Big Box Panic

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Today’s attempts at anti-chain legislation follow a similar pattern—and have, in most cases, met a similar fate. Maryland’s anti–Wal-Mart law, which mandated that the company spend at least 8 percent of its payroll on health care benefits, was voided when a federal judge ruled that “state laws which impose employee health or welfare mandates on employers are invalid.” In 2006 the Chicago city council passed a resolution requiring stores of at least 90,000 square feet in floor space and earning more than $1 billion in revenue annually to pay a living wage, only to see the rule vetoed by Mayor Richard Daley. In California, Governor Arnold Schwarzenegger vetoed a similar law that would have forced large employers such as Wal-Mart to provide health care benefits for their employees, arguing that “singling out large employers and requiring them to spend an arbitrary amount” on insurance would have no appreciable effect on “the health care challenges we face.”

If legislation has done little to restrain the chains, the marketplace has regularly cut them down. Contrary to many critics’ assumptions, America has not been condemned to centuries of retail uniformity. The 21st-century consumer has greater choice and access to a wider assortment of products than American consumers have ever had.

In a country of such colossal wealth, price and convenience are not the only factors affecting consumer choice. Even among Starbucks executives, who single-handedly created a market for espresso drinks in the United States, there exists a deep fear that it won’t be an aversion to paying $5 for a cup of coffee that will inhibit the company’s growth but a backlash against the chain’s standardization. Last year, Starbucks CEO Howard Schultz fretted in an internal e-mail that the automation that has helped to drive the company’s expansion “has led to the watering down of the Starbucks experience.” Starbucks isn’t going to disappear anytime soon, but as Business Week recently pointed out, the chain “is suddenly besieged by tough competitors.”

Wal-Mart is also showing signs of wear and overextension. In 2006 it posted a mere 1.9 percent growth in same-store sales—that is, sales in outlets that have been in operation a year or more. It was the slowest rate since the company’s inception. Writing in the Harvard Business Review, retail analysts Darrell Rigby and Dan Haas suggested that other chains “are managing to coexist and even thrive in the same forest with Wal-Mart.” Business Week reported that “Wal-Mart’s growth formula has stopped working,” and one analyst told the magazine that we were seeing “the end of the age of Wal-Mart. The glory days are over.”

Maybe. But stores like Wal-Mart will always be with us, just as they were when they were called Woolworth’s or A&P. If Sam Walton’s creation disappears, it will doubtless be replaced by a more clever, more modern adaptation of the business model he popularized. It is likely true, as big-box critics contend, that stores like Wal-Mart will always dominate certain sectors, thus threatening the existence of many smaller competitors. But chain stores often create markets that didn’t previously exist, both by forging new trends (like the $10 new-release CD, quickly adopted by Newbury Comics) and by provoking a backlash against the alienating experience of big-box shopping. There will always be those who find Wal-Mart inauthentic, those who prefer the punk rock ethos of a Newbury Comics to the Deep South values of Wal-Mart, with its habit of censoring CD covers and song lyrics.

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