6112009

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Big-Box Retailer Impact on Communities and
PeopleJune 4, 2005
2
Outline

• Definitions
• Impact on
• Consumer Spending
• Jobs
• Standard of Living
• Revenue
• Culture
• A Story of a Pickle
• What Its Really About
• Sources

3
Definitions (10)

• Superstores Combination retail stores and
  supermarkets, all under one roof (e.g., Wal-Mart,
  K-Mart, Target)
• Membership Warehouse Clubs Superstores requiring
  a yearly membership fee (e.g., Sams Club,
  Costco/Price Club, Pace)
• Category Killers Large stores characterized by
  low prices and a large selection of merchandise
  within a particular narrow category (e.g., Home
  Depot, Circuit City, Toys R Us)

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Wal-Mart(The Gorilla in the Monkey House)

• The worlds largest corporation (285B in most
  recent FY) (13)
• 1.6 million associates (13)
• 3,600 facilities in the US 1,570 outside the US
  (13)
• 138 million customers per week (13)
• 82 of all Americans made at least one purchase
  at Wal-Mart last year (11)
• Sells more DVDs, groceries, toys, bicycles, guns,
  diamonds, engine oil, detergent, dog food,
  sporting goods, and toothpaste than any other
  company in the world (11)
• Is the countrys largest optician and film
  developer (11)
• Operates the countrys largest private trucking
  fleet (11)
• Is the countrys largest consumer of energy (11)
• Is the countrys biggest real estate developer
  (11)
• Advantages Over Small Retailers include economies
  of scale and access to capital (4)
• Advantages Over Other Big-Box Retailers include
  superior distribution, logistics, and inventory
  control (4)

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Impact on Consumer Spending

• savings !!! (1)
• Products cost less
• Gas costs less

6
Impact on Jobs

• WAL-MART a small net job gain (1, 4, 14)
• Farewell to US manufacturing jobs (17)
• Job loss calculation is complicated

7
Impact on Standard of Living

• Reduced wages and benefits (6, 9)
• Below-average health care coverage (3, 5, 6, 9,
  17)
• Greater increases in family poverty levels (12)

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Impact on Revenue

• Municipal revenues increase (10)
• Sales in surrounding areas decrease (10)
• leave the community (7, 8, 9)
• Subsidies!!! (18)

9
Impact on Culture

• Fewer neighborhood stores (8), which reduces
  consumer choice (9)
• Censorship (Wal-Mart has banned new books by Jon
  Stewart and George Carlin)
• Superstore carcasses blight and property value
  reductions (9)
• Wal-Mart lawsuits alleged discrimination against
  women and overtime pay issues
• There is strong evidence that rural communities
  in the United States have been more adversely
  impacted by the discount mass merchandisers than
  by any other factors in recent times.(15)

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Once Upon a Time

• There was a gallon jar of pickles you could buy
  for 2.97
• And LOTS of people bought them
• Which made the pickle-maker VERY happy (for
  awhile) (16)

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What Its Really About

• The knee bone really IS connected to the thigh
  bone
• Short-term vs. long-term analysis
• I buy a cheap product and
• I save money, or
• I set off a chain of events that results in
  outcomes I may not immediately appreciate but
  would rather not experience

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The Chain of Events

• Small retailers go out of business
• Consumers have less choice
• Money leaves the community
• Poverty levels rise
• Property values may fall
• Manufacturing jobs leave the U.S.
• Traffic increases AND
• Consumers save money
• IS IT WORTH IT???

13
Sources

• Wal-Mart Supercenters Whats In Store for
  Southern California?, Los Angeles County
  Economic Development Corporation, January 2004
• Wal-Mart Factory Certification Report, March
  2003 February 2004, Wal-Mart Stores, Inc.
• Wal-Mart An Example of Why Workers Remain
  Uninsured and Underinsured, AFL-CIO Report,
  October 2003
• Job Creation or Destruction? Labor Market
  Effects of Wal-Mart Expansion, E. Basker,
  University of Missouri, January 2004
• The Growing Share of Uninsured Workers Employed
  by Large Firms, S. Glied and S. Little, Columbia
  University and J. Lambrew, George Washington
  University, October 2003
• The Impact of Big-Box Grocers on Southern
  California Jobs, Wages, and Municipal Finances,
  M. Bournet, UCI and R. Crane, UCLA, September
  1999
• Fiscal Impact Analysis of Residential and
  Non-Residential Land Use Prototypes, Tischler
  and Associates, July 2002
• The Andersonville Study of Retail Economics,
  Civic Economics, February 2005

14
Sources (contd)

• Final Report on Research for Big-Box
  Retail/Superstore Ordinance, Rodino Associates,
  October 2003
• Competing with the Discount Mass Merchandisers,
  K. Stone, Iowa State University, 1995
• The Age of Wal-Mart Inside Americas Most
  Powerful Company, CNBC documentary, 2005
• Wal-Mart and County-Wide Poverty, S. Goetz and
  H. Swaminathan, Penn State University, 2004
• Wal-Mart company web site
• The Regional Impact of Wal-Mart Entrance A
  Panel Study of the Retail Trade Sector in West
  Virginia, M. Hicks and K. Wilburn, 2001
• Impact of the Wal-Mart Phenomenon on Rural
  Communities, K. Stone, Iowa State, 1997
• The Wal-Mart You Dont Know, C. Fishman, Fast
  Times Magazine, December 2003

15
Sources

• Hidden Cost of Wal-Mart Jobs, A. Dube, K.
  Jacobs, UC Berkeley, August 2004
• Shopping for Subsidies How Wal-Mart Uses
  Taxpayer Money to Finance Its Never-Ending
  Growth, P. Mattera and A. Purinton, May 2004