Walmart - Does bigger always mean better?

Retail is everywhere, and it comes in all shapes and sizes; from your local street vendor to European powerhouses like Carrefour to the ultimate gargantuan; Walmart - the biggest grossing retail chain in existence.

But does bigger mean better? Well, in the world of sci-fi movies, then the answer is no. Moon over Avatar anyone? But with retailers the parameters are as diverse as the items that are sold across the globe. Selection is key to most consumers, as is customer service, value and the arguably the biggest kicker; price.

But slashing prices causes a ripple effect that t ravels further than we thought. First, consider the knock-on effect to smaller retailers. If Walmart undercut all other retailers, then where does this leave other retailers? The answer could be in a bankruptcy office or looking for another job.

Walmart has professed its desire to bring the lowest prices, year in and year out. But this can mean suppliers are forced to cut their prices, and in some extreme circumstances, mean they're forced abroad where overheads are cheaper. In affect, taking jobs away from Americans.

It's unfair to just point the finger at Walmart, as US companies have been moving jobs abroad for decades. But there is no question that the chain is helping accelerate the loss of American jobs to low-wage countries in Asia and beyond. Walmart preached "buying American" in the late 1980s and early 1990s, but has seen more and more of its operations leave US shores.

But does this really matter? Well in a recent Shopper Loyalty Study apparently not, as price was paramount to consumers above anything else. "We've witnessed a profound change among consumers since the recession hit: Low prices have stepped up to become retail's strongest loyalty lure according to consumers," said Kelly Hlavinka, Colloquy partner, in a statement. "That is something which was simply not true in 2008."

So how big is Walmart?

Size has traditionally driven down prices. Saying Walmart is the biggest grossing retailer doesn't re ally do the numbers justice. In global company revenue terms Walmart ranks number two. Walmart is joined in the top five by energy powerhouses ExxonMobil, Royal Dutch Shell, BP and motor giant Toyota.

Walmart dwarfs its closest retail competition by US$250 billion in revenue. The gross annual revenue for Walmart in 2009 was US$405 billion, with Carrefour raking in a modest-in-comparison US$124 billion. Other retailers who warrant a mention are German retailers Metro AG (US$95 billion revenue), British retailer Tesco (US$77 billion) and US retailer Kroger (US$75 billion).

Economists will always tell you that monopolising is never good for a balanced economy, but consider this: If Walmart suddenly upped and vanished from the face of the earth, then it would leave in its wake an unemployment queue with two million people in it. That's the population of Slovenia. And that doesn't account for the people and companies that rely on Walmart to create revenue for themselves.

If your definition of better is cheaper, then Walmart is most probably the better option. And the numbers don't lie. Consumers spend US$36 million in Walmart every hour, and the total number of transactions a year topping US$7.2 billion. Whether bigger is better or not, one thing is for sure, Walmart's size and revenue suggest that consumers are going there, and going there more than anywhere else.

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