliath is besieged by an army of Davids even as other large, non-union stores are opening everywhere.

There are no Wal-Marts inside the Beltway. And, if unions and community leaders have their way, there never will be. The primary concern is the grocery aspect of Wal-Mart Supercenters, whose prices would undercut the local supermarket chains. This, the grocery workers union feels, would devastate their industry.

So, through a bevy of zoning regulations and targeted laws, Washington, DC and its inner suburbs are trying to guarantee that any Wal-Mart Supercenter that opens would almost certainly be unprofitable. This raises a serious issue. Capitalism is supposed to work by pushing companies to compete with each other and continuously improve. But when one group uses political clout to stop a competitor, there’s something broken in the system.

One of the biggest problems is that Wal-Mart has done a very poor job of anticipating and responding to criticism. How many other national retailers have well-funded organizations actively working against its success? In fact, while Wal-Mart is getting shut-out of the DC market, non-union employers such as Home Depot, Best Buy and Target have all been welcomed with open arms.

Wal-Mart has built an incredibly successful business but capitalism is not just about price and availability. In a mature-capitalist economy like ours, companies must also concern themselves with community responsibility and public image. While Wal-Mart should not be condemned for their success, they can be criticized for their perceived indifference on the effect they have had on communities. We’ve all heard the stories of local downtowns killed off by a new Wal-Mart. Even though these stories oversimplify the problem and place far too much blame on Wal-Mart, being known as the killer of nostalgic Main Street America is not a great corporate image. And Wal-Mart has done far too little to refute this image.

Among many leaders in the DC area, Wal-Mart is perceived as a bane to the existing community rather than a boon to local consumers. Passing laws specifically designed to stop one company from succeeding while allowing similar companies to flourish is bad public policy. But I’m not shedding any tears for Wal-Mart. The company needs to do a much better job of proving that it cares about the communities it enters. The days of Wal-Mart muscling its way into new markets may be over. The company now has to figure out how to be welcomed.

3 Comments:

At 10:16 AM, Blogger Shay said...

Wal-Mart cannot muscle its way into a community, without the community's help. Folks want low prices, that is what Wal-Mart provides, and that is why it is successful. And these 'do-gooders' are denying potential jobs to (disproportionately black) working-class folks too with their stance.

 
At 10:37 AM, Blogger Alan Stewart Carl said...

Molotov,

I agree. I meant muscle from a marketing standpoint--not as a judgement of the company's character. I personally don't have much of a problem with Wal-Mart and have regularly been irritated that there isn't one nearby (I live in DC). My point is just that Wal-Mart has made some big PR blunders and is now paying the price. As I said, these laws are bad public policy, but in America, companies that grow huge have to be aware of their image. Failing to do so is going to get you burned in some sectors.

 
At 10:48 AM, Anonymous Anonymous said...

My in-laws live on the Pine Ridge Indian Reservation in South Dakota. They call the Wal-Mart SuperCenter in Chadron, Nebraska "Indian Heaven" because it's got everything they need at prices that aren't a rip-off -- and unlike a lot of other businesses in the town, they seem to appreciate business from Sioux people.

 

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