Wal-mart is the largest world retailer having direct, indirect, and induced impact to the economy. The Retailer employs more than one million people in the United States, which is more than any other private company as well as another hundred of thousand others across the world. The expansion in their stores and distribution centers has affected the economy directly by creating 3800 new jobs, which attracts $42,200 salary annually per a worker, which translates to more that $160 million total annually. Specifically, the refurnished and new jobs provide opportunities for people in the region where Wal-mart expand and establish the distribution centers and superstores. Creation of job opportunities serves to promote the economy of the region because when individuals are employed in these stores, they are able to earn a living as well as using their salaries to invest in other fields. The growth of the economy will be experienced when people are able to save and invest from their earnings.
Other than job creation because of Wal-mart expanding and building new superstores, there is also the growth of small businesses, which leads to an increase in sales tax revenue. The community is expected to have a positive gain in taxable retail sales because small businesses grow tremendously due to the benefits people in the neighbourhood get from working at Wal-mart receive. Small business owners also get a chance to increase their earnings by supplying to the retailer shop, particularly individuals in the agriculture sector. As such, they increase their revenue and create more jobs. A neighbourhood that is comprised of people who support each other benefits from an overall growth.
Expansion to facilitate customer needs also has a direct impact to the economy. Particularly, Wal-mart expanding and establishing distribution centers bring their services and commodities near a customer to ensure they access all they need. The retailer has more choices brought closer to clients and they do not have to drive far to access the products. Wal-mart also offers products at low prices in one-stop shopping environment making it possible for any customers to afford them. As such, consumers from the neighborhood communities have the opportunity of enjoying benefits from an easy access to Wal-mart stores near them. However, Wal-mart’s expansion has an indirect impact to other businesses with competing prices. Businesses offering similar products are forced to lower their prices to attract customers who would have shifted to Wal-mart. They end up having losses as they try to compete with the retailer, which not only takes the largest market share, but also manages to drive them out of business.
Similarly, while creating new job opportunities in the neighborhood, they affect other employers who end up losing their workers to Wal-mart, which attracts employees with better salaries than they are paid with their current employees. Other companies losing their employees leads to a decline in productivity and many businesses eventually shut down do avoid huge cost of production. Therefore, although Wal-mart’s expansion benefits workers, it affects other employers negatively. When other businesses are affected negatively, the economy also suffers.
However, the competition that Wal-mart takes to a region during expanding and establishing of the distribution centers promotes advancement in the retail industry. Notably, competition creates an opportunity for innovation and efficiency. Businesses that face competition from Wal-mart will be forced to invent new ways of sustaining themselves in the market and being efficient in their productivity. They will also want to establish their competitive advantage in the industry. When they lose workers to Wal-mart, the solution will be to be innovative and create ways to increase labor productivity using alternative ways.