Voting with the wallet and purse

No matter how many arguments come up against Wal-Mart and its sourcing of products from China and other overseas countries, the fact is that there is rarely anything more important to the standard retail consumer in the U.S. than price. And, when more and more consumers determine that they have needs that still need to be maintained but they can no longer afford $200 tennis shoes and $600 grocery bills, they head to Wal-Mart. This is how Wal-Mart is growing sales in this economy: customers "trading down" to the lowest retailer possible. That's Wal-Mart.

One of the fiercest battles Wal-Mart has fought is trying to enter many southern California markets. In a state that treasures smaller stores, local business relationships and as-liberal-as-they-come thinking, the mere thought of Wal-Mart entering into almost any southern California town draws incredible resistance from residents, city councils and just about any form of local government. The retailer has had success entering into larger metros in southern California, but not the smaller areas and suburbs of the major metro areas.

Why communities panic

As communities fear the advent of boring, generic big-box retail locations with little-to-no local flair but a penchant for the lowest prices in retail, customers are demanding them more than ever. What many anti-Wal-Mart communities fear is that the spirit of Wal-Mart will come into a smaller community and destroy not only the economic base, but the culture.

However, many studies have shown that having Wal-Mart as a retail anchor actually brings in business and keeps smaller business around. Seriously -- can Wal-Mart ever hope to serve every single retail need? Of course not -- even Wal-Mart can't be everything to everyone all the time. Those who have competed well against Wal-Mart know to offer superior customer service, decent prices and provide a product or service Wal-Mart simply cannot match. Those who won't change get quashed by the retail giant -- hence the "destroying small business" mentality.

Bias?

And then there's the "largest kid on the block" rub. Do these same communities have a vendetta against Wal-Mart specifically, or do they fear other big-box retailers as well? Do communities that fear the big box drive out Costco and Target? If not, then perhaps there is some kind of irrational fear of Wal-Mart itself rather than the big-box store format.

Retail has evolved in the last two decades to the "superstore" format, and retailers not anchored with others will be extinct in the next two decades. Remember TG&Y? How about Woolworths? Even Macy's (NYSE: M) had to buy Marshall Field's to continue its growth. It would be interesting to see if JC Penneys and Dillards hook up next. Seriously -- do mall department stores have a place in the next 20 years of retail? If they do, it won't be like the business climate of today. Reinvention or combination with the competition will be key.

And so lies Wal-Mart. The small Arkansas company that began as a "Made in the USA," lowest-cost retailer and evolved into a "Made anywhere in the world," absolute lowest-cost retailer. The company will break half a trillion dollars in annual sales revenue in the next year or two, and will continue helping as many customers save as much money as possible. At the same time, the company will draw the ire of jealous competitors and fearful communities and shoppers. One thing is clear: Wal-Mart isn't going anywhere and soon may have more than a majority of all retail dollars spent in the U.S. And let's not forget its ambitious international expansion plans.

You can love Wal-Mart or hate it, but regardless of your stance the retailer has changed the face of retail and consumer economics in the U.S. by every measurement. So, the next time one is being considered for yet another community, you'll have to answer this question: is this a better move for my shopping selection and dollar? If there is even an inkling of the answer "yes," then you'll understand why Wal-Mart is where it is -- and it's not because of the cute stores.

Stay tuned right here this time next week for another edition of the Wal-Mart Weekly. Until then, have a safe week.