Wednesday, August 18, 2010


Wal-Mart is quietly raising its prices, in some cases up to 60%. I've been noticing this over the last few months because we shop at Wal-Mart on a fairly regular basis, not because I want to but because there isn't a lot of other choices around here.

At some point this would seem to be inevitable. Wal-Mart stores used to be small and simple. Now they've become massive, and by Wal-Mart standards, glitzy. That means that overhead had to go up. And quite honestly, the parking lots are not as full as they used to be and the carts seem a bit emptier, too.

This is the free market in action. It is entirely possible that Wal-Mart believes they can increase their prices because they've effectively wiped out a good deal of the competition over the years so their market should be safe. They've become, in some ways at least, a virtual monopoly. The question though is whether the consumer is willing to pay a higher price when going to Wal-Mart just isn't that convenient because of its size? Given a choice between parking in and walking through a giant parking lot, and then dragging my sorry butt across acres of store just to get a simple bottle of soap, I'd rather go to the local grocery store if pricing is close and get in and out quickly. The same is true for clothes and everything else Wal-Mart sells.

Wal-Mart's size, always having been their advantage, may be starting to work against them. My family no longer shops there for groceries because we've found we can spend less at a local store and get in and out much quicker. The selection isn't as great but really, how many different brands of green beans do we need? I never have bought meat at Wal-Mart because I get it from friends or my local butcher. It may cost slightly more but its fresh and I know where it comes from.

So it'll be fun to see how this plays out. Over time I imagine that Wal-Mart will make substantial changes to their business to accommodate a population with less disposable income. This may mean that they begin to reduce store size and selection or maybe they don't expand into new areas as quickly. Maybe they'll go back to being more of a rural store, like they used to be. Or maybe they'll figure out some way to dominate the markets just as they always have and will continue on as before.

My guess is that as prices at Wal-Mart continue to rise competition will rise along with them. I hope that people start to realize that local merchants with local interests at heart are better for the community than giant box stores. With the economy spinning into the toilet we'll see changes in the retail world in a rather short period of time that will be astounding. We are returning to a smaller world, whether we like it or not. Wal-Mart is going to have to make adjustments to this new reality to survive. Raising prices won't help them.

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