By DAVID MOON, Moon Capital Management
I used to have a rule that I would never buy food from a place that sold
Never say "never."
On a single visit to Wal-Mart last week, I bought a case of water, a pair of
shoes, two bicycles, a trampoline and two pounds of Swiss cheese I can't get
anywhere else in town.
Yeah, yeah, yeah; I know its stores are ugly, nearby neighborhoods hate them
and small businesses are supposedly becoming extinct because of this evil
I don't care. And I have a lot of company. Someone is spending $750 million a
day at Wal-Mart.
But people are still shopping at little stores, as well.
The day after my Wal-Mart retail orgy, I visited the Village Hardware store
on John Sevier Highway. I hate going to Lowes for only a couple of items or if I
need a to actually talk with a person other than a 15 year-old cashier. After
learning of my intended use, the clerk suggested I buy a different shovel.
(The shovel he suggested was less expensive.) I was buying 10 bales of
straw for a hayride and they offered to loan them to me. The clerk loaded
my lumber into my truck. The entire transaction took less than ten
When the need arises (and it often does), I go to Lowes and Home Depot and
gorge the same way I do at Wal-Mart. Those big stores serve a fantastic
purpose. But so do the Village Hardware stores of the world.
As politically correct as it may be to think so, Wal-Mart is not the economic
anti-Christ. Because of their low prices, it is estimated that the
Consumer Price Index is lowered a full percentage point each year. With
two or three percent annual inflation, Wal-Mart reduces consumer price increases
by thirty to fifty percent! For a low wage earner, that is like getting a
pretty significant raise each year.
Yes, some small businesses are hurt by the competition. That is the
nature of capitalism. People have the freedom to succeed and fail.
Sam Walton took that risk. So did the folks who started Montgomery Ward
and Service Merchandise. Itís a great lesson to remember on Independence
The best small businesses are the ones that attack Wal-Martís
vulnerabilities, not its strengths. A mom-and-pop retail store trying to
compete on price is living on borrowed time. But niche markets and
personal service have always been strong competitive forces.
Visit Emery Five and Dime. Youíll find items that are nowhere else in
Knoxville. Longís Drugstore isnít competing with Walgreenís.
Markmanís isnít a mass retailer. Spookyís Restaurant (which has moved from
Northshore, by the way, and is now directly across the street from Village
Hardware on John Sevier) isnít competing with Corkyís. Shields Electronics
isnít Radio Shack or Circuit City. And, of course, I whole-heartedly
endorse Village Hardware. These businesses and scores of others like them
are better as a result of the existence of the retail behemoths Ė and so are
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).