Wal-Mart ranks fourth in the drugstore and pharmacy business, behind giants Walgreen, CVS and Rite Aid, according to the National Association of Chain Drug Stores. But it is upgrading its profile, rolling out a handful of 24-hour pharmacies in August. Pharmacies themselves are low-margin propositions, but they act as an anchor to drive the profitable over-the-counter business. Wal-Mart can employ its strategy of squeezing supply chains to push down prices in both segments. People with health insurance who pay only co-payments may not be price-sensitive. But for the shoppers who don’t have insurance, many of them Wal-Mart customers, Wal-Mart’s brand of competitive pricing would be just what the doctor ordered.
Forbes.com recently identified what it sees as five key markets (slide-show) that Wal-Mart can successfully enter and dominate (Consumer Electronics, Banking, Pharmacy, Gasoline & Fashion).
Regarding pharmacies, Wal-Mart is obviously doing a disservice to society-at-large by nefariously undercutting mom-and-pop competitors that are forced to charge lower prices for drugs in order to stay in business with such cut-throat competition. There oughta be a law.
Via Always Low Prices. See also Mark Thornton and Jeffrey Tucker.
{ 6 comments }
good word,
There oughta be a law against competing against mom-and-pop stores? I never thought of Walgreens as a M&P store, but if you say so ….
How is it *obvious* that Wal-mart’s strategy of driving prices lower is harmful to society? What you mean is, you would rather see Wal-mart’s blue collar shoppers pay more for OTC drugs because *you* prefer M&P stores to Wal-mart, whereas those truck-driving rubes prefer Wal-mart, and after all, you know better.
You should read this and then consider explaining why generic drugs are cheaper in America than in Canada, France, or the UK.
http://www.newyorker.com/critics/atlarge/?041025crat_atlarge
Sorry, I just realized that this was Mises, not one of the lefty blogs I thought I was reading.
Eric,
The perils of information overload: you might not recognize the artful satire or the odd witty parody in the electronic sea of left hysteria until its too late! There oughta be a law agin’it.
Wal-Mart is going into the fashion business?? Now this I will have to see.
1. Most of the small business owners shop at their competitors for other goods.
2. Most small businesses would not have been viable to begin with if their suppliers were not efficient conglomerates.
3. Many tremendous chains actually began as tiny, M&P type businesses.
Of course, the implicit expectation of its opponents is that their “stupid” colleagues will immediately drop their protest banners, forego their principles, dispose of their culture and run into the completed store to buy up the week-old cheese at half price. Self-interest dictates the demise of erroneous intellectual blather. After all, that’s the only reason to expect Wal-mart to succeed. It’s like protesting a chocolate shop opening because you can’t resist the temptation to purchase chocolate.
Maybe moms and pops should open businesses for self-discipline seminars, instead of playing the violin of self pity as they buy the nickle-and-dimed refined sugar and white flour for their “homemade” breads and cookies from multinational conglomerates.
Comments on this entry are closed.