Wal-Mart To Destroy Small Businesses, Time Magazine Reports

Something Wal-Mart this way comes.


Here's the lead from a Time magazine story on Wal-Mart from yesterday:

Walmart loves to shock and awe. City-size stores, absurdly low prices ($8 jeans!) and everything from milk to Matchbox toys on its shelves. And with the recession forcing legions of stores into bankruptcy, the world's largest retailer now apparently wants to take out the remaining survivors.

It is certainly true that Wal-Mart has a tendency to "crush competitors," as the headline says. But is it true that, as that last sentence presumes, the more successful Wal-Mart is, the more there will be bankruptcies of smaller businesses?

There's actually some pretty compelling evidence that Wal-Mart could help smaller businesses overall. You can't just look at businesses that directly compete with Wal-Mart. There are also many businesses that do not compete with the retail giant but have customers with more money to spend thanks to Wal-Mart's dampening effect on prices of everyday goods.

I think that analysis makes intuitive sense. So why do people keep writing about Wal-Mart like it's assumed that it is destroying businesses? Yes, there would be more bankruptcies if Wal-Mart gets a leg up on competitors. But that doesn't mean "taking out the remaining survivors," because businesses will also be aided and maybe even created thanks to lower prices.