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Wal-Martification?

If you seek a five forces analysis of Wal-Mart, please try this page. cue_the_violins.jpg Just when you thought the critics of Wal-Mart couldn't possibly go any further afield, that they'd finally stop trotting out the same old shopworn populist rhetoric, that they couldn't misunderstand more the fundamentals of strategic management and economics, let alone the competitive landscape of the retail industry, one comes along and surprises you. Today, that one wrote a piece entitled "The Wal-Martification of America". Cue the violins.
I don't expect you to shed any tears about Aron's closing. Unless you grew up in L.A. as I did, you've probably never even heard of it. Aron's was this used record and CD store that I discovered 30 years ago. It was a quirky place, an audiophile heaven where there was never any telling what offbeat treasure you might find. More to the point, it was “my” place, a store where I spent endless hours browsing for rarities and oddities you could never find elsewhere. To this day, no trip back to L.A. is complete without an afternoon at Aron's. Or at least, that used to be the case. Recently I read online in the Los Angeles Times that Aron's will soon be closing its doors.

Of course we all feel a little sad when our favorite anything closes down. It can feel like the loss of an old friend because sometimes, in those small shops where everyone knows your name and your preferences, you do make friends and find kindred souls. That said, what alternative is there, really, when a business loses money year after year or is, for some reason or another, no longer economically viable? When there are simply not enough people who want what you have at the price you have it? I can think of one: closing down and turning what was a unprofitable firm into a non-profit organization, a 501(c) 3 , and accepting charitable donations. But even then, some of the same fundamental principles will apply: that organization still must provide some product or service to some group of people who place a high enough value upon it that they are willing to underwrite the organization's activities.
The paper played it as a sign of hard times in the music industry, noting that the number of independent music stores has dropped by half in the last 10 years. But for my money, the demise of Aron's is symptomatic of something larger: Mom and Pop are dying. Or at least, starting to smell funny.

You remember Mom and Pop, right? Mr. and Mrs. Small Business? Used to own that diner down the street, that coffee shop around the corner, that record store across town? Used to run that bookstore with the long aisles of dusty paperbacks where you could while away a rainy afternoon browsing to your heart's content. They gave the neighborhood personality. They gave it soul.

There are many reasons why a business might fail. As for music stores, they have had a very rough time of late. As anyone with an internet connection knows, that industry has experienced nothing short of a tectonic shift since the introduction of Napster in the summer of 1999. Independent records stores have been hit especially hard. So too has the book industry since the introduction of Amazon. But it doesn't necesarily follow that neighborhoods have lost their souls because local record stores or bookstores have shut down in greater numbers. Who could disagree that electronic distribution and production have allowed more people around the world, including those living so-called soulless neighborhoods, to get exposed to music and books they might have never found otherwise? Who doesn't know that these techniques have faciliated finding small but profitable target audiences for previously only marginally-profitable artists?
Then somebody bought them out, knocked down the building and put up a Wal-Mart. Or a Starbucks. Or a box store with low prices, huge selection, and all the soul of tuna fish on white bread. And one by one those storied places, yours and mine, winked out of existence.

The big are eating the small. Indeed, ask Bob Perry of Blue Note Records in North Miami Beach what business is like for independent music sellers like him and the first word out of his mouth is, “Sucks.”

“It's very, very bad,” he adds. Perry says his store thrives only because he's diversified: he sells posters, memorabilia and does Internet auctions.

This is a truly astonishing piece of commentary. First of all it contradicts the earlier unstated assumption that small firms, aka Mom & Pop, can't compete with the big boxes. There is ample evidence, both anecdotal and empirical, that they can and do. And the author tells us how they do when informs us that Blue Notes "thrives only because (it) diversified." And by using the internet no less. Horror of horrors! But seriously, it is important to state that running a business is anything but an entitlement. No one that does so has any right to expect that customer tastes and behavior will remain constant, that competitors will stay away, that substitute products won't come into existence, that new technolgies won't obviate some or all of what they have done so well for so long. The choice here is simple: adapt or don't- and die.
This is not the business page, I know. But this lament is not for lost business. Rather, it's for a loss of – here's that word again – soul. Meaning the things that once made our communities unique.

Drive across the country these days and “unique” is not a word that comes often to mind. Increasingly, Richmond could be Rochester could be Dayton could be Duluth. We shop at cookie-cutter stores in cookie-cutter malls and eat at cookie-cutter restaurants, not because the food is special but because it is familiar.

Alliteration and anaphora aside, these seven sentences are remarkably peevish. By definition, small businesses are not able, by virtue of their limited resources and scale and scope, to meet the demands of a large number of customers with the consistency that the "customer service" revolution led us to expect. What one person castigates as "cookie cutter" another may see as "consumer surplus" created by economies of scale. On the other hand, no matter how big the "big box" stores get they can never do everything or be all things to all customers.

But size is not destiny. Nor does it spell doom for everything and everyone smaller. In fact, the bigger & squarier those boxes get, the harder and sharper their corners become, the more, not less, opportunity there is for Mom and Pop to provide the personalized, localized service that their community of souls presumably values. Sage Against the Machine is but one example I've written about on this blog relating to how small companies can and do routinely profit, generally after some serious and painful readjustment, when the big chains come to town. And here is a link to an entire series of articles from Fortune Small Business that take up the issue.
A former colleague called it the Wal-Martification of America. It's as good a term as any for the process by which we become uniform. And regionalisms – that thing they say only in Cincy, that funky bookstore in lower Manhattan, that dish you can get only in that little dive in Jackson – become fewer and farther between.

Progress is inexorable, so I suppose there's nothing to do but wave Mom and Pop goodbye and mourn what they represent, a world before Velcro and digital clocks where families watched TV together and neighbors knew one another by name. Not to sentimentalize. Time passes, yes. Things change. But man, Aron's was my place. And I'm sorry, but amazon.com just ain't the same.

Progress is inexorable only so long as their are people striving to do so. Fortunately ours is a culture that still places a premium on rewarding the individual initiative and organizational action upon which progress depends. But why say "Wal-Martification" like some kind of slur rather than as an appreciation of the fact that souls live in cities and neighborhoods and bodies that need food, shelter, and clothing. What's so difficult about giving credit to the big box stores for meeting those needs in a manner and to a degree that Mom and Pop never dreamed?

Also on this blog:

The Political Dimensions of the War on Wal-Mart and Five Forces Analysis of Wal-Mart and The Economic Impact of Wal-Mart and The Empire Strikes Back or the entire Wal-Mart series
Linked to: Don Surber | Pirate King

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Comments

Heh, I wouldn't call my comment "thoughtful" ;)

Did the internet really kill Mom & Pop? I don't think so. Mom & Pop are still alive and kicking. Personal customer service still counts for something to a majority of people.

The faceless internet felt really easy to deal with in the beginning but in the end leaves you cold and alone. The more people buy online the more "horror stories" you'll hear about awful service with no one to hold responsible as they are thousands of miles away.

There was (and still may be) a fluctuation toward finding the lowest price but to me, saving 42¢ really isn't worth waiting in line at Walmart for 45 minutes.

In both cases Mom & Pop beats the giant competitors.

Jim & Mark

thanks for your thoughtful comments. I agree that Wal-Mart isn't as much to blame, if at all, for the demise of so many small retail goods store. In fact, I am not even convinced that there has been that many gone under. Without a solid baseline, any decent reporter tell us anecdotes and make them seem like the rule rather than an exception. But even it it is so, one has to consider other explanations. And as you astutely observe, information technology in general, and the Internet in particular, has made the small retailer's business model take on water faster than they can bail it out. Wal-Mart is, as you note, an big, fat, easy target0 just what lazy, undisciplined thinkers like.

thanks again for your comments.

My opinion - WalMart didn't kill the Mom & Pop retail goods stores, but the Internet did. And the demise of Aron's isn't due to Wal-Martification.
Curse you, Al Gore, for inventing the internet!!!

LOL

My opinion - WalMart didn't kill the Mom & Pop retail goods stores, but the Internet did. And the demise of Aron's isn't due to Wal-Martification.

What used to be a viable, although marginally so, business became endangered because the Internet was able to provide access to more items of a similar nature at a lower cost (both real and opportunity). In the case of the odd-ball music stores, no longer do I have to spend more time searching for stuff I might like, but I can go over to Amazon and eBay and have their system search for me. The trade-off is that I have to wait at least overnight to get my purchase (but really if I've waited up until now, I can probably wait a little longer). The Internet has made it possible for big retailers (or at least big virtual retailers) to stock & sell items that were considered unprofitable because demand was too small in a area they could reasonably service. The virtual retailers can aggregrate demand over a larger geography, up to the point the economies of scale then kick in.

We blame Wal-Mart because at least they're a big target (and it's easier for us to hit big targets).

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