A new Walmart is set to open in the Hillside Centre by the fall of 2021. This will be the third Walmart to open in the Greater Victoria area, with one in Uptown and another in Langford.
This raises some interesting questions. Do we need another Walmart in Victoria? What would the effects be on the local economy?
The Walmart business model is famous for pricing certain items below the cost of production, meaning Walmart takes a loss when selling certain items. Their overall strategy relies on getting customers into the store by alluring them with cheap goods that they don’t make money on in the hope that customers will then proceed to also buy items that are highly profitable for the company.
The most famous example of this model can be seen in the sale of razor blades. The razor handles are expensive to make, but they’re sold for dirt cheap, with the producer taking a loss; the razor blades are extremely cheap to make, but they’re sold for expensive prices, making them significantly profitable.
To pull off this kind of strategy, a company needs massive financial clout to afford selling items at a loss the way Walmart does. This puts local businesses at a disadvantage to Walmart, as they have fewer financial resources at their disposal.
This strategy has effects on the local economy. It leads to a decrease in local businesses in small towns. It also tends to cause local prices in competing businesses near Walmart to go down, which decreases their revenue. This then hurts the business owners and their employees.
Don’t get me wrong—this strategy does result in cheaper prices for the consumer. But there is a cost to this convenience.
Think of the local stores around the Hillside Centre area and the impact that a new Walmart might have on them. It doesn’t just have to be grocery stores, since Walmart also sells electronics, gardening supplies, clothing, books, toys, flowers, and just about everything else they can fit in there. Walmart will impact all of these types of retail in the area surrounding Hillside.
It comes down to a short view of the costs and benefits, as opposed a long view. In the short view, if you want the personal convenience of having cheaper goods available all in one store, then another Walmart in Victoria is good. But if you want to maintain a healthy local economy in the long term, then another Walmart is bad. It’s very bad.
Personally, I can’t help but feel that having another Walmart in an area that’s a 10-minute drive away from the Walmart in Uptown is extremely aggressive on Walmart’s part. It would also be an excessive move on our part as a city, considering how easy it is to get to the Walmart in Uptown, with or without an automobile.
The space in Hillside would instead be better suited to a rentable office space, similar to the upper floors of Uptown. Or it could be a community centre, with indoor recreation spaces. It could be any number of things that aren’t another big box store.
Hillside Centre has seen enough big box stores over the years. Modernizing the use of space in the mall would be a far better decision than having another Walmart set up shop.