I have Thoughts... on Sam's Club closing

Yesterday morning, I learned that the Fairbanks Sam's Club was shutting its doors. I shrugged. I have been in Sam's Club exactly twice in my 11 years in Fairbanks. I could scarcely care less.

But then I learned from my friend Lane. After several years of planning and another several years of running a small stand at the farmer's market, Lane had finally opened his dream taco shop, bringing the style and flavors of his native Texas to Fairbanks. Lane's Quickie Tacos quickly became a hit, winning multiple "readers' choice" awards and winning a devout fan club among both the University folks (who are only a block away), and the military folks (who have to drive across town). Anyway, Lane bemoaned on Facebook, "Sam’s Club is closing its doors in Fairbanks. My taco business is crumbling before my very eyes." And then I read about quite a few local small business owners bemoaning the insecurity of their future supplies.

Would you believe that this is the first time it's actually occurred to me precisely why people believe that most giant corporations are terrible? Everyone says, Walmart is evil, McDonalds is evil, Starbucks is evil, but honestly, while I seldom go to those places (for other reasons), I never thought they were so bad. But now Sam's Club has thrown in my face why giant corporations are not great for small communities.

So, Sam's Club: They move into small cities, use their corporate buying power to undercut pricing for the local businesses, hire some 150 people, and give a false sense of security. In the face of the monolith, a web of dependencies develop around the giant, from small restaurants depending on their bulk food supplies to unskilled workers depending on the "reliable" paycheck. Then they shut down and pull out with no notice, laying off those 150 employees and screwing over other local businesses who had come to depend on them. And now, since no other supply chains had developed organically, a lot of little local businesses will have a supply chain vacuum. Not to mention those 150 employees who likely had little savings built up.

No wonder we are constantly exhorted to "buy local" even though their prices are higher. Local businesses are vested in their local environment, will care for their community out of self-interest, and will know the ins and outs of doing business in their unique circumstances. Consumers who have access to a monolith like Walmart or Sam's Club, who use their enormous purchasing power and multinational presence to reduce prices, get artificially accustomed to prices that are completely unrealistic and unsustainable for a supply chain in a challenging location. Sam's Club thus put the other vendors out of business, and then--surprise!--learned that they couldn't turn a profit at those price points. They also attributed their decision to the complications of managing supply chains in Alaska. Gee, ya think? A local businessperson would be more capable of that, but no local business could compete with the purchasing power of Sam's Club.

Multinational corporations end up being ruthless because they have no stake in the community. As a counter-example, I was extremely impressed when I visited Usibelli Coal mine, located in Healy, the closest town to Denali Park. The fourth generation of the Usibelli family works there, with little Usibelli babes going to Healy schools. They pay good wages, provide good benefits, contribute to the community, even kick in to their employees' kids' college funds. After they complete strip mining on each location, they return the overburden and replant native trees and vegetation, not because the EPA tells them to, but because they hike and camp and hunt there themselves. In this case, self-interest drives caring. That's why it's good when the decision-makers of a company are present in the community.

Here is another example, also from Healy. Three Bears Alaska, the tiny chain founded in Tok, last month opened a store in Healy. The week prior, the Minor News published this report.

Choice quotes from the article include the opening line: "The grand opening of Three Bears Alaska’s year-round grocery story Friday in Healy is such a big deal that the student body of Tri-Valley School — more than 170 kindergarteners through 12th-graders — will attend."

Then it went on:
For the estimated 1,000 people who live here and the remaining 1,500 residents in Denali Borough communities, the new store means groceries and household items are at their fingertips. Typically, everyone drives more than 100 miles one way to shop in Fairbanks. That’s at least a four-hour round trip from Healy, longer for residents of Denali and Cantwell. There will still be plenty of shopping in Fairbanks. But the opening of this store in Healy is generating incredible excitement.

But this is my favorite part! All emphases mine:

For the owners, the Healy store reminds them of where it all began, when the first Three Bears Alaska store opened Nov. 1, 1980, in Tok.

“Healy is very similar,” said Dave Weisz, president and CEO of Three Bears Alaska. He is in Healy this week, stocking shelves. “This is where we started, in towns this size.”

Three Bears targeted a mid-December opening date, in part because they they want local residents to know they are there for them year-round.

All the warm fuzzies from Three Bears!