published Friday, June 10th, 2011

Wal-Mart and the free market

Remember all the worried talk just a few years back about Wal-Mart becoming so dominant that it would crush its competitors, and leave Americans with far fewer choices about where to shop? There were even governmental efforts in some places to protect other stores by forbidding Wal-Mart to build.

Well, today it’s clear that Wal-Mart has not become “the only game in town.” Sure, it remains a major retail presence. But it is having to fight to hang on to its share of the market.

“Wal-Mart is in a race against time to give the people what they want before they get comfortable shopping elsewhere,” The Associated Press reported this month.

It seems that during the recession, quite a few of Wal-Mart’s customers started frequenting dollar stores and other low-cost retailers. As a result, the AP noted, “overall traffic [at Wal-Mart] has been down, and revenue at stores open at least a year has posted eight straight quarters of declines on a year-over-year basis.”

That’s an example of how the free market is self-regulating. Stores adapt to changing conditions, or they lose customers. The most successful stores are the ones that are best at figuring out what consumers want, and then giving it to them at a price they can afford. But they always face competition from other stores that hope to attract customers. That acts as a natural check on prices and pushes companies to improve, benefiting consumers.

Unfortunately, government often distorts that process by propping up failing businesses with subsidies and burdening successful businesses with high taxes and undue regulations.

That puts government — not consumers — in the position of picking economic winners and losers.

So many of the economic troubles we face as a nation today could be avoided if we would steer clear of heavy government intervention and let our dynamic market economy play out according to free consumer choice.

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JoeHill said...

If you don't want propaganda about the free market and Wal-Mart, in particular, check the facts at Seems the greatest welfare queens in our society are corporate giants like Wal-Mart. Wal-Market competing without subsidies? Sure . . .

This article also emphasizes the role that price plays in Wal-Mart's struggles, in spite of its subsides. While price is the biggest factor, many people may not shop there anymore because the experience is a burden on their time. They may also feel that he employees are not the cheeriest and most helpful crowd in the world, which the company's hr policies may influence. But beyond that, many may also read honest and critical journalism concerning how their influence on the economy may be of questionable value and have decided to adjust their shopping accordingly. People are not one-dimensional who care only about the price of stuff.

Finally, according to industry information, Wal-Mart is gunning hard for the smaller Dollar Store type market by planning equally sized stores that can drop right down into dense urban areas where many people might walk or use public transportation to reach retailers.

June 10, 2011 at 8:37 a.m.
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