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THE EVE OF BATTLE
Oct 2006 | Canadian Grocer 120. 8 (): 38-39,41,43. | Andrew Allentuck

Wal-Mart's success in the U.S. was built on conquering the fragmented and relatively inefficient grocery market, says [John Chamberlain]. But Canada is likely to be different. "It it were a slam dunk, Wal-Mart's Supercentres would have been here a lot sooner. If you read into the time they have taken to arrive, there is a recognition that this market is going to be very challenging." As award-winning Business Week senior writer Anthony Bianco said, in The Bully of Bentonville (Random House, 2006), "It is far from certain that even Wal-Mart can thrive in a Wal-Mart world."

What will Canadian retail grocery be like a few years down the road? Chamberlain figures that Wal-Mart will take over packaged goods. "It can dominate the field. Everybody knows what a box of detergent should cost and nobody wants to pay 40% more at a competitor," he says. By sheer massive buying power, with savings passed along to consumers, Wal-Mart will take a lot of the centre store grocery. Rut in differentiated goods, from lettuce to meat, bakery to meal replacement, the market may not tumble to Wal-Mart. To the extent that people are prepared to pay more for quality or even just differentiation, Wal-Mart will have trouble maintaining its winner-takes-it-all momentum, he suggests.

There is also the union question. In China, faced with the pro-union policy of the incumbent government, the company has agreed to work with them. Chinese unions are not trenchant opponents of management. Rather, they work at "promoting good relations between employers and workers," reports the Wall Street journal. If unions did capture Wal-Mart Supercentres, they might raise payroll costs and hinder the company's aggressive cost reduction strategy. Wal-Mart may remain hostile to unions in North America. It shut its Jonquière, Que. store after it was certified by the United Food and Commercial Workers union. The February 2005 shutdown sent a message that was undeniably clear. Bomb threats and temporary store closings followed, Bianco recalls. The cost of Wal-Mart's image was huge, but, as Bianco admits, "The allure of cut-rate prices and convenient locations is not easily resisted."
ProQuest  buying_power  Wal-Mart  grocery  Metro  Sobeys  Loblaws  fragmented_markets  retailers  CPG  winner-take-all 
july 2012 by jerryking
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