Wal-Mart's Expansion Research Articles

Local Welfare Effects of Walmart’s Expansion in Mexico, 2009–2020 (Los Efectos sobre el bienestar local de la expansión de Walmart, 2009-2020)

Walmart is one of the most successful companies in the world. With more than $ 524 billion in 2020 revenue and 2.2 million employees, Walmart is the world's largest company by sales volume and is ranked 19th on the Forbes list of the world's largest public companies. Walmart serves nearly 265 million consumers per week in its 11,501 stores around the world. In Mexico, Walmart entered the market since the 1990s, injecting strong competitive pressure horizontally against its competitors and vertically with suppliers. It has established new standards in the industry in the field of food and product logistics, and has promoted cheaper products, thus altering the dynamics of competition in these markets. At the end of 2019, Walmart's total revenues in Mexico amounted to $ 30.64 million. This document summarizes an independent investigation we conducted on the effects of Walmart's expansion in Mexico from 2009 to date. The entrance of Walmart has pushed prices down in the 34 urban locations compiled in the INPC, according to evidence from the last 10 years. The effect is significant and robust, and is greater for the Bodega Aurrera formats that serve consumers in the lowest socioeconomic levels: D +, D and E. For a representative basket (an expanded basic basket of 44 products crossed with the most sold at Walmart) in stores of different channels (modern, traditional and convenience), the opening of Walmart stores reduces or maintains the prices of its competitors, in different channels, in the long term. Again, this effect is greater for the Bodega Aurrera format. Our study also measures effects on the productivity of companies neighboring a Walmart Distribution Center (CEDI) and we found that the presence of a Walmart CEDI has increased the marginal productivity of capital in the states of the republic where it is located, consistently for 10 years. Based on this analysis and classifying companies according to their size, we find that the existence of a Walmart CEDI increases the marginal productivity of capital for large companies, which suggests that a Walmart CEDI promotes the adoption of technologies that use capital more intensively in large companies.

Towards an agrarian question of circulation: Walmart's expansion in Chile and the agrarian political economy of supply chain capitalism

AbstractThe central role that infrastructures of circulation and connectivity—logistical, financial, and digital—have come to perform in the reproduction of agro‐food systems calls for an expanded conception of agriculture that integrates dialectically the production of economic value and its subsequent realization in the sphere of exchange. Through the case of Walmart's expansion in Chile, and on the basis of a critical theorization of the circulation of capital, this paper proposes an agrarian question of circulation in which the apparently distinct realms of food production, transport, storage, and consumption are brought together into a contradictory and yet unitary whole. The case of Walmart Chile is illustrative of how the reconfiguration of spaces of urban mass consumption and the organizational restructuring of agro‐industrial hinterlands constitute each other in intricate ways. An agrarian question of circulation, the paper concludes, bears important political implications for rethinking the scope and extent of contemporary discussions on agrarian reform being put forward by transnational rural organizations.

Decoding the Development Strategy of a Major Retailer: Wal-Mart's Expansion in the United States

This research aims to provide insight regarding Wal-Mart's retail development strategy in its expansion across the continental United States. The study examines store location patterns and relationships between Wal-Mart's store and distribution center locations and markets. The study shows that, although radial expansion is broadly characteristic of the dense store patterns that have been well established for Wal-Mart at the national level, expansion patterns at the regional level are consistent with a selective process based on factors other than store density. These results provide a new perspective on Wal-Mart's expansion, providing insights of value to retail practitioners and local government.

Estimation of Dynamic Discrete Choice Models in Continuous Time with an Application to Retail Competition

This article develops a dynamic model of retail competition and uses it to study the impact of the expansion of a new national competitor on the structure of urban markets. In order to accommodate substantial heterogeneity (both observed and unobserved) across agents and markets, the article first develops a general framework for estimating and solving dynamic discrete choice models in continuous time that is computationally light and readily applicable to dynamic games. In the proposed framework, players face a standard dynamic discrete choice problem at decision times that occur stochastically. The resulting stochastic-sequential structure naturally admits the use of conditional choice probability methods for estimation and makes it possible to compute counterfactual simulations for relatively high-dimensional games. The model and method are applied to the retail grocery industry, into which Walmart began rapidly expanding in the early 1990s, eventually attaining a dominant position. We find that Walmart's expansion into groceries came mostly at the expense of the large incumbent supermarket chains, rather than the single-store outlets that bore the brunt of its earlier conquest of the broader general merchandise sector. Instead, we find that independent grocers actually thrive when Walmart enters, leading to an overall reduction in market concentration. These competitive effects are strongest in larger markets and those into which Walmart expanded most rapidly, suggesting a diminishing role of scale and a greater emphasis on differentiation in this previously mature industry.

Density Versus Differentiation: The Impact of Wal-Mart on the Grocery Industry

This paper empirically examines the impact of entry by Wal-Mart on competition in the supermarket industry. Using a detailed panel dataset spanning 1994 to 2006, we estimate the impact of Wal-Mart on firm outcomes and market structure, controlling for persistent local trends and systematic differences across markets by exploiting the detailed spatial structure of our store-level census. We find that Wal-Mart's impact is highly localized, affecting firms only within a tight, two-mile radius of its location. Within this radius, the bulk of the impact falls on declining firms and mostly on the intensive margin, entry of new firms is essentially unaffected. Moreover, the stores most damaged by Wal-Mart's entry are the outlets of larger chains. This suggests that Wal-Mart's expansion into groceries is quite distinct from its earlier experience in the discount industry, where the primary casualties were small chains and sole proprietorships that were forced to exit the market. This contrast sheds light on the role density economies play in shaping both equilibrium market structure and economic geography. In the case of grocery competition, high travel costs and the perishable nature of groceries appear to impart horizontal differentiation between firms. This differentiation in demand appears to reduce impact of scale economies advantages that Wal-Mart exploited to the detriment of far-flung competitors in the discount store industry.

Globalization and Local Governance: Implications from Wal-Mart's Expansion

This article focuses on one set of examples where globalization and relocalization have proven strong and determined political, economic, and cultural forces. By examining Wal-Mart's efforts to site a new store in Colchester, Connecticut, we paint a local political mosaic where globalization (in the form of Wal-Mart and its corporate culture) met head on with the forces working to preserve the local. At its broadest level, this case highlights some of the ways in which globalization necessitates changes in governance structures and processes—local and beyond—as communities attempt to navigate the impacts of globalization. The concluding section discusses a number of policy lessons and implications that can be drawn from this case.

Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion

This paper estimates the effect of Wal-Mart expansion on retail employment at the county level. Using an instrumental-variables approach to correct for both measurement error in entry dates and endogeneity of the timing of entry, I find that Wal-Mart entry increases retail employment by 100 jobs in the year of entry. Half of this gain disappears over the next five years as other retail establishments exit and contract, leaving a long-run statistically significant net gain of 50 jobs. Wholesale employment declines by approximately 20 jobs due to Wal-Mart's vertical integration. No spillover effect is detected in retail sectors in which Wal-Mart does not compete directly, suggesting Wal-Mart does not create agglomeration economies in retail trade at the county level.