Thursday, January 10, 2008

The Store We Love to Hate...and Shop

One of the great economic success stories in the last half of the twentieth century certainly has to be Wal-Mart. From an Arkansas phenomenon to a national presence, this retail giant has changed the face of retailing. Some say it has done so for the worse, others talk about it more glowing terms. It even holds a key place in one of the more popular books of the past few years, Thomas Friedman's The World is Flat. And it can frequently be used in class as good/bad example of competition or creative destruction, depending on the teacher's predilection.

The Federal Reserve Bank of Minneapolis fedGazette for January, 2008 has an interesting article titled The Wal-Mart Effect that can be used in classroom discussion. Of particular value are the charts in the article. They illustrate
things like Ninth District population growth, employment, earnings, number of business establishments, tax receipts, poverty rates, comparing the District counties with Wal-Marts to those without. The data seems to support both sides of the debate about Wal-Mart's impact. But this is frequently the case in economics, isn't it? (Insert old joke about Harry Truman and one-armed economist for yourself.)

Of additional interest is a link to a prior issue of fedGazette that discussed Wal-Mart's location strategy and containing a wave file illustrating the growth of Wal-Mart locations from 1962 to 2004.

Do you ever find yourself discussing Wal-Mart when talking about competition, creative destruction, or other aspects of economics? Does this provide you with additional insights? I look forward to your thoughts.

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