There are few things I love as much as having good conversations with our adult children.
There are four of them, and like the electorate, two are right of center, and two are left. Our eldest daughter is pretty clearly left (although I chuckle when she refers to some of her friends as “crunchy”). It’s all a matter of degree. Sometimes, she drinks the left’s Kool-Aide, and if it’s obviously factually incorrect, it’s my parenting duty to help her see the light.
While returning from dinner recently, we drove past a Walmart. Abigail immediately launched into a diatribe about how Walmart comes into a market, puts the local retailers out of business with low prices, and then, raises the prices again. Since I didn’t think she ever had an economics course, I had to assume this was something she was fed.
I’ve seen large corporations do a lot of simply dreadful things, but this kind of behavior is not in any large retailer’s playbook. Walmart is simply too big to worry about the local competition when they roll into a community.
Based on Walmart’s 2025/26 projected gross revenue of $680 billion dollars, you can back out the $100 billion or so for the e-commerce operations, and you have $580 Billion retail behemoth.
It’s estimated that Walmart would have to open 46 of their Supercenters to increase their sales by 5%. That’s 46 Supercenters, each larger than three football fields, and with hundreds of employees working at each and every one.
The gross revenue of the Mom and Pop Hardware or Pharmacy that might fail in one of their markets is not even a rounding error to Walmart. Walmart is going to do what is in their nature to do. The left likes to infer that Walmart has a dedicated meanie who’s there to put the local stores out of business. There is nothing further from the truth.
Walmart comes into a market and they execute at scale, and they are reliably consistent. At last count they did what they do 5,400 times. That’s the number of stores they have in North America.
It reminds me of the old parable of the Scorpion who wants to cross the river.
Scorpions cannot swim, so one asks a frog to carry it across the river. The frog hesitates, afraid that the scorpion might sting it, but the scorpion promises he won’t, pointing out that they would both drown if it stung the frog in the middle of the river.
The frog considers this argument sensible and agrees. The scorpion climbs on the frog’s back, and off they go. Midway across the river, the scorpion stings the frog anyway, dooming them both. The dying frog asks the scorpion why it stung him despite knowing the consequences, to which the scorpion replies: “I am sorry, but I couldn’t help myself. It’s my nature.”
The low prices that the local retailers can’t meet are part of Walmart’s nature
Poorly run businesses are going to close when well-run national retailers like Walmart or a Big Box home improvement store opens in their area. It’s not because the large national chains set out to hurt the locals. It’s because the locals had vulnerabilities that they could overcome when they did not have competition.
Poorly run businesses fail when they have competition. Well-run businesses thrive on competition.
Some of the best-run hardware stores I’ve ever seen are literally in the shadow of the big box stores. One that I’ve been to has a Walmart to their west, a Home Depot to their east, and a Lowes north of them. Yes, they had to make changes and accommodations to continue to succeed. That’s part of doing business. That is what well-run businesses do.
There are many examples of local hardware stores actually increasing their profitability after a national chain moves into town. The successes were the stores that were adding value before, and who’s ownership realized that they could not compete against the buying power of the big stores battling with them head on.
So, they had to adapt, improvise and overcome. Adding value in ways the big box could not dream of doing.
Before making allegations against the faceless big corporation, think through the numbers. Most big companies don’t do malfeasance well. It’s documented that they can and will do incompetence.
Based on Walmart’s historical financial results, they are wildly successful because of their nature, and by being as ethical as possible in a firm with 2.1 million employees. I’ve always believed that “value given for value received” is the capitalists’ creed. If you are providing needed value, you’ll always succeed.
But do follow the money. The numbers tell a story if you listen.
