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Home > Blog > Competing with Wal-Mart
Out of Our Minds
Sunday, July 04, 2004 1:59 PM
Competing with Wal-Mart
Anita Sharpe on Business

More astounding Wal-Mart facts from an interesting story in today's New York Times magazine: 'Because 12 percent of China's exports to the U.S. end up on Wal-Mart's shelves, and because Wal-Mart's trade with China accounts for 1 percent of that country's gross domestic product, the company exerts tremendous downward pressure on prices. Its buying power enables it to dictate, in effect, what a Chinese manufacturer will get for producing goods that American consumers want. By selling Chinese-made portable DVD players with seven-inch L.C.D. screens for less than $200, for instance, Wal-Mart helped to cut the price of these trendy devices in half over the last year. Competitors have to match the chain's prices or go under.'

While I'm all for cheaper prices, I rarely shop at Wal-Mart because the experience is like reading a long, unedited manuscript: unfocused, unwieldy and uninspiring. I'm willing to pay a bit more for good editing. That's why I'm heading out in a few minutes to a small CD store with minimal selection, 12 miles from where I live. The owner selects about three dozen great CDs for customers to sample and refreshes them often. I almost always find something new I like. I doubt that Wal-Mart, even with its vast inventory, stocks many of the lesser-known selections.

There's no stopping the power of Wal-Mart and clearly, it has a huge fan-base. But there's also no stopping the power of better editing and creativity; I'm betting those will become formidable market forces in the future. Creativity is one of the few things left that can't be commoditized.


3 comments

Elizabeth Albrycht - 7/8/2004 3:17:52 AM
The assumptions in Matt's statement are a little confounding. Don't we usually see creativity come from small businesses who are trying to beat the Goliaths? Haven't we seen that big businesses are generally complacent when it comes to true creativity? And who will be left to compete with? Smaller, nimble, creative types who will fill niches.

That being said, maybe one day, one of those niches will take off and actually threaten Walmart (read: open source/Microsoft). Maybe then they will try to invest in creativity. But I am skeptical.

While Microsoft has a wide variety of talent working for them now, I question if they have 'the cream of the crop' given how many smart people I meet all the time in the tech start-up world.

Clearly Microsoft and Walmart can't be compared on an apples-to-apples basis, but I think there are enough similarities to call into question Matt's creativity assumption.
Matt - 7/5/2004 9:59:07 PM
It may be difficult to commoditize creativity, but when Walmart is the only store left with any buying power, they'll hire some very, very creative people to compete with the others (when the time comes that price alone won't let them expand as fast as they can now).

There is nothing stopping them from taking the cream of the crop from whatever obscure or high-profile school, whether in the arts or in business, that they set their sights on.
Tim - 7/4/2004 6:06:55 PM
Yeah, Walmart may not stock the 'obscure' but my experience of ASDA in the UK is positive. I can get the mainstream albums cheaper than most places (internet excluded). But I know that if I want something a bit different then I'll have to go elsewhere. And that's the point for me - it's about expectations. I don't expect a massive choice from ASDA but I do expect good prices. As long as they provide that, I'll continue to shop there.

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