Wal-Mart's Entry Research Articles

Survival of new and small retail businesses facing mega‐retailers in non‐metropolitan areas—The case of Walmart in the province of Quebec

AbstractThe aim of this paper is to study the impact of Walmart's entry on the survival of new and small retail businesses within non‐metropolitan areas in the province of Quebec. To do so, the study covers the years 1999–2007 and focuses on four non‐metropolitan cities. These include two Walmart entry cities, Rimouski and Salaberry‐de‐Valleyfield, and two other cities, where no Walmart was present during the study period, La Pocatière and Sorel‐Tracy. The results of a difference‐in‐differences analysis, conducted through a semi‐parametric Cox proportional hazards model, reveal that the entry of Walmart decreases the risk of closure of the new and small retail businesses.

The Economic Impacts of Walmart Supercenters

Our purpose is to review the economic impacts of Walmart's disruption of the food retailing industry. This review synthesizes the extant knowledge and research findings related to the economic impacts of Walmart's entry into, and subsequent domination of, food retailing in the United States and more broadly globally. The findings suggest five broad generalizations: ( a) Walmart's physical growth in the United States has slowed considerably, but the company is growing rapidly in terms of total assets, digital capabilities, international presence, and sales per square foot; ( b) Walmart's entry and presence are associated with lower food prices for households; ( c) Walmart has considerable negative impacts on large competitors, particularly supermarkets, but the evidence for Walmart's deleterious impacts on small businesses is limited; ( d) there is no consensus on the impact of Walmart on local employment, but most studies on the topic point to a modest increase in retail employment; and ( e) Walmart likely increases food access but does not improve dietary quality.

Wal-Mart Germany: Wal-Mart's Egocentric Foray into the German Marketplace

Abstract
 The primary purpose of this paper is to critique Wal-Mart's entry into the German retail market from its initial acquisitions in late 1997 to its exodus in 2006. In an effort to understand the fiasco in Germany, the proper context must first be established. The paper will begin with a brief history of Wal-Mart's United States (US) operations, a short description of its dismal international track record, an outline of its venture into the German marketplace, and an overview of its competitors in Germany and the global marketplace. This paper attempts to answer the following two questions:
 
 What did Wal-Mart do right or wrong in Germany, and how could they have minimized their mistakes?
 What can marketers and global entrepreneurs learn from Wal-Mart's actions in Germany?

Examining the entry of Walmart into South Africa: A stakeholder management perspective

The recent entry of the US multinational Walmart into South Africa has proved to be a source of controversy. Key stakeholders in South Africa objected to the merger and attempted to block it unless certain conditions were met. The aim of this study was to examine the controversy and the conditions surrounding the merger. The research employed a qualitative archival analysis to examine publicly available sources of information with regard to the merger. The findings revealed key stakeholders’ concerns that Walmart’s entry would lead to an increase in imports which would displace local producers, increase unemployment, marginalise trade unions and lower labour standards unless certain conditions were met. The results also revealed problems relating to the firm’s primary focus on “business” while neglecting “public interest” issues, naively relying on their “local retailer” to manage key stakeholders, and assuming that their perceived controversial reputation regarding treatment of trade unions and their views about unemployment as well as the controversies surrounding their history of entry into other global markets would not have the major negative impact it did on stakeholders in South Africa.

Examining the entry of Walmart into South Africa: A stakeholder management perspective

The recent entry of the US multinational Walmart into South Africa has proved to be a source of controversy. Key stakeholders in South Africa objected to the merger and attempted to block it unless certain conditions were met. The aim of this study was to examine the controversy and the conditions surrounding the merger. The research employed a qualitative archival analysis to examine publicly available sources of information with regard to the merger. The findings revealed key stakeholders’ concerns that Walmart’s entry would lead to an increase in imports which would displace local producers, increase unemployment, marginalise trade unions and lower labour standards unless certain conditions were met. The results also revealed problems relating to the firm’s primary focus on “business” while neglecting “public interest” issues, naively relying on their “local retailer” to manage key stakeholders, and assuming that their perceived controversial reputation regarding treatment of trade unions and their views about unemployment as well as the controversies surrounding their history of entry into other global markets would not have the major negative impact it did on stakeholders in South Africa.

Wal-Mart: The Store Wars

In early 2004, residents of Inglewood, California, a working-class community just outside Los Angeles composed primarily of African- and Hispanic-Americans, were preparing to vote on a referendum that would change the city charter to allow Wal-Mart to build a supercenter on a huge, undeveloped lot in the city. Walmart had put forward the measure after the city council refused to change the zoning of a sixty-acre plot on which it held an option to build. Numerous community and religious groups opposed Wal-Mart's entry and campaigned against the referendum. Walmart promised low-priced merchandise and jobs, but these groups were skeptical about the kinds of jobs and compensation that would be offered, the healthcare that would be provided to employees, and the broader impact Walmart would have on the community. Inglewood was a pro-union community, so there was also opposition based on Walmart's anti-union position. On April 6 Inglewood residents voted to reject the referendum by a margin of 60.6 percent to 39.9 percent. Though smaller, less organized, and with fewer resources than Walmart, this coalition of community and religious leaders had defeated the global retailing behemoth.After students have analyzed the case they will be able to (a) appreciate the importance of nonmarket factors to execute growth and market entry strategies, (b) understand how the decisions of political institutions depend on the issue context and the alignments of coalitions of interest, (c) formulate and assess strategies to overcome nonmarket barriers to entry.

Survival of The Fittest: How Competitive Service Overlap and Retail Format Impact Incumbents’ Vulnerability to New Entrants

Many retailers invest in ancillary services to provide shoppers with additional reasons to come to their stores. However, it is unclear whether these services insulate incumbents from new entrants. We address this question by examining how the size and uniqueness of an incumbent's service portfolio protects its sales after a new competitor enters. We study uniqueness by introducing the notion of “competitive service overlap” (CSO) that operationalizes service similarity, and show both that retailers are best served by offering many services and that particularly successful retailers have more unique service portfolios. Furthermore, the impact of uniqueness is most prominent when a grocery incumbent faces a discounter entrant (e.g., Kroger facing a Wal-Mart entry).

The effect of Walmart and Target on property tax rates

This paper analyzes the effect of Walmart and Target on municipal property tax rates using panel data for all New Jersey municipalities from 1998 to 2007. We analyze the impact of Walmart (30 openings) and Target (33 openings) in the host municipality and the nearest adjacent municipality. We find evidence that entry by either retailer lowers the tax rate in the host municipality. However, the estimated reduction in the tax rate is much larger for Target. Target entry reduces the equalized property tax rate by $0.38 per $100 of market value in the host municipality or about 16.8 % while Walmart reduces the equalized property tax rate in the host municipality by $0.063 per $100 of market value or about 2.8 %. The most striking result is the contrast between the positive and significant effect of Walmart entry on the equalized tax rate in the adjacent municipality and the negative and significant effect of Target entry on the equalized tax rate in the adjacent municipality. Walmart entry (in the host municipality) raises the equalized tax rate by about $0.23 per $100 of market value (about a 10 % increase). Target entry, on the other hand, reduces the equalized tax rate in the adjacent municipality by $0.14 per $100 of market value or about 6.2 %.

Competitive Effects of Wal-Mart Supercenter Entry: Moderating Roles of Category and Brand Characteristics

In this paper, the authors investigate whether a Wal-Mart supercenter entry engenders differential effects on competitive draws across different product categories and across distinct groups of brands within a product category sold at incumbent supermarkets, and if so, how. They use data from a natural field experiment created by openings of Wal-Mart supercenters near six stores of a major US supermarket chain. Using two different analyses – a before-and-after-with-control-group analysis of weekly sales, and an individual household level analysis of change in weekly spending – they find that Wal-Mart entry does produce differential effects across categories and brand groups. Mid-tier national brands are more vulnerable to Wal-Mart entry than brands on the boundary of the price-quality continuum, such as premium and economy national brands. Food categories are more vulnerable to Wal-Mart entry, whereas promotion intensive categories and categories with low brand concentration are less vulnerable. Their findings suggest the potential for specific category and brand assortment differentiation strategies that can help conventional supermarkets to better compete with Wal-Mart.

Retail, the service worker and the polity: attaching labour and consumption

This article argues for viewing debates about consumption – here specifically focused on retail spaces – as attachments to fantasies about participation. It uses the figure of the service worker as index, tracking how she appears and disappears at different historical moments in South African public discussions on consumption. Discussing four moments of debate where the service worker is represented in relation to commitments to consumption, the article argues that the figure stands in (variously) for what is at stake in claims to service and retail spaces. Paying attention to the shifting and sometimes shadowy figure of this worker in public debate, we can begin to comment on the longer history of ambivalence toward consumption, linked to labour, as well as recent triumphant claims to access to the market as sphere of democracy, for instance, in Wal-Mart's entry to South Africa.

Supplier responses to Walmart's invasion in Mexico

This paper examines the effect of Walmart's entry into Mexico on Mexican manufacturers of consumer goods. Guided by firm interviews that suggested substantial heterogeneity across firms in how they responded to Walmart's entry, we develop a dynamic industry model in which firms decide whether to sell their products through Walmex (short for Walmart de Mexico), or use traditional retailers. Walmex provides access to a larger market, but it puts continuous pressure on its suppliers to improve their product's appeal, and it forces them to accept relatively low prices relative to product appeal. Simulations of the model show that the arrival of Walmex separates potential suppliers into two groups. Those with relatively high-appeal products choose Walmex as their retailer, whereas those with lower appeal products do not. For the industry as a whole, the model predicts that the associated market share reallocations, adjustments in innovative effort, and exit patterns increase productivity and the rate of innovation. These predictions accord well with the results from our firm interviews. The model's predictions are also supported by establishment-level panel data that characterize Mexican producers' domestic sales, investments, and productivity gains in states with differing levels of Walmex presence during the years 1994 to 2002.

Repositioning Dynamics and Pricing Strategy

The authors measure the revenue and cost implications to supermarkets of changing their price positioning strategy in oligopolistic downstream retail markets. Their approach formally incorporates the dynamics induced by the repositioning in a model with strategic interaction. They exploit a unique data set containing the price format decisions of all U.S. supermarkets in the 1990s. The data contain the format change decisions of supermarkets in response to a large shock to their local market positions: the entry of Wal-Mart. The authors exploit the responses of retailers to Wal-Mart entry to infer the cost of changing pricing formats using a revealed-preference argument. The interaction between retailers and Wal-Mart in each market is modeled as a dynamic game. The authors find evidence that entry by Wal-Mart had a significant impact on the costs and incidence of switching pricing strategy. Their results add to the marketing literature on the organization of retail markets and have implications for long-term market structure in the supermarket industry. Their approach, which incorporates long-term dynamic consequences, strategic interaction, and sunk investment costs, may be used to empirically model firms’ positioning decisions in marketing more generally.

한국 소매유통 업태의 구조변화에 따른 월마트효과 분석

Change in distribution environment has brought about many structural changes such as extension and monopoly of corporate distribution businesses after the opening of distribution. There are conflicting opinions on the effect of discount stores' growth on consumer prices through the structural changes, fortunately which are well shown in the preceding studies. Discount stores growth of these structural changes has emerged early and contribute directly to price stability through competition with other Category stabilizing inflation entire Wal-Mart effect. Previous studies look at the effects of Wal-Mart due to price drops in the presence of some items that uncovered the presence of the materials studied the effects of Wal-Mart. , However, focused on the world's largest distribution company, to analyze the effects of Wal-Mart Wal-Mart entry that is causing the negative economic, social, according to results of a study side view of that study was Divide opinion through structural changes in the Wal-Mart effect, which is well in domestic and overseas study are shown. Thus complementing the limitations of these preceding studies, this study purposes to analyze empirically prices the growth of discount stores' ripple effect on national economy, that is, direct/indirect impact on prices, to draw out implications and to suggest policy plans according to that. In addition, I carried out this research with the purpose of suggesting directions for the development of distribution industry, it examines Wal-mart effect, that is, the growth of discount stores on economy and society. This study to test the effects of Wal-Mart has grown to large supermarkets and hypermarkets to target growth in inflation, which is based on macro-economic study is Therefore, this research literature on the internet and Census Bureau, through the Bank of Korea data for research topics with the data collected through the existing literature, previous studies were Through previous research and theoretical background, a set of hypotheses to test the hypothesis, and data were collected. The data collected statistics program 'Excel 2005' by the statistical processing and clean-up program 'SPSS 15.0', 'EViews 5.0', using the time series data and analysis of the stability test was carried out. The growth of large retail stores in Wal-Mart effect on prices in order to analyze the impact of a proper analysis of time series analysis methods are judged. For this reason, time series analysis of the methods in this study the stability of time-series data by test vector error correction model (Vector Error Correction Model: VECM) was carried out. In this study Hypothesis is that ‘discount store growth affects consumer prices index.’ As a result of the test of hypotheses, Wal-mart effect that discount store growth affects consumer prices has the increase effect of consumers prices index partially. However, it turned out that the seasonal adjustment index of the amount of sale of supermarket and special goods retailers partially drops the consumer prices index. As a result of indirect effect analysis, the effect of seasonal adjustment index of discount store sale amount on consumer prices index turned not to be statistically significant. To examine implications and plans for policy development drawn out by the result of the analysis: first, discount stores should be able to contribute to revitalization of local economy seeking for plans to purchase preferentially local products increase the weight of purchase; second, discount stores should attempt to stabilize consumer prices through rationalization of management; third, they should be able to contribute to the increase of the total employment rate deliberating plans to treat preferentially graduates from colleges in the areas with store; and fourth, discount stores should expand partnership with middle and small distribution firms.

Repositioning Dynamics and Pricing Strategy

We measure the revenue and cost implications to supermarkets of changing their price positioning strategy in oligopolistic downstream retail markets. Our estimates have implications for long-run market structure in the supermarket industry, and for measuring the sources of price rigidity in the economy. We exploit a unique dataset containing the price-format decisions of all supermarkets in the U.S. The data contain the format-change decisions of supermarkets in response to a large shock to their local market positions: the entry of Wal-Mart. We exploit the responses of retailers to Wal-Mart entry to infer the cost of changing pricing-formats using a revealed-preference argument similar to the spirit of Bresnahan and Reiss (1991). The interaction between retailers and Wal-Mart in each market is modeled as a dynamic game. We find evidence that suggests the entry patterns of Wal-Mart had a significant impact on the costs and incidence of switching pricing strategy. Our results add to the marketing literature on the organization of retail markets, and to a new literature that discusses implications of marketing pricing decisions for macroeconomic studies of price rigidity. More generally, our approach which incorporates long-run dynamic consequences, strategic interaction, and sunk investment costs, outlines how the paradigm of dynamic games may be used to model empirically firms' positioning decisions in Marketing.

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.

When Wal-Mart Enters: How Incumbent Retailers React and how this Affects their Sales Outcomes

The authors examine incumbent retailers' reactions to a Wal-Mart entry and the impact of these reactions on the retailers' sales. They compile a unique data set that consists of incumbent supermarkets, drugstores, and mass merchandisers in the vicinity of seven Wal-Mart entries, as well as control stores not exposed to the entries. The data set includes weekly store movement data for 46 product categories before and after each entry and allows the authors to measure reactions and sales outcomes using a before-and-after-with-control-group analysis. They find that, overall, incumbents suffer significant sales losses as a result of a Wal-Mart entry, but there is substantial variation across retail formats, stores, and categories both in incumbent reactions and in their sales outcomes. Moreover, they find that a retailer's sales outcomes are significantly affected by its reactions, and the relationship between reactions and sales outcomes varies across retail formats. These findings provide valuable insights into how retailers in different formats can adjust their marketing mix to mitigate the impact of a Wal-Mart entry.

Dancing with a Giant: The Effect of Wal-Mart's Entry into the United Kingdom on the Performance of European Retailers

The authors examine the value-destroying and value-enhancing effects of a giant player's foreign entry on incumbents operating in that region. They use Wal-Mart's entry into the United Kingdom, through its acquisition of Asda, as the empirical context. Drawing on the marketing, strategy, and finance literature streams, the authors develop hypotheses as to why some incumbents are negatively affected whereas others actually may benefit from the entry of a giant competitor. Their measure of performance impact is the change in shareholder value around the announcement date, which has recently been recognized as an important metric to evaluate the effectiveness of marketing actions. The authors find strong support for the conceptual model, which distinguishes between the seriousness of the threat to the incumbents and their capacity to withstand the threat. The authors validate their findings using three alternative measures of company performance: percentage growth in the incumbent retailer's sales, earnings before interest and taxes, and return on assets between 1998 (the year before the Asda takeover) and 2002 (three years after the takeover). The authors discuss various managerial implications of their results. By acting proactively, incumbents can mitigate the negative performance consequences, while maximally benefiting from the positive implications of a giant competitor's entry.

Wal-Mart, Leisure, and Culture

This essay contributes to the debate about the alleged spillover effects associated with Wal-Mart's growth. Combining county-level data on Wal-Mart entry and location from 1985 through 1998 with individual-level data on leisure activities, we estimate a positive relationship between Wal-Mart penetration and participation in activities involving inputs that can be bought at Wal-Mart. The relationship between Wal-Mart penetration and activities that do not involve inputs that can be bought at Wal-Mart is negative in most cases, but may be positive or zero for cultural activities such as attending classical music concerts and visiting art galleries. The evidence is consistent with the thesis that deeper Wal-Mart penetration expands consumption possibilities.

Dancing with a Giant: The Effect of Wal-Mart's Entry into the United Kingdom on the Performance of European Retailers

Dancing with a Giant: The Effect of Wal-Mart's Entry into the United Kingdom on the Performance of European Retailers

Wal-Mart's entry into Japan as discussed in three domestic trade journals

Wal-Mart entered Japan in March 2002 by taking control of Japanese retailer Seiyu and has since then made significant efforts to reorganize the company. In the course of its entry into Japan, Wal-Mart has become a catalyst for innovation and change in the Japanese retail sector. In this process, Japan's trade journals, with their detailed and diverse coverage, are playing an important role. While at first sight they just seem to be spreading information, at second sight they offer a platform for retailers and suppliers to communicate amongst themselves and with each other. This article looks at the coverage of Wal-Mart's activities as seen in three leading Japanese trade journals. The applicability of Every Day Low Price policies, store development, retailer–supplier relationships and general aspects of the reorganization of Seiyu were identified as the main areas of discussion, and it is shown how the entry of Wal-Mart has led to a broad reassessment of the Japanese retail industry as a whole.