How $4 Drugs Spurred the World’s Smallest Walmart
Decatur Metro | January 16, 2011One of the more specific goals to emerge from Decatur’s 2010 Strategic Roundtable sessions was “Encourage a diversity of business types with particular focus on small businesses and businesses that provide daily needs.”
Decatur is well-known around the metro for strong support of small businesses, partly out of desire, but also – let’s be honest – partly out of necessity. Small businesses, such as restaurants, gift shops and clothing stores can add significant mark-ups on items sold – read: “alcohol” for pubs and restaurants – and survive on fewer total purchases and square-footage.
For many commodity goods – such as food, toilet paper, etc – mark-ups are so small in the modern economy that these items are generally regulated to the outskirts of town centers, where rents are cheaper and people shop mightily with a car and a “buggie”. (Sorry, as a native-Northerner, I’m compelled to put that word in quotes.)
But now, some of those big-box players are beginning the move into urban areas. In what is widely seen as a test-model, Walmart is opening a 3,500 (or 10,000 – reports conflict) square foot store – the SMALLEST IN THE WORLD – on the campus of the University of Arkansas this month.
But how can Walmart, a name synonymous with low-prices – if not necessarily low profit margins, but that’s another story – and big box stores, make that jump into urban areas? How did they overcome the profit-margin hurdle?
One number, one word: $4 drugs.
According to AdAge, Walmart makes urban stores profitable with its pharmacies and the recent surging popularity of its $4 prescription program. So from a business standpoint, urban Walmart’s are looking to take market-share from downtown pharmacies, under-cutting them on prescription prices and offering customers a greater and cheaper selection of your “daily needs”.
It looks like the urban store war has just begun. Walmart’s small store on the UA campus is just the beginning. AdAge reports that Walmart has big – I mean small – plans to open 30-40 small and medium size stores in the next year, with a particular focus on New York City.
So it’s possible that more “basic needs” will be returning to our downtowns in the coming years, subsidized largely by your prescription drug plans. It’s not the utopian model that many new urban dwellers desire (see Decatur’s partial goal for “more small businesses” above), but it seems to have the greatest promise to bring more commodities back downtown in the current day and age.
If that makes you more than a little conflicted, you’re certainly not the only one.
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You should point out the the University invited Walmart in to replace their existing University-run pharmacy that is closing for reasons that are not clear. Your post makes it sound like this is a hostile move on Walmart’s part.
It does? How?
To say Walmart has been portrayed as unwanted in many areas, including urban areas with union opposition, is an understatement. Usually the criticism is how the big stores hurt small urban retailers and are bad for urbanism. Here is a case where they are invited in to fill a need in a university/urban setting as a small store. This is a good thing and I think you should have included the fact that they were invited by the university and were not there just to undercut the other pharmacies and create an “urban store war.” That’s all.
How would this differ from CVS?
McKinney’s Apothecary, by the way, is awesome.
I was wondering that very thing myself.
A CVS runs about 13,000 square feet so, assuming the Ad Age figure is accurate, probably not all that much at all. From a first-hand report, the merch in Arkansas was described as: “salty snacks and candy, pharmacy, dairy case, fresh fruit, detergents, kitchen gear (limited selections), paper towels, etc., condoms, shampoos, soaps, etc., frozen meals, and bottled soft drinks,” and the overall feel described as “more like a corner store than a pharmacy.”
The question is, will they merchandise to compete with the CVS/Walgreens crowd or will they try to plug the gaps in the market left unfilled by the drugstores?
Cool. Well if it’s the former then perhaps this urban Walmart story isn’t quite as explosive as some has made it. Sure local urban pharmacies will feel the pressue if Walmart moves in, but it’s not like they haven’t already faced competition from the big nationals like CVS or Walgreens. But I guess that sorta foothold could lead to other things.
Any place that can provide me with a one-stop-shop for salty snacks, a spatula AND condoms has my business at “hello.”
McKinney’s Apothecary does rock! I point to last weeks storm and their thoughtful delivery service to those in need of refills. Nothing beats their friendly atmosphere and extra conveniences.
Yep, I will trade at McKinney’s for as long as they’re there. We have a Mall-Wart about a mile away, and we’ve never crossed its threshold.
There’s no “good thing” associated with Walmart. Destroying small businesses like McKinneys would be bad enough, but…they also negotiate low or no taxes that are passed on to local residents, require infrastructure improvements to be provided at the cost to local taxpayers, abandon their stores if they’re not profitable enough to their investors and leave them to become an unsightly blight. They have absolutely no desire or requirement to investment in any community.
I Agree with you Teppic!
There is absolutely no good thing associated with Walmart.
They sell resonable goods for reasonable prices and provide buying options and selections, by virtue of their size and the number of products that they carry, in areas where these selections might not otherwise be found and why would anyone want something like that?
And $4 perscriptions – the horror.
Skeptic, you’re fighting a losing battle. I’m afriad the upper-middle class bias against Wal-Mart is so engrained in some that to argue against it is an exercise in futility. And Teppic’s post is a perfect example. It’s one thing to say Wal Mart is undesirable on balance. To say there is no “good thing” about a Wal-Mart at all, in any respect, is purely an expression of bias.
Yeah, I know.
Sometimes I feel I have to tilt at awindmill though…
The not-so-funny thing about the liberal elite, is they constantly wring their hands over the “working poor/poor/underclass/underserved/underprivileged”, how these Americans are dying in the street from starvation/can barely make ends meet and what can we do?, yet, Walmart provides these people with things they need (food, TP, undies) and things they want (toys, “fashion”) at prices they are willing and are able to pay. Many people don’t have the luxury, or even geography,or even care to buy these things at trendy boutiques. Walmart probably provided the children of most of these folks with Christmas. Sure, it wasn’t a organic free-trade cotton doll made by one-armed virgins in a third world country, but mass-produced plastic (you know- made by the evil BIG Plastic). One (but not only) funny source of facts is Penn and Teller’s BS series, one show is about Walmart myths. Should check it out. Because I have the financial ability to choose where I buy my meds, I will forever be with McKinney’s. Love my Dr. Doug. Don’t like Walmart? Don’t shop there. Freedom, right?
“Sure, it wasn’t a organic free-trade cotton doll made by one-armed virgins in a third world country”
DM, I am sorry, but that is the line of the year.
Bravo, MNINS!
I think I am posting that as my Facebook status!
hahahahahahahah…
“…organic free-trade cotton doll made by one-armed virgins in a third world country…”
HAH! I LOVE that…
Walmart sucks the life out of communities. It’s employment policy and desires to purchase/sell garbage made in China undermines local and national economies. It makes no sense to me to try to save a few dollars on a product then pay that money back (in taxes) to Peachcare when I could support a local merchant who is my neighbor. Local businesses produce more income, jobs, and tax receipts for local communities than big box stores do; Local businesses are more likely to utilize local ads, banks and other services; Supporting local businesses preserves the economic diversity of our communities and the unique character of our neighborhoods.
Wal-Mart’s desire os to sell what people are willing to buy. Where it is made is entirely secondary, at best. The stores are full of things NOT made in China.
How much life do we have left since we have a Walmart in Avondale Estates?
Please provide specific details of negative employment practices in corporate policies (examples of settlements not encouraged- they are usually shakedowns and occur in lieu of costly litigation regardless of whether guilty). As an attorney, I’d like to know! I could drum up a class action!!!!!!!. “Negative” in that you don’t like it and would prefer not to work there, or actually in violaton of OSHA, Fair Labor Act, Minimum Wage, etc.? Absolutely and certainly its hundreds- probably thousands- of attorneys have vetted employment policies thoroughlywith a fine-toothed comb through the years- what violation(s) of what law(s) have they missed that you are in knowledge of?
WOW! Why get so worked up about this topic? This is Decatur Metro, not Decatur Let’s-All-Go-Loco!
There you are, NellieBellie! My DecaturMetro stalker! I was just sitting here in my fur Snuggie, after taking the kids to their non-government school in my big honkin’ SUV, sipping my non-fair-trade Big Coffee coffee, listening to Boortz’s tribute to Royal, and lo-and-behold – hook, line and sinker! Sweet!
Um, “IheartNB” & NB aren’t the same people, just so you know, NotSuze…
Yeah, I know! I was thinking of changing my handle to “IHeartIHeartNellieBelle,” but I think it was taken. You will be happy to know I recieved some very nice tequila for Christmas, even though I’m not a tequila drinker. I will have a shot one evening in DM and all the posters’ honor one night soon.
That would be deliciously narcissistic!
Is Nelliebelle named after Pat Brady’s Jeep?
Hehehehehe!
While some of the things you said are true, it should be noted that Wal-Mart is merely one of hundreds of such multinational companies that have this effect on local economies. CVS, Starbucks, Target, you name it – they all outsource their profits to equity market investors worldwide, which has reduced the merchant class in this country.
Wal-Mart is often unfairly singled out by people who otherwise love their Starbucks.
Oh Teppic, competition and choice is so bad for the end consumer.
as a parent of a college student who lives on a budget, a discount pharmacy is a good thing. as an adult with a senior citizen parent, $4 drugs are appreciated. there are some things that are good about Wal-Mart, and some things that aren’t so good. I wouldn’t want to be presented with such a broad brush, and neither should they. But I don’t think that smaller model would fit into our downtown — but I bet it goes gangbusters i n NYC.
As an old timer myself, I’m interested in your expanded thoughts about your last sentence. Don’t tease like that.
My mom was corporate for WM for years. The small store model is in place in Chicago and a few other places. She says (at least as of her retirement last summer) the urban small store model really isn’t working or profitable but they aren’t willing to give them up yet. Decatur is not big enough by far to qualify for the small store urban model.
Link to an article in today’s NYTimes: Walgreens, CVS and others are moving into the grocery business.
http://www.nytimes.com/2011/01/17/business/17grocery.html
We were in a RiteAid in Dahlonega over the weekend that had a WINE SECTION! Unfortunately, couldn’t locate the RiteAid sommelier to guide us on a good Cab.
Seems like everyone is fighting for “everyday” purchases.
Bruce, you really need to clean up your language. “Fighting” means that you are inciting violence.
Stop being such a hate filled bigot.
(if you don’t get the sarcasm here…..sorry)