From accusations of predatory pricing, forced overtime, sexual discrimination, workers collecting foodstamps to survive, and the clear-cutting of small businesses wherever they set up shop, Walmart is fraught with controversy. Despite this backstory, a Walmart opened in Corvallis, OR on March 29.
Surrounded by a veritable panoply of grocery stores, it’s a peculiar move. None of the managers of the markets in the vicinity were permitted by their corporate overlords to comment on their newest competitor, but the general consensus was that Walmart is so far having virtually no effect on its neighbors.
One of those neighbors stands out from the rest as the only one that’s not a corporate entity. Located across the road, Grocery Outlet is the proverbial mom-and-pop establishment. Owners Terry and Jan Neumann work the floor of their store full time. It is not uncommon to see Terry walking the aisles with a pricing gun. These are not lazy corporate fat cats; they’re hard-working folks who’re not afraid to get their hands dirty. By contrast, according to Forbes, the six Walmart heirs have a combined net worth of nearly $100 billion—equivalent to the total net worth of the bottom 30 percent of Americans. Needless to say, you won’t likely see them working the floor of their stores.
Also in contrast to Walmart—which offers communities low-paying jobs in exchange for shuttering local businesses—Oregon native Terry and his wife Jan are avid contributors to the community.
“We help every school; we try to put back in the community as much as we possibly can afford. That may be a small donation, it may be a large donation,” Terry said.
As an example, Terry and Jan helped Habitat for Humanity by stocking the pantries of newly constructed homes with $200 to $300 in groceries: two last fall, and two more this coming June.
Not a franchise, Terry and Jan are owner-operators of the Corvallis Grocery Outlet, which they’ve owned since 1997. The larger Grocery Outlet company is their major supplier, not corporate overlords. As Terry says, “It’s kind of the American Dream.”
Walmart is often able to destroy local mom-and-pop businesses by undercutting prices. Grocery Outlet, however, has its own unique business model, allowing it to buy directly from manufacturers at rock-bottom prices. So, how do they compare?
In a random analysis of 55 commonly bought grocery items, an interesting picture appeared. Out of the 39 items that were identical in both stores (many of the excluded 16 were sold at both locations, but in different sizes), 30 were cheaper at Grocery Outlet, but only nine were cheaper at Walmart. These nine items averaged $0.49 less. Four were only a penny cheaper. On the other hand, the 30 items less expensive at Grocery Outlet averaged $0.67 savings. Sure, you can buy a 32-ounce jar of Smuckers Strawberry Jam for a penny less at Walmart, but you’ll pay $17.97 for a three-liter Black Box Wine that you could buy at Grocery Outlet for $10.99, supporting a true mom-and-pop business in the process. Beyond the bottom line, as Jan says, “Our people, I think, are friendlier.” Walmart, however, is notorious for underpaying and overworking their employees.
Perhaps Corvallis is the line in the sand Walmart shouldn’t have crossed. The only logical reason for opening a grocery store in an area so saturated with them is in the hope that the usual Walmart effect—putting surrounding local businesses out of business—will pave the way for Walmart to dominate the market. Corvallis may be the place where that finally fails.