By exercising its bargaining power, it squeezed profit margins among the major brands, offering them higher volumes in return. It also engaged the most efficient small-scale local producers as suppliers of store brands, thereby creating for itself a residual source of SDS products that could be used in bargaining with the major (multinational) branded suppliers. Those local firms that were not efficient enough to meet Walmex’s terms lost market share, and many failed. At the same time, the limited set of producers that survived grew, and with prodding from Walmex they became more efficient and innovative, adopting innovations first introduced into the market by their multinational competitors. A similar transformation took place among retailers themselves in reaction to the new business practices that Walmex brought to the country. This means an improvement in welfare for Mexican and American consumers, who now have more, and cheaper, soaps to choose from.

Walmart as a schumpeterian force. I love it.

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