CandleFocus Glossary Editor
The Walmart Effect has been the focus of much scrutiny in recent years – the company has become infamous for their anti-union policies, out-sourcing of jobs, and their impact on small business owners. It is difficult to measure the exact economic impact of Walmart stores, but numerous studies have found that Walmart creates significant costs to local businesses. For example, a 2009 study conducted by economists at the University of Indiana showed that Walmart causes an average of 27% of local business to close or relocate.
When a Walmart location is built, the presence of a large, multinational corporation can crowd out the smaller businesses in the area. Not only are these businesses unable to compete with Walmart’s low prices and huge selection of products, but they may also experience a decrease in foot traffic as customers flock to the larger, more convenient store. This can reduce the appeal of the area for businesses other than Walmart and make it difficult for new businesses to establish themselves there.
The Walmart Effect can also be seen in the reduction of wages for local workers. The large corporation is well known for its strategies to limit its labor costs, such as reducing the hours of workers and outsourcing its jobs. This can lead to a decrease in wages for local workers, as the competition for jobs drives wages down. In addition, the large corporation may be unwilling to provide benefits and union representation, which may further reduce wages.
The Walmart Effect also affects Walmart’s suppliers. In order to remain competitive, suppliers must reduce their production costs in order to meet Walmart’s strict price criteria and remain competitive. This often means outsourcing labor, decreasing wages, and reducing or eliminating benefits. This can lead to a decrease in the quality of products, as suppliers strive to meet Walmart’s cost requirements.
The Walmart Effect can have long-term consequences on local economies. The large corporation’s presence can cause local businesses to close, reduce wages for local workers, and reduce the quality of products of suppliers – all of which can lead to increased poverty and decreased economic activity. Many communities have voiced their opposition to the presence of Walmart or proposed similar regulations in order to limit the Walmart Effect.
When a Walmart location is built, the presence of a large, multinational corporation can crowd out the smaller businesses in the area. Not only are these businesses unable to compete with Walmart’s low prices and huge selection of products, but they may also experience a decrease in foot traffic as customers flock to the larger, more convenient store. This can reduce the appeal of the area for businesses other than Walmart and make it difficult for new businesses to establish themselves there.
The Walmart Effect can also be seen in the reduction of wages for local workers. The large corporation is well known for its strategies to limit its labor costs, such as reducing the hours of workers and outsourcing its jobs. This can lead to a decrease in wages for local workers, as the competition for jobs drives wages down. In addition, the large corporation may be unwilling to provide benefits and union representation, which may further reduce wages.
The Walmart Effect also affects Walmart’s suppliers. In order to remain competitive, suppliers must reduce their production costs in order to meet Walmart’s strict price criteria and remain competitive. This often means outsourcing labor, decreasing wages, and reducing or eliminating benefits. This can lead to a decrease in the quality of products, as suppliers strive to meet Walmart’s cost requirements.
The Walmart Effect can have long-term consequences on local economies. The large corporation’s presence can cause local businesses to close, reduce wages for local workers, and reduce the quality of products of suppliers – all of which can lead to increased poverty and decreased economic activity. Many communities have voiced their opposition to the presence of Walmart or proposed similar regulations in order to limit the Walmart Effect.