Radio Iowa
08-22-06
I-S-U study looks at Wal-Mart's impact on grocery industry
by Darwin Danielson
While mega-retailer Wal-Mart has come under some fire for their employment
practices lately, an Iowa State University professor says the company is doing
the right things to gain ground in groceries. Bobby Martens, an assistant
professor of logistics and supply chain management, says Wal-Mart has a
world-wide reputation in the way it supplies its stores.
Martens says Wal-Mart is able to offer lower prices and still make a profit partly
due to their supply chain practices. Martens says Wal-Mart has done some "very
smart things" and continues to do some "impressive" things in their supply chain.
Martens says Wal-Mart's entrance into a community usually helps push down
food prices early on, but Martens says there's evidence that Wal-Mart drives out
competitors in the long run. Martens says it appears to be happening in the
grocery industry. He says there has been a mass exodus of medium and small
size "mom and pop" or small chain grocery stores.
Martens says small grocery stores could still compete with Wal-Mart by finding
niche customers who're looking for something more in grocery store than big and
cheap. Martens says Generation X'ers who have more money for example, may
be more interested in going to a smaller grocery store with a meat counter, or a
selection of foods that Wal-Mart doesn't offer.
Martens says Wal-Mart is projected to control 35 percent of the U.S. grocery
market by 2010. He says one of the few things that could hold them back are
those lingering image questions about how the company treats its employees.
Martens says, "One of the things that Wal-Mart is working to do, and they
probably need, to do, is improve what people think of their organization." He says
improving public relations will be an important part of Wal-Mart's future growth.
Martens says Wal-Mart began selling groceries in 1987 and has since become
the top grocery retailer in the country.