Wal-Mart Plans Classes on Small-Business Survival

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Wal-Mart Stores Inc. has announced plans to open more than 50 new locations in the next two years in urban areas, where it has often met with criticism and local opposition in the past. The company plans to offer seminars to mom-and-pop stores about how to survive when Wal-Mart comes to their neighborhood. Michele Norris talks with Charles Fishman, senior writer for Fast Company magazine.


I'm Michele Norris.


I'm Melissa Block. And this is ALL THINGS CONSIDERED, from NPR News.

NORRIS: The world's biggest retailer is offering some advice to its small-time competitors. Literally.

T: how to survive when Wal-Mart comes to town. On top of that, the giant company will be offering tens of thousands of dollars in neighborhood development grants to local chambers of commerce.

So what's in it for Wal-Mart?

We decided to put that question to Charles Fishman. He's author of a book titled THE WAL-MART EFFECT and he joins us now from Philadelphia. Charles, good to talk to you.

CHARLES FISHMAN: Thanks for having me.

NORRIS: So why is Wal-Mart so eager now to show itself a good corporate citizen? What's this all about?

FISHMAN: This particular announcement was part of a larger announcement that it's going to open 50 or more stores in the next two years in what it calls blighted urban areas. And as part of that, it's going to offer advice to the neighborhood businesses in those urban areas that it goes into.

What's in it for Wal-Mart is a couple of things. Wal-Mart desperately needs to move into urban markets successfully. 90 percent of Americans live within 15 miles of a Wal-Mart. So, if you're going to keep growing, you have to go into the big cities, which are the places where there are still few Wal-Marts.

Wal-Mart has historically, in the last three or four years, encountered a lot of resistance in big cities. And it's trying to use this announcement of a package of incentives and development grants and ways of going to cities to kind of inoculate itself against that opposition in advance, I think.

NORRIS: So go in wearing a white hat?

FISHMAN: Try and go in wearing a white hat. And I think it's okay to say, what does Wal-Mart look like when it's behaving well? And maybe this is part of what Wal-Mart looks like when it's behaving well. If the criticism is ever going to have an impact and Wal-Mart is going to change its behavior, what does that actually look like? Maybe this is what it looks like.

How many companies have announced recently that they're going to open 50 businesses, especially in economically needy parts of the country? I don't think that's bad news. I think it's okay to be skeptical of Wal-Mart. The cynicism is now so deep it's hard to know when to take their good news initiatives seriously. And so I think this is one where we ought to sort of say, well, if you actually do it and you're true to your word, maybe that will really be a good thing.

NORRIS: Has Wal-Mart talked specifically about what they want to do to help these small businesses?

FISHMAN: Yes, they have. They've said they're going to conduct seminars with them on how to compete with Wal-Mart. They're going to advertise a select group of businesses every few months on their own in-house radio and TV network in the stores. And they're going to include some of the local merchants in their local newspaper advertising.

NORRIS: In the end, though, what can Wal-Mart do to help those mom and pops survive, if they're undercutting the prices on baby formula and diapers and Coca Cola and a gallon of milk?

FISHMAN: The weird part of the announcement is not that they're going to build 50 stores in blighted areas. The weird part of the announcement is just what you said, that they're going to try and help the people they will be competing with. I don't know exactly how that's going to work.

The idea of Wal-Mart, literally, it's in the official announcement, conducting seminars on how to compete with Wal-Mart, that's a little unusual. There are, of course, ways to effectively compete with Wal-Mart. You change your product offerings. You improve your customer service.

I would hope that in a slightly more classic economic development sense, the local communities would be helped because Wal-Mart will be an anchor of good news and good economic energy and that people in the area around who may even do things that Wal-Mart doesn't do, like shoe makers or dry cleaners, will actually benefit from the traffic that Wal-Mart brings.

The economics studies show that when a typical Wal-Mart opens anywhere in the country, within five years, four of five businesses have gone out of business. So it is, in fact, quite hard to compete with Wal-Mart, but it is possible.

I'm not sure how I'd feel about taking business advice from one of my competitors, but it's worth seeing how it plays out.

NORRIS: Charles Fishman, good to talk to you. Thanks so much.

FISHMAN: Thank you so much.

NORRIS: Charles Fishman is a senior writer for Fast Company magazine. He's also the author of a book called, THE WAL-MART EFFECT: HOW THE WORLD'S MOST POWERFUL COMPANY REALLY WORKS AND HOW IT'S TRANSFORMING THE AMERICAN ECONOMY.

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