0

Wall-to-Wall Wal-Mart?

Do you want to know which video clip will soon be scaring the daylights out of policymakers throughout the world? In a scenario that looks uncannily like the spread of a global pandemic, the economist Thomas Holmes has prepared a dynamic map simulation showing the spread of Wal-Mart stores throughout the United States. Starting at the epicenter in Bentonville, Arkansas, where Sam Walton opened his first store in 1962, giant boxy Wal-Mart stores have now multiplied to the point where the average American lives less than seven kilometers from an outlet.

Interestingly, the video shows how the stores spread out like petals of a flower, ever thickening and expanding. Rather than jumping out to the coasts – 80% of all Americans live within 80 kilometers of the Pacific or Atlantic oceans – Wal-Marts have spread organically through an ever-expanding supply chain. Even though each new store takes away business from Wal-Mart stores established nearby, ever-improving supply efficiencies help maintain the chain’s overall growth.

Love them or hate them, what is undeniable is that Wal-Mart is the quintessential example of the costs and benefits of modern globalization. Consumers pay significantly less than at traditional outlets. For example, economists estimate that the food section of Wal-Mart charges 25% less than a typical large supermarket chain. The differences in price for many other consumer goods is even larger.

Consider the following stunning fact: together with a few sister “big box” stores (Target, Best Buy, and Home Depot), Wal-Mart accounts for roughly 50% of America’s much vaunted productivity growth edge over Europe during the last decade. Fifty percent! Similar advances in wholesaling supply chains account for another 25%! The notion that Americans have gotten better at everything while other rich countries have stood still is thus wildly misleading. The US productivity miracle and the emergence of Wal-Mart-style retailing are virtually synonymous.