The Creative Destruction of Walmart

Overview:

The reason why we chose this topic is because we want to find out if businesses lose customers because of Walmart being in their area. The Walmart around my area has a lot of little other businesses around it and based off what I see when I go to Walmart is that there is so many people at Walmart and very little people at the other shops around it. This is what brings us to our Research Question. This connects to economics because there is competition and creative destruction involved. Walmart is basically taking the places around it out of business.


Research Question:

How can Walmart take out many local Business?


Competition:

When it comes to competition to Walmart, there is really not that much. There are the other big grocery stores like Target and King Soopers of course, but Walmart is still bigger than those ones. The things that Walmart is really known for in terms of competition is that they close down small business when ever ones open up because often time those small businesses cant keep up with Walmart's prices and variety and can never come anywhere near to their demand.


Evidence:

Economics concept #1


Supply and Demand

The reason why Walmart can keep business booming is because of the demand they receive which leads to them begging their suppliers to lower the buying costs. Also they listen to the demand rather than keeping their Walmart organic like others and supporting non-tobacco campaigns. Target and CVS have done this exactly. Target "put major suppliers on notice and changed up assortments" and "CVS eliminated tobacco in its stores and backed its decision up with an anti-tobacco crusade." Regardless of the demand and how much better than could do if they sold unhealthy items and tobacco, they care for the well being of their customers rather than fishing as much money as possible.

Economics concept #2


Incentives

Low prices. Walmart is all about low prices and because of this it shoots other businesses surrounding straight out of the water. They pretty much constantly boast about how they sell things that other places might but for a lower price. That's the appeal that nearly everyone falls for. Who would turn down a Kit-Kat that only costs 99 cents when they cost 2 dollars at a 7-11? When they tell their customers about these low prices, they continue to return and thus they become regulars. Solely why they are able to sell their stuff for so cheap is because they rely on Chinese sweat shops. They do this because it costs less for labor regardless of what laws they might be breaking. It's been seen that children have been seen working in these sweatshops for Walmart and have exploitative conditions in these said factories.

Economics concepts #3


Creative Destruction

What's really mind boggling is how easy and effortlessly Walmart indirectly puts surrounding businesses out of business. Even if it isn't intended, Walmart has enough power and popularity to become the apple of anyone's eye. When someone passes by a Walmart and they're in a rush to get something, Walmart would be the immediate solution because of the convenience of the prices and location. Also most of the time Walmarts are specifically built in certain areas to one, provide a grocery store with low prices to less wealthier people but also because that is where they'll get the most profit. Walmart has found a new way to reinvent grocery shopping and has successfully reached that goal. Now King Soopers is struggling to compete. Albertsons is almost completely absent in Colorado and Safeway doesn't happen to be the number one choice to grocery shop.


Conclusion

Economic Conclusion:

Although Walmart is very relied on and is actually helpful to many households, it still has destructive properties and is not necessarily making the best options for everyone in there areas. The present Walmart locations can't be torn down now unless there were some sort of spending more money is better epidemic but that probably won't happen. So with that being said obviously Walmart needs to reconsider how they are approaching their mission and the people around it.