Wal-Mart Location Study

Topics: Wal-Mart, Small business, Target Corporation Pages: 7 (2011 words) Published: April 11, 2012
Executive Summary Memo
To: Prof. T. Schuyler Hale
From: Rodolfo Nolasco, Miguel A Quiroga Jr., Anthony Ramirez, and John Ramirez Subject: Hello, Wal-Mart? Case Study 2
Restatement of Problem:
Wal-Mart is the largest retail corporation in the world. While many welcome its location in their communities, others do not. Suppose Wal-Mart has announced plans to seek the approval from the planning commission of a small town to build a new store. Develop a list of the main arguments, pro and con, that could be present at a public hearing on the matter by members of each of these groups: Owners of small businesses located nearby:

o Increased Traffic = Increased Business (pro)
o The Anchor Effect (pro)
o Effects on Product Quality and Customer Service (pro) o Inability to Compete (con)
o Effects on the Local Economy from Displaced Employees (con)

Town residents and residents of nearby towns:
o Convenience (pro)
o Increased Property Values and Sales Tax Revenues (pro) o Increase in Local Jobs (pro)
o Increased Crime (con)
o Increased Traffic Headaches (con)
o Questionable Wage and Benefit Practices (con)

Wal-Mart boasts 10,130 stores and club locations in 27 countries, employing 2.2 million associates, and serving more than 176 million customers a year (Walmart). These staggering numbers make Wal-Mart the largest retail corporation in the world. When the retailer moves into a new area, there are strong arguments for and against its presence in the community. In the following pages, various views are presented from small business owners and local residents on the pros and cons of allowing Wal-Mart to become a new neighbor. Small Businesses: Opportunities

Increased Traffic is Increased Business
While there are some that view Wal-Mart as a threat to small businesses, there are some small businesses that believe they benefit from this retail giant. Since Wal-Mart has the power to attract a large number of people to the area, small businesses that are near will benefit from the increase in eyes that view their establishment such as restaurants, gas stations, and other establishments that benefit from an increase in visitors to the area. Gas stations are usually located near a high commuter area and a Wal-Mart will create an influx on gas demand by having more vehicles travel near the area. Restaurants are near high commute areas and a Wal-Mart will bring in potential customers to the area. There may be a greater demand for restaurants near the area, so that customers visiting the Wal-Mart can eat out at. Other businesses will start to be developed around the area because of the potential Wal-Mart has to bring in new customers to the surrounding area (money.usnews.com). The Anchor Effect

The location will be developed and updated to attract new customers to the area. Wal-Mart is a huge chain supermarket that has a great selection of items to choose from. They sell items that almost everyone would need in their lifetime. This will bring more visitors to the area and will increase the possibility of new development in the area. The new development will rejuvenate the area and help existing businesses. A nicely developed area is a great attraction to new customers. Effects on Product Quality and Customer Service

Small businesses can take advantage of a marketing strategy that targets consumers who prefer quality over price. Most items sold at Wal-Mart are inexpensive and value-targeted, where profits come from high sales volume and cost competition. However, not all consumers are looking to purchase value items. If they focus on higher quality items, small retailers can leverage a competitive advantage. Wal-Mart targets potential customers by focusing on lower prices, and are not necessarily known for great customer service. While they may not be able to compete on prices,...
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