When Wal-Mart retail chains started invading small town America in the 1970s and 80s, there was a huge public outcry about how they were destroying local business.
Mom-and-Pop stores were being out-competed, out-bargained and simply pushed out. Shoppers found better values and more jobs with the retail giant than they could ever realize with their homegrown shops. The tables are turning, it would seem, as even those controversial big box stores are finding real struggles in rural markets across the country.
Local vs. Big Box Stores
There’s not a new local retailer on the horizon, though. The fierce competition is being brought to the doorstep of home and farm, day after day, by delivery drivers from companies like UPS, FedEx and USPS. According to a special series in the Wall Street Journal, eCommerce orders started trickling into rural America about five years ago, where shopping options were often very limited.
If residents were lucky, they had a decent grocery store, a Wal-Mart and a farm supply in the nearest town to help fill their food, clothing, home and farm goods needs. If not, it might be an even longer journey to find a town with enough foot traffic to support this much commerce. The great irony is that while eCommerce is making it almost impossible for local businesses to compete in small markets and again empties stores in downtown Anywhere, USA, it’s also costing eTailers massively to service rural areas with the same level of care as urban ones.
UPS and FedEx charge an extra $4 to ship to remote customers to help offset the additional costs of running their fleet vehicles in areas with so few stops per mile. Spend Management Experts examined the real cost of shipping a container of Tide Pods from Atlanta to rural Magnum, Oklahoma and found, rather surprisingly, that the $11 item costs a retailer around $15.65 to send to that remote location.
Although eTailers are hardly going to lose their businesses because of rural shoppers, these customers are certainly taking a bite out of profits both from the remote online shops where they’re saving by spending and the local stores that once thrived nearby. As online shopping becomes more of the norm for rural customers, though, it’s likely that local stores will find a way to compete, just like they did when Wal-Mart came to town. After all, they have one big leg up over the Amazons of the world: shoppers can take their purchases home right away.