Research PaperWal-Mart and small businessAbstract
Wal-Mart is one of the biggest retailers of American. It sells groceries in its super center. Recently, Wal-Mart went in to small business. It opened new supercenters in small towns. More and more people who usually shop at small shops went to Wal-Mart. Soon, thousands of small businessmen were out of jobs. We should take three strategies to keep small shops existing.
Wal-Mart is the largest retailer in America. Now it is trying to carry a full line of groceries along with clothing and other goods usually found in its supercenter (Kaiser, 2003). It sells the same goods as those in small shops and has taken a lot of customers from them. Wal-Mart has huge capital to support its development. After Wal-Mart came into small business, thousands of small businessmen ran out of business. For instance, Bonnie Neisious, a small businesswoman who owned a UPS franchise in Las Vegas, said that “surrounding businesses” that were near her shop folded and “her business was down 45 percent”(Goldman, A. & Cleeland, N. , 2003). The motto “We Sell for less” is very attractive; the small shop cannot match its price. “Wal-Mart is well liked”, said Larry Peterson (Kaiser, 2003, par. 4). It means that the public has recognized Wal-Mart and it is easy for Wal-Mart to get its position at the expense of small shops. If we do nothing about this, the small shops will be closed and thousands of people who work in this area cannot receive their income.
Although Wal-Mart has lots of advantages of going into small business, we also can do something to help the small business to accept the challenge of Wal-Mart. We should take three strategies to keep small shops existing.
We should use the government to stop Wal-Mart from going into small business. First, we get make the local businessmen to start an organization and complain about the situation about Wal-Mart to the government. Second, they should make the government know the damage to the local economy and ask them to pass a law to help them. Third, they should ask the government to create some small business support center to give them some ideas of raising their ability to accept the challenge of big-boxes.
Small businessmen need to join together to start an organization. “The trend of mega-mergers and huge chains is wiping out small business everywhere” (Lippman, 2004, par. 3). Wal-Mart affects small business anywhere, not only a few towns. It is powerful, so they should start an organization. The members of the organization can be “neighbors, clergy, educators, union members, retirees, former public officials, small business owners, etc.”(Norman, n.d.). We should think that there are several things that the small businessmen can report to the government. “Only a company of their size can buy direct from manufacturers, cutting out the distributor. They buy so cheaply they can resell to other stores at cheaper than wholesale. Thus they can ruin the competition through predatory pricing” (lippman, 2004, par. 2). Because Wal-Mart cut out the supplying of manufacturer, the small shops do not have a chance to exist. They have to buy goods from Wal-Mart. But Wal-Mart will raise the price. When the small shops sell the items, they have to make the price higher in order to get the benefits. As a result, so person wants to go shopping in a small shop.
The damage of the local economy is obvious. Wal-Mart “put their money in big banks, taking it far out of town” (Lippman, 2004, par. 5). When it takes money out of a town, the money of the town will be reduced. So the town will be lack of capital.
In addition, we should get the support of local residents. We can tell them the bad results of shopping at Wal-Mart. First, if the majority of residents only went to shop at Wal-Mart, the small businessmen would lose their jobs. Then the number of unemployed will rise, which means many families will live in a poverty state. They will not even have money to buy foods and necessary goods. Furthermore, many small businessmen will have to take a job in Wal-Mart, and then they will have little salary and be without adequate health care. They must take two or more part time jobs to earn a living. Finally, if there were only one shop, Wal-Mart, in the groceries area, could charge any price it wants. And locals would not have choices.
If the Wal-Mart appeared in towns and communities that wanted Wal-Mart, people might only shop at Wal-Mart. Wal-Mart “never talks about the jobs” it “destroys”(Norman, n.d.). Many small businessmen would lose their jobs.
The local citizens should notices that Wal-Mart is not willing to give its employees enough heather care. “Wal-Mart’s Health Care Plan Fails to Cover Over 600,000 Employees. Wal-Mart reports that its health insurance only covers 48% of their employees. Wal-Mart has approximately 1.3 million US employees” (United Food and Commercial Workers International Union, 2005, par. 9). Many of the local workers of Wal-Mart do not have health care. Maybe some of the workers are the local’s relatives. If the workers were seriously sick, they could not afford the cost of seeing the doctors.
If the local small shops were closed, many of small businessmen would have to work for Wal-Mart. That means that with the salaries that they earn from Wal-Mart that cannot afford their families. “In 2001, the average pay of a Wal-Mart worker was $8.23 per hour, more than two dollars less per hour than the average supermarket employee wage of $10.35 per hour. Wal-Mart wages are so low that the average Wal-Mart worker’s annual salary in 2001 was almost $1,000 below the federal poverty line of $14,630 for a family of three” (Cram, n.d., par. 3).
If the two steps above are not practiced, we should help small businessmen change themselves. First, they can stock the goods that Wal-Mart cannot offer. For example, they can offer high-end goods or have a special shop only for certain people. Second, they can offer delivery service. Wal-Mart only offers delivery service on limited goods. If they offer delivery for all the goods under the requirement, many people will be willing to come to small stores. In the end, small businessmen can choose their goods from the Internet to find the lowest price to reduce the cost.
It would be good if the small shop offered good quality and services.”You can not compete with Wal-Mart on price…So you need to find a niche and have different product lines, services and retail goods that are not in competition” (Ronna, 2003, par. 7).
These above are three ways to accept the challenging from Wal-Mart. It is said that Wal-Mart is interested in fashionable dress and plans to purchase some medium brand like Tommy. This is obviously against its usual rule. Will it get benefits or not? This is another topic, which will be covered later.Bibliography
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