Category killers: The Home Depot and Toys R Us problem

One of the biggest geographic phenomena across the US in the past 30 years is the disappearance of small specialized stores, including family-owned "mom and pop" stores and unique craft/trade stores.

These individually owned stores which specialize in one or two categories of goods like belts, model cars, radios, etc. have been replaced by "big box" stores known as "category killers" such as Wal-Mart, Toys R Us, Best Buy.

What is a category killer?
A category killer is a store sells pretty much everything i..e all categories in a given market. Toys R Us sells just about everything in terms of toys, so categories like "doll store" and "model train store" go out the window.

The good side is that Toys R Us and Wal Mart sell a lot of things for cheap prices. But there are several downsides:

1. Local ownership declines and profits go to big companies far away not to local owners

2. Local know-how and custom-made, specialized good/trades disappear. For example, let's say there was a very specialized doll store in a town where a very artistic store owner crafted custom-made high-end dolls based on decades of experience and also sold cheaper dolls to keep the business going. Toys R Us comes in and just sells plain vanilla mass-produced dolls but a little cheaper than the small local store, which puts him out of business. As a result, we lose a unique, fine craftsman in exchange for saving a dollar on regular dolls. Meanwhile, that craftsman is less likely to be able to pass on his trade to others, because he no longer can make a living at it. This sort of example has occured all over America -- loss of individual specialized trade shps as stores selling mass-produced good move in.

This is just one example of the idea of "creative destruction" that is inherent to capitalism, coined by Joel Schumpeter. New ideas and technologies are great but we have to remember they destroy established businesses, often too fast for people to adapt.