- 02 Apr 2017 15:56
#14792682
You seem to be presuming that markets are a lot more efficient than they actually are. There is substantial stickiness in retail markets, where consumers are slow to shift the bulk of their shopping to other retailers. It's also the case that there can be considerable scope for engaging in non-price competition, playing up a retailers localness and Irishness, as happens in the Irish market. The growth of Aldi and Lidl in Ireland are a case-in-point: their market share has doubled in the last decade to control about 10 percent of the market each, but their displacement of Irish-owned stores hasn't been total and it hasn't been as rapid as people here seem to imagine.
So I would reject the idea that local shopowners would suddenly go from profitable to running deep into the red at near-zero sales. It might be tough for locals but their competitors tactics are inherently unsustainable and the idea that the encroaching retailer would fight tooth and nail for a relatively small slice of market share seems improbable - the spell of competition will unlikely last long enough to drain their entire revenue. What's more, from their perspective as other local firms fold, the shoppers who have a preference for local retailers increase their demand for their own goods, so their situation improves the longer they hold out.
So to answer your immediate question, loans and strategic downsizing, forming producer co-operatives and purchasing the stores of failing rivals at distress prices when possible.
If the foreign retailer are supplying goods efficiently then when a local retailer buys up their goods they are creating conditions of undersupply in the market that they can sell into. Unless, of course, the foreign retailer pumps an effectively infinite amount of product into the market, in which case that's just increasing the unsustainability of their operation.
On your second point, there is no reason that a local firm needs to represent as itself.
On a further note, this practice is difficult to engage in within retail markets. However, it has been successfully deployed as a strategy in other markets historically.
The complaint that the OP was making is that Walmart can push their prices up and not that they're a soulless corporate.
Though, if people end up purchasing from a soulless corporate over the charming local retailer, though, that implies that consumers believe themselves better off purchasing their goods from the soulless corporate. I don't think we should subsidize local retailers on the basis of the cognitive dissonance of their market - esp. when, by revealed preferences, it would leave the people in that market worse off.
Saeko wrote:Wait it out how? Walmart may be operating at a loss, but the poor suckers waiting out for Walmart's demise would be operating on nearly zero sales.
You seem to be presuming that markets are a lot more efficient than they actually are. There is substantial stickiness in retail markets, where consumers are slow to shift the bulk of their shopping to other retailers. It's also the case that there can be considerable scope for engaging in non-price competition, playing up a retailers localness and Irishness, as happens in the Irish market. The growth of Aldi and Lidl in Ireland are a case-in-point: their market share has doubled in the last decade to control about 10 percent of the market each, but their displacement of Irish-owned stores hasn't been total and it hasn't been as rapid as people here seem to imagine.
So I would reject the idea that local shopowners would suddenly go from profitable to running deep into the red at near-zero sales. It might be tough for locals but their competitors tactics are inherently unsustainable and the idea that the encroaching retailer would fight tooth and nail for a relatively small slice of market share seems improbable - the spell of competition will unlikely last long enough to drain their entire revenue. What's more, from their perspective as other local firms fold, the shoppers who have a preference for local retailers increase their demand for their own goods, so their situation improves the longer they hold out.
So to answer your immediate question, loans and strategic downsizing, forming producer co-operatives and purchasing the stores of failing rivals at distress prices when possible.
Saeko wrote:Sell them to who? If selling overpriced goods was profitable, there never would have been a problem in the first place.
If the foreign retailer are supplying goods efficiently then when a local retailer buys up their goods they are creating conditions of undersupply in the market that they can sell into. Unless, of course, the foreign retailer pumps an effectively infinite amount of product into the market, in which case that's just increasing the unsustainability of their operation.
On your second point, there is no reason that a local firm needs to represent as itself.
On a further note, this practice is difficult to engage in within retail markets. However, it has been successfully deployed as a strategy in other markets historically.
AFAIK wrote:So the best way to avoid large impersonal, lifeless out-of-town supermarkets from destroying small locally owned businesses is to replace the small businesses with large, impersonal, lifeless out-of-town supermarkets.
Isn't that the core complaint people make. That they prefer to have vibrant town centers full of shops staffed by people whose names and faces they recognise.
The complaint that the OP was making is that Walmart can push their prices up and not that they're a soulless corporate.
Though, if people end up purchasing from a soulless corporate over the charming local retailer, though, that implies that consumers believe themselves better off purchasing their goods from the soulless corporate. I don't think we should subsidize local retailers on the basis of the cognitive dissonance of their market - esp. when, by revealed preferences, it would leave the people in that market worse off.
That the King is insane is now old news.