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Sunday, April 30, 2006

 

New Urbanism and Wal-Mart

New Urbanism seems to be getting a lot of attention and Wal-Mart is considering joining the ban wagon. This article explains how Wal-Mart is considering to rebuild their Wal-Marts that were destroyed in Mississippi and Louisiana, due to Hurricane Katrina, in a way that conforms to New Urbanistic views. The plans would call for Wal-Mart to discard their typical 'box' style buildings and move to a more modern aesthetically appealling design. Planners of this idea propose that Wal-Mart create several smaller multi-level buildings. Surrounding these 'mini' Wal-Marts would be housing mixed in with the Wal-Mart buildings. The idea is to bring the New Urbanist feel to areas where Wal-Mart locate.

This doesn't seem like a great idea. Wal-Mart seems to dominate the retail business due at least in part by economies of scale, but through this proposal, Wal-Mart would lose some of this advantage. The retailer benefits from economies of scale in many ways, from purchasing large amounts of products to selling all of these products under one roof. Selling the products all under one enormous building allows Wal-Mart to pay one set of utilities bills, one construction cost, and their customers are allowed to do one stop shopping. Wal-Mart would lose this by creating a New Urbanism community. They would likely pay higher prices for utilities since they would have multiple buildings, higher construction costs to build the various 'modern' looking buildings, and their customers would no longer have the luxury of shopping for all of their needs under one roof.

Even if Wal-Mart was willing to accept the higher costs associated with building the New Urbanistic style Wal-Marts, the problem of getting people to buy into this idea still exists. The proposal calls for housing such as condomeniums and small single family houses to be built with the Wal-Marts, creating a town center. In order for this to work, enough people must be willing to live in close proximity to the Wal-Mart. Since the success of New Urbanism is still relatively unproven, Wal-Mart would be taking a great risk assuming that people are willing to buy into this new idea. This proposal seems to go against everything that Wal-Mart thrives its success on, and as such it seems like a bad idea.

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