Walmart Closures: Why Big Business’ Loss is Small-Town America’s Gain
Wal-Mart’s announcement that it was closing 269 stores worldwide – 154 in the United States – sent waves of panic throughout the economy. Wal-Mart Stores, Inc., the nation’s largest private employer and a primary source of goods and services for hundreds of communities, is dealing small-town America a heavy hit with its opting to shutter these stores. The decision puts tens of thousands of people in a very tough spot – but it might actually end up being a good thing.
Wal-Mart’s decision to lay off thousands and leave many communities without a place to buy groceries was, according to CEO Doug McMillon, rooted in a strategy to strengthen the company’s overall portfolio.
“Actively managing our portfolio of assets is essential to maintaining a healthy business,” McMillon said, per a Wal-Mart press release. “Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future. It’s important to remember that we’ll open well more than 300 stores around the world next year. So we are committed to growing, but we are being disciplined about it.”
Wal-Mart’s decision and subsequent announcement unsurprisingly led to anger and dismay, especially in small communities where Walmart has become the main economic attraction. The people in these places rely on their local Walmart for jobs, for groceries, for everything – and local governments rely upon it to supply tax revenue. Obviously, the loss of the store throws the entire system into a tailspin.
People are angry, worried, and wondering what to do as the remaining stock at many of these stores is picked clean. They have good reason to be angry – after all, they blame Wal-Mart, in part, for running all other competition out of town, and more or less making communities dependent on a single business.
It’s easy to sympathize with them. Wal-Mart has a long history of shady business practices, doing everything from squashing unionization efforts to redefining ‘full-time’ work, so as to reduce expenditures on benefits and wages. But the people in these communities can’t be completely absolved of responsibility – they were the ones who flocked to Walmart, and allowed local, established businesses to be cleaved from the local economy.
And now, left high and dry, they’re upset. The future its unclear. But there’s a silver lining, and it’s wrapped in a concept from ancient Rome, of all times and places.
The Roman Emperor Marcus Aurelius – one of history’s greatest thinkers, and classic Stoic philosophers – once wrote in Meditations that “the impediment to action advances action. What stands in the way becomes the way.” This idea, that our problems are actually opportunities in disguise, was recently explored in detail by author Ryan Holiday, in his book The Obstacle is The Way. The main point of his book is that times of strife and frustration are actually blessings in disguise.
And that’s exactly the type of logic that should be applied to the current situation in the communities being abandoned by Wal-Mart.
Now, for people who are now going to have to drive longer distances to buy groceries, and for the thousands who are jobless, this sounds crazy. Most employees don’t have a lot of resources to draw from, after all, and many of these communities are experiencing some serious economic issues. There’s going to be a rough transition, make no mistake about it.
But Wal-Mart’s decision to close up shop presents a huge opportunity, the type of which Holiday writes about in his book. The closures create vacuums – vacuums that are chances for entrepreneurs and small businesses. With the local Walmart out of the picture, your town may need a grocery store. Or a tire shop. Or even a barbershop. These are opportunities, ripe for the picking, with established demand.
Where Wal-Mart once came in with an economic scythe and ran everyone else out of town, the fall of the giant means that these small businesses can once again take root. People have demands, and entrepreneurs can step in to cater to them. It’s a once in a generation opportunity to step up, and rebuild a local economy.
Not only is Wal-Mart’s decision to close more than 150 stores a chance for small businesses and entrepreneurs, it’s also as good a chance as any to learn a valuable lesson about corporate America. When you and your community are no longer profitable, or seen as worth the trouble, large, faceless corporations will leave.
We’ve seen this before, as manufacturing jobs were taken from the factories of the Midwest and shipped overseas. These companies have shareholders to please, and have a goal of seeing quarterly growth – not making sure that you have a job, and that your community has an affordable place to buy groceries. Or Buzz Lightyear sweatpants.
Wal-Mart and other big companies are not invested in your community in the same way that a small, locally-owned business is. There is a difference in interests. A local grocery store has a vested interest in making sure a community has access to affordable food. It will go out of business if that’s not the case. A Walmart store does too, to a certain extent. But their goal isn’t to service the community, it’s to turn a profit, and a bigger profit every year. That’s why they can close up a domestic store, and open another store in India to make up for it. If that new overseas store can match (and probably overtake) the sales numbers of the closed store, there’s no reason not to do it. Especially when operating a store overseas is likely much cheaper – wages are lower, workplace protections may be much less stringent, and certain benefits may not need to be paid out.
From a shareholder’s perspective, the company would be stupid not to do it.
This is why it’s important to support and foster local, small businesses. Companies may grow by leaps and bounds, but still have a vested interest in seeing local communities prosper. If a local business does well, then it can afford to pay employees more – and then they can go out and support other local businesses. It’s a cycle, and consumers need to remember that large multinational corporations can pull the rug out with little damage to their brand or bottom line. Local, small businesses can’t, and won’t have a reason to.
Wal-Mart’s closings will have a big impact in many communities, but it’s important to approach the news with the right mindset. You can get frazzled and frustrated, or you can see it as an opportunity. Many of us grew up hearing that ‘attitude is everything’, and not taking that advice seriously can be a detriment.
Attack issues head-on, with the right mindset, and suddenly a negative can look like a positive. Of course, there are a lot of details that make reality much more complicated, but deep down, it can be as simple as that. Roman emperors knew it was true, and the current situation with Wal-Mart is a perfect opportunity to put that wisdom into practice.