The Wal-Mart Effect
Wal-Mart the major retailer we all know and love has a strangle hold on the market for companies trying to sell their product. Wal-Mart is such a major power house in the retail business it is easy to see how they could be considered a monopoly. Business who have a product that Wal-Mart could sell have a difficult time selling it with out using the Wal-Mart channel to do so. For example in the industry of soft drinks you have the two "titans" Pepsi and Coca-Cola. These companies are not greatly affected by not selling their product through Wal-Mart however smaller companies such as COTT does not have the market strength that Coke or Pepsi do. The lack of this market strength forces COTT which produces company brand carbonated soft drinks has to turn to Wal-Mart for 38% of its sales. It is this high percentage of sales from one small company that causes people to raise an eye brow at Wal-Mart. Soft drinks are one the only area in which this type of thing is happening at Wal-Mart they have such a huge power of the market of producers that companies have to turn to them to create a profit, selling through another retailer is not an option. This causes me to wonder just how much power Wal-Mart really hold and if it should be allowed.
1 comment:
I think that Wal-Mart is the perfect example of free enterprise. First, you have the customers who have the option to shop anywhere but choose to shop at Wal-Mart. What does Wal-Mart do so much better than any of its competitors? Secondly, as stated by DL, the manufacturer's feel they can't be successful unless their product is in Wal-Mart. How did Wal-Mart create such a need?
I would first like to say that Sam Walden is a genious. What most people might not realize is that Wal-Mart and Sam's Club receive a rebate from the manufacturer if they sell a certain amount of product in a set period of time. This allows them to offer the product at a lower price to the consumer without lowering their net profits. How can you say that Wal-Mart is a monopoly when consumers have other options but choose not to use them? Isn't this, by definition, the very opposite of a monopoly?
Post a Comment