What will Walmart’s impact be for Jefferson?

Undoubtedly, when Walmart, or any big box store locates in a town, it does have an impact on other businesses. For one thing, large stores have buying power to get merchandise at lower costs than smaller businesses that can’t buy in volume.
The bigger impact, however, is that the American culture wants megastores. While many people say they support local small businesses, in reality they vote with their pocketbook to support the megastores and other big box chain stores.
That’s partly due to competitive pricing and to the larger selections available. But it’s more than that — shopping in a large store is a psychological “experience” that is attractive in our current culture. We want low prices, we want large selections, but we also want to be part of something big where we meet and greet neighbors and friends.

A good example of that is the impact the Kroger store and shopping center along the Jefferson Bypass has had on the community. Like Walmart, Kroger is a megastore with a vast selection of grocery items. Shopping there is an “experience” that many people find attractive.
In a very short time, that store and shopping center has become as much of a part of Jefferson as the traditional downtown has been. In fact, more people probably park in that shopping center each day than do in the traditional downtown during an entire week. It has become the largest center of retail in the community not because of people being forced to shop there, but rather because they choose to shop there.

Those kind of dynamic shifts certainly affect traditional small businesses. But megastores aren’t the reason many small businesses fail. Most small businesses fail because their owners make bad decisions, not because of competition from chain stores.
What are those bad decisions? Here are a few:

1. Lack of experience. All too often, people try to take a hobby or narrow interest and turn it into a business. But just as often, those people have virtually no business experience and there is little demand for what they’re selling. They overestimate their ability and the market and underestimate the cost involved. They don’t know how to hire and fire employees. They don’t know how to manage cash flow. In short, many small businesses fail because their owners don’t know what they don’t know when they start out.
2. Lack of capital. A lot of startup business owners seem to think they will make money from the day they open their doors. But the reality is, most small businesses will lose money for 3-5 years before they ever make a profit. To ride out that time requires a business to have cash on hand to pay the bills until it can begin to make a profit. But what happens most of the time is that owners of startup businesses use all the cash they have before they ever open their doors — then they have nothing left to carry them forward. All too often, small business owners have never worked out the numbers before they start the business. They have no plan and no backup plan. They fly blind and are left without the resources to survive as they try to build the business.
3. Ego. It takes a lot of gumption to open a small business and only people that are driven and competitive will take the plunge. But that kind of drive can also be self-destructive to small businesses because owners often don’t listen to their own instincts or outside advice. The drive to “prove” they can succeed often blinds business owners to the reality of their situation — they ignore bad numbers and don’t listen to their bankers or accountants who try to give them advice. When ego takes over as the driving force of a business, that business is headed for failure.
4. Partnership with a friend. If you want to lose a friend, go into business with them. While the idea of going into business with a friend or family member sounds charming, in reality it often leads to power struggles, jealousy and eventually, disaster. One partner wants to be the “big thinker” and doesn’t want to do the day-to-day work while the other partner has to carry the load. Personalities clash. Struggles over money happen. And when the downward spiral begins, both partners point the finger at the other for the failure.
5. Fatigue. Most small business owners have to work a lot of long, hard hours. The firm isn’t big enough to spread the workload around. Owners miss out on family events. They can’t go on vacation. Their spouse is on their back because they work so much. They have to deal with troublesome employees or a customer who didn’t pay for the service they were given. Running a small business is wearing both mentally and physically and many small business owners simply burn out. The mental and physical fatigue become too much.

Certainly, increasing competition from the big box stores is also a factor in the failure of some small businesses. But the bigger competitive battle in Jefferson may actually come between the megastores in town. Walmart will be located across the street from the Kroger in Jefferson and that could lead to a war in grocery prices.

Economists looking at the big picture would say that would be good for the community since it would dilute the monopoly either store has and bring down consumer costs. Of course, one of the by-products of such a war could be to force other smaller stores out of business in the community.
Economists would argue that such “creative destruction” is just the nature of a growing economic system; that nothing ever stays the same and that the forces of a free market are always going to rearrange the winners and losers.
There’s a lot of truth to that in theory, but what happens in the real world is that government often steps in to pick winners and losers, either by bailing out the failures (Chrysler, large banks), or by erecting barriers to protect the status quo from competition.

The Jefferson City Council will soon decide on some rezonings related to the Walmart project. The two key items for the council to consider will be the road access plans and the long term impact of the store’s property. Some communities now have the big box centers pay a bond or into a sinking fund so that if these megastores close or relocate, there is money available to either tear down the empty shell, or to find some other use for the site so that it doesn’t become an eyesore. The city should consider that alternative, too.

The addition of a Walmart megastore in Jefferson will have an impact on the community. There will be some good things and some bad things.
But the store itself isn’t good or bad. If people didn’t want that kind of store, they’d vote with their pocketbooks and shop elsewhere. Walmart is responding to consumer demand and like it or not, that’s the economic reality.

Mike Buffington is editor and co-publisher of The Jackson Herald. He can be reached at mike@mainstreetnews.com.