Sam Rose on the end of Walmart
Part of a discussion on alliances between peer producing communities and corporate backers, this is an interesting prediction by Sam Rose.
Sam Rose:
“My 2 cents on Walmart (this is not an argument for, or against anything anyone has said here already) is that, from a *systems* perspective, they cannot sustain their size and methods forever.
There are several reasons why:
Regional and local distribution systems are emerging across the US that will collectively compete with WalMart’s primary market-making system: which is to demand that suppliers offer them the lowest price for widest distribution.
Walmart’s largest competitor in the Unites States for the next 5 years will be a collection of millions of Small Businesses. Small business is indeed still close to 50% of the non-agricultural GDP in US (source: http://www.sba.gov/advo/press/07-12.html).
The difference between “now” (the last 10 years) and the prior decades is that small businesses are more networked, and have more access to more infrastructure. Small businesses do better at finding and flexibly filling niches. All of those niches already add up to a larger total market than the market served by Walmart. One pattern that is notable in small business evolution is that as small businesses fill in niches, *new small business niches emerge*, which creates more room for more small businesses. Also, the more that small businesses network together, the more that they raise their chances of collective survival, and the more they will tend to raise the volume of their individual businesses.
The bulk of people that I know here in Michigan, that have small businesses, are doing really well (especially those associated with Open source software), while those who have or are looking for “jobs” as employees with other companies are really struggling. The new “middle class” looks like it is going to be networked independents.
So, how does this equate to “from a *systems* perspective, [Walmart] cannot sustain their size and methods forever”?
As more niche-oriented choices become available, more people will fill more needs with these niche oriented choices, instead of seeking out mass-produced goods which require mass communication to create and sustain demand. Walmart will always exist, and will always have a market. But, it will be diminished. As the nodes start to network, there will be a threshold reached, and cascade, and this is the point where the demand for mass produced products will diminish. It seems unbelievable now. And yet, keep in mind, not too long ago, General Motors was the largest company in the world.
Filling niches creates more niches, people who come to fill those new niches learn that working with, and buying from the other small businesses that they are networked with is in their interest, and this will diminish current dominant suppliers like WalMart. It won’t be open source anything alone that undoes WalMart so much as it will be: what people want, and what they do to solve their problems of existence (and what they see as their best choice to solve those problems, which I contend will be to collaborate with already emerging networks of collaborating small businesses).”