New WalMart stores put large retailers out of business, mom-and-pop stores less affected

Special Focus Issue: WalMart

From Economic Development Quarterly

Ranked as one of America’s largest corporations and the largest private employer in the United States, some say that WalMart stores are catalysts for economic growth in U.S. communities, while others claim that they can have damaging effects on local shops. However, this special focus issue finds that it is the larger retailers such as Ames Department Stores, Sears, and Kmart that lose business with the arrival of a new WalMart store, while smaller retailers are not affected to the same extent. “Wal-Mart predominantly might be replacing stores already characterized by nonlocal management,” wrote the authors. “This seems to contradict a widely held belief that Wal-Mart hurts locally owned subsidiary business establishments.” Using Indiana as a case study, researchers studied the financial impact of new WalMart stores on establishments nearby. They found that competing stores with 49 or fewer employees were affected very little after a Wal-Mart was opened in the county and competing stores with 50 to 99 employees received a very small negative impact, while stores with 100 to 249 workers closed at a rate of about .5 stores per year, and competing stores with over 250 workers closed at a rate of 1.5 stores per year.

 

Link to table of content for this special issue

Free access to the guest editorial

Persky, J., & Merriman, D. (2012). Focus Issue: WalMart Economic Development Quarterly, 26 (4), 283-284 DOI: 10.1177/0891242412464453

Tags: business, local economic development, Local Taxes, Private Employment, small-town retail, WalMart