The Walmart Effect

Walmart is one of the most well-known and successful retail stores in the United States. 90% of Americans have a Walmart within 10 miles of where they live. The company has 140 million shoppers a week and half a billion dollars in annual sales. Walmart is what many people would call a monopoly, having little to no actual competition and having massive control of its cost of goods and services. Some other examples of American Monopolies are Railways, Luxottica, Microsoft, and Google, all of which own 70% or more of their products market.

In 11 years Walmart broke 1 billion in sales, 7 years later it became 15 billion, and in 2020 was at the top of the fortune 500 list which has consistently been the largest company by revenue in the world. With all of this success, how have they done it? Back when Walmart was in its first couple of years the company prioritized two big things and those things were convenience and deals, after quickly learning that they could make a less profit off an item but fewer lots of its price became a very big deal when it came to the store. The phrase Walmart effect can be traced back to 1990 used by Julie Morris. The phrase was used to describe what would happen when a Walmart store would move to town. Due to the store’s convenience, it became everyone’s first pick. As Walmarts started to pop up in small towns, small businesses began to disappear. The stores being run by such a big company allowed them to buy larger amounts of product for much less which then could be sold for far less, but local businesses in the areas simply could not keep up with their prices and were forced to have to shut down, this became ¨The Walmart Effect.¨

So does the company have any real competition? Well, when you really think about it, Walmart has nothing to worry about. At least not anytime soon will another company be taking Walmart’s place. Although some companies like Amazon may be trying, Amazon is in the works of creating what you could call “The everything store.” Amazon currently fears that it needs to become Walmart before Walmart becomes Amazon. Although it’s difficult to replace a company with as much economic power as Walmart currently holds, some are definitely trying.