Wal-Mart is known for its low prices strategy – “Every Day Low Prices”. Wal-Mart’s impact on the local economy and businesses when it enters an area/country is termed as Wal-Mart Effect. While small competitors like the corner stores (mom and pop stores) end up closing down their businesses failing to keep up with Wal-Mart’s strategy to drive prices down, bigger competitors also face the heat. On the positive side, Wal-Mart’s entry can help curb inflation (see The Wal-Mart effect: food inflation tame in Canada)

While many local businesses oppose Wal-Mart’s entry into their country, some governments refrain from opening up foreign direct investment (FDI) to foreign multi-brand retailers. E.g. An AC Nielsen study reveals that India leads other countries wr.t shops per capita with about 40 million shop owners and employees. Wal-Mart’s entry into India can have an impact on many local corner stores. The Indian government has a FDI limit in single-brand retail and allows only cash-and-carry stores that can only sell to other local retailers or restaurants. (see related case study – Wal-Mart in India)