http://web.archive.org/web/20070122153249/www.john-ross.net/wal-mart.htm
Wal-Mart: Consumer Savior or the Scourge of Small Businesses? or
Sam Walton Didn't Invent the Free Market
By John Ross
Copyright 2003 by John Ross. Electronic reproduction of this article freely permitted provided it is reproduced in its entirety with attribution given.
On a shooting-oriented discussion board recently, I entered a discussion where some posters were saying that people in general and shooters in particular shouldn't patronize Wal-Mart and other "big-box stores," as they were driving small merchants, especially gunshops, out of business.
Economist Joseph Schumpeter coined a marvelously accurate term called "creative destruction."
It refers to the fact that in the free market, there is always someone figuring out new ways to provide a good or a service that either does something entirely new, or, more likely, does something old in a better way. The new creativity inevitably destroys some part of "the way things were." Ever hear of Keuffel & Esser? They had the major part of the slide rule market for students and engineers. Gone. Ever hear of National Cash Register? They changed their name to NCR Corp. because they don't make cash registers any longer. They make and sell all manner of the things that stores use to handle transactions today, like scanners, self-checkout equipment, etc., and are thriving.
Great fortunes were once made in America in textiles. Then canals and shipping. Then railroads. Then banking. Then newspapers. Then retailing. Then oil. Then automobiles. Then consumer goods. Then computers and software. Then telecommunications. Tomorrow it will be something else. This is not to imply that telecommunications
replaced textiles, or anything like that, but that the only constant in the market of consumer needs and desires is
change. The free market is a continuously running play with an ever-changing cast.
We tend to remember the past in a much more forgiving light than we would if we could actually relive it. America has ALWAYS had people driven out of business by someone who figured out something that consumers would prefer. During the online discussion of Small Shop vs Big Chain, one poster gave the example of how he got much better price and service getting a tire on his lawn tractor replaced at a small shop because they mounted it for free, whereas Wal-Mart wanted a mounting fee that made their total price higher than the independent. Another man told of needing a battery for a trolling motor, and getting excellent advice on the best battery type, which the shop ordered for him, whereas Wal-Mart didn't carry much selection, had little sales knowledge, and wasn't much help.
The tire and battery examples given above are good evidence of people who
haven't been driven out of business by Wal-Mart, and why they haven't. The butcher/meat shop I frequent here in St. Louis is 2 miles from a Sam's Club, and this shop just took over the storefront next door and doubled their space! I guarantee they didn't expand because their business had fallen off due to Sam's selling meats. I guess the butcher shop is offering something Sam's isn't, that enough people like me want and are willing to pay for.
EVERY successful business owner is constantly trying to identify needs and fill them. Near the Sam's Clubs and Wal-Marts in my area are hundreds of small businesses that offer something the box stores don't. These successful small businesses occupy storefronts vacated by establishments that continued to try to sell slide rules in a world of cheap pocket calculators.
In the late 1940s, many big-name authors (like Hemingway) were outraged at the tremendous success of the "hack" Mickey Spillane. How DARE he give returning servicemen a quick, exciting, non-literary read, and do it for 25 cents?
Today, I hear people bemoan the fact that big publishers concentrate on "name" authors that they pay huge sums to, and ignore new talent. This is a golden opportunity for small publishers, and this new talent saw this and didn't even bother contacting the big publishing houses. Accurate Press (
www.accuratepress.net) is now on the map with a bunch of good-selling titles for this very reason.
People in the investment industry cried that E-trade would put them out of business. Well, yes, the ones who offered nothing for the dollars they were charging. Some of us are still alive and healthy, thank you very much.
If you're a shooter, you'd think that as accurate as Nosler Ballistic Tip and Hornady V-Max bullets are (both made by big factories with state-of-the-art automated equipment), you'd be a fool to go into the business of making match rifle bullets by hand one at a time. Don't tell that to Walt Berger (
http://www.bergerbullets.com), who keeps hiring more people to pump the handles of his manual RCBS A2 presses because his business keeps growing and he keeps adding new styles.
We often look at the past with rose-colored glasses. It has never been terribly easy to make money in any kind of small business. And being big is no guarantee, either--look at KMart. Sticking with firearms, consider the challenges that gunshop owners faced in the past: Pre-1968, people could buy guns and ammo through the mail. Ten years ago, there were many more Federal Firearms Licensees that weren't stocking dealers, compared to now. The smaller gunshop of yesteryear is rarer today, but many of the savvy ones are making a living dealing 100% in used guns on consignment, something Wal-Mart is unlikely ever to attempt. Others combine their shops with on-site ranges with gun rentals, another marketing advantage Wal-Mart will never have.
Also keep in mind that in any industry, there are factors at work other than big-company competition. Gunshops have been hit as much by zoning laws and other measures as they've been hurt by Wal-Mart. Perhaps the greatest factor in shutting gunshops has been gun shows.
A gun show
used to be a place where collectors showed off their displays. Little selling was done, and certainly not the kind of things you see sold now. Today, the gun show has become a bazaar. Now you have people who set up at a show every weekend and sell reloading components, gun cases, cleaning supplies, ammo, surplus items, and both new and used guns.
This is these people's profession, not their hobby. Most gunstore customers came to the store on Friday or Saturday anyway. Many storeowners realized that there's a lot less overhead in renting five tables at a gun show each weekend than leasing a storefront and paying utilities 365 days a year.*
Bob Tipton, a reader from Virginia, where a lot of textile and furniture manufactures are going under, had this to add:
[blockquote]"One point I keep trying to bring out in discussions with people about this is the importance of knowing your own worth, and the worth of your employer. If your job is unskilled, then you need to be constantly aware that you can be replaced at any time, either through automation or by a cheaper workforce. Even if your job requires skill, if it doesn't produce REAL value, then you have to realize that you're in jeopardy. How many programmers lost their jobs because they were willing to take a job with a company that had an unrealistic business model? These are intelligent, reasonable people who never thought to look over the resume of their prospective employer before accepting a position within the company. Many abandoned other careers and relocated only to be out of work within a few years. A recent online article pointed out that it was almost impossible to rent a U-Haul trailer within San Francisco, because so many had been rented by departing workers."[/blockquote]
Amen to that. Successful small businesses will figure out how to provide goods and services that the box stores cannot, and if they can't, they will go bust and their space will be leased by other small business owners who can. It's always been that way, and it's not going to change.
John Ross 8/25/03
*Memo to any nanny-state legislators reading this: The gun show is NOT a "loophole." The dealers who set up there have to do all the same paperwork and make the same phone call for the federal NICS criminal background check as they would in a storefront gunshop. Stop whining and lying.
