Business Insight Zone

Wal-Mart remains by far the biggest retailer in the world and the largest company in the US, but it may not enjoy the clout it did even a few years ago, according to this detailed Wall Street Journal piece by Gary McWilliams:

Wal-Mart Era Wanes
Amid Big Shifts in Retail

Using a combination of low prices and relentless expansion, Wal-Mart Stores Inc. emerged from rural Arkansas in the 1970s to reshape the world’s largest economy. Its co-founder, Sam Walton, taught Americans to demand ever-lower prices and instructed businesses on running a lean company. His company helped boost America’s overall productivity, lowered the inflation rate, and strengthened the buying power for millions of people. Over time, it also accelerated the drive to manufacture products in Asia, drove countless small shops out of business, and sped the decline of Main Street. Those changes are permanent.

Today, though, Wal-Mart’s influence over the retail universe is slipping. In fact, the industry’s titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions to $4. But success is no longer guaranteed.

Whether you give as much weight as McWilliams does to the factors that face Wal-Mart, the article is well worth reading, not least for the strong dose of historical perspective it offers. I think that McWilliams is particular apt when he stresses how other retailers have not only competed with Wal-Mart on price, but have used other factors like convenience and style to trump Wal-Mart’s pricing advantages.

The giant, durable firms that have changed the world’s business landscape — GE, IBM, Siemens, and so on — have seldom done so by standing pat. Even if they hew to the same basic principles over time, they must forever reshape their businesses to cope with changes in their markets and the constant rise of new entrants to those markets. As sound as Sam Walton’s “Everyday Low Prices” approach has been for the past 40 years, it may turn out not to be as permanent a concept as Wal-Mart has thought.

Category: Consumer goods