Small Businesses

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What Walmart Says…

“Walmart stores often serve as magnets for other new businesses, large and small.”[1]

“The small businesses that surround our stores generally have products and services we don’t offer or are strong in areas where we can’t compete.”[2]

“The small businesses that adapt can thrive and grow side by side with Walmart.”[3]

What Walmart Doesn’t Say…

Walmart’s entry into a new market has a strongly negative effect on existing retailers.[4] Supermarkets and discount variety stores are the most adversely affected, suffering sales declines of 10 to 40% after Walmart opens.[5]

The value of Walmart to the economy will likely be less than the value of the jobs and businesses it replaces. A study estimating the future impact of Walmart on the grocery industry in California found that “the full economic impact of those lost wages and benefits throughout southern California could approach $2.8 billion per year.”[6]

A study of Chicago in 2009 shows that businesses within one mile of a Walmart Supercenter have a 25% chance of shuttering in the first year, and a 40% chance of shuttering by the second year, when compared with stores farther than one mile from the Supercenter.[7]

Local businesses keep more money in the community. A 2009 study of the differential impact of locally-owned businesses and big-box stores in New Orleans shows that while big-box stores only recirculate 16% of revenues into the community, locally-owned businesses recirculate twice as much.[8]

A 2011 study of the St. Louis region found that as public tax dollars were diverted to big box retailers and shopping malls – more than $5.8 billion over 20 years – small business suffered. Over 600 small businesses (10 employees or less) closed during this time while retail sales have not increased in years.[9]

A 2009 study from the Center for Economic Studies at the U.S. Census Bureau found that the entry and growth of big-box stores has a strong negative impact on the growth and survival of nearby independent and small-chain stores selling the same types of goods.[10]


[1] http://www.walmartwashingtondc.com/loyola/

[2] http://www.walmartwashingtondc.com/loyola/

[3] Matt Byrne, “Walmart disputes claims by new Somerville coalition”, Boston Globe, 11 Nov 2011

[4] Srikanth Parachuri, Joel A.C. Baum, and David Potere. “The Wal-Mart Effect: Wave of Destruction or Creative Destruction?” Economic Geography 85.2 (2009): 209-236.

[5] Kenneth E. Stone, Georgeanne Artz, and Albery Myles. “The Economic Impact of Wal-Mart Supercenters on Existing Businesses in Mississippi.” Mississippi University Extension Service. 2002. http://Wal- Mart.3cdn.net/6e5ad841f247a909d7_bcm6b9fdo.pdf ; O. Capps, and J.M, Griffin. “Effect of a Mass Merchandiser on Traditional Food Retailers.” Journal of Food Distribution 29 (February 1998): 1-7; Vishal P. Singh, Karsten T. Hansen, and Robert C. Blattberg. “Impact of a Wal-Mart Supercenter on a Traditional Supermarket: An Empirical Investigation.” February 2004.

http://chicagobooth.edu/research/workshops/marketing/archive/WorkshopPapers/hansen.pdf; Kusum L.

Ailawadi, Jie Zhang, Aradhna Krishna, and Michael W. Kruger. “When Wal-Mart Enters: How Incumbent Retailers React and How This Affects Their Sales Outcomes.” Journal of Marketing Research 47.4 (August 2010).

[6] Martin Boarnet, and Randall Crane. “The Impact of Big Box Grocers on Southern California: Jobs, Wages, and Municipal Finances.” Orange County Business Council. September 2009.

[7] Julie Davis, David Merriman, Lucia Samayoa, Brian Flanagan,Ron Baiman, and Joe Persky. “The Impact of an Urban Wal-Mart Store on Area Businesses: An Evaluation of One Chicago Neighborhood’s Experience”, Center for Urban Research and Learning, Loyola University. December 2009, pg 17.

[8] Thinking Outside the Box: A report on independent merchants and the New Orleans econo­my, September, 2009. The Urban Conservancy in partnership with Civic Economics.

[9] “An Assessment of the Effectiveness and Fiscal Impacts of the Use of Local Development Incentives in the St. Louis Region” East-West Gateway Council of Governments; Jan 2011