Wal-Mart Announces it Will Aid Rivals
A story by Michael Barbaro in yesterday's New York Times called Wal-Mart Offers Aid to Rivals seems at first glance to be saying that the world's largest retailer is shifting from devouring small retailers to helping them. This cannot be true.
Wal-Mart wants to open 50 stores in urban neighborhoods in the next two years. Opposition comes from people who live in New York, Los Angeles and Chicago, cities with thousands of small businesses, where neighborhood retailers are part of the traditional way of life. Resistance has kept Wal-Mart out of New York City, it has defeated Wal-Mart roundly in Inglewood, California, and it has limited Wal-Mart to just one store in Chicago. According to The Times, Wal-Mart's chief executive, H. Lee Scott, Jr., said on Tuesday that Wal-Mart would "offer those businesses financial grants, training on how to survive with Wal-Mart in town and even free advertising within a Wal-Mart store."
The Wal-Mart jobs and opportunity zones are to be set up in 10 metropolitan areas where the chain wants to build stores. Wal-Mart said it would choose sites traditionally overlooked by retailers — urban neighborhoods with high unemployment, contaminated land and old shopping centers in need of revitalization. The new stores are expected to create at least 15,000 jobs.The first zone will be the West Side of Chicago, where Mr. Scott announced the program yesterday. . . .
First, however, Wal-Mart has sucked the life out of Main Streets in small towns across America. There is no reason to suppose that it will have any different effect if big cities start letting it in.
Second, although Wal-Mart's announcement seeks to appeal to small businesses and the city residents who depend on small businesses, it is impossible for Wal-Mart to help small stores and continue destroying them at the same time. The Times story suggests that Wal-Mart might help local retailers concentrate on customer service, at which Wal-Mart is weak. Realistically, however, Wal-Mart cannot expect local hardware stores or dress shops in poor neighborhoods to thrive if Wal-Mart offers loss-leader prices on the same items the local stores sell, no matter how great the local stores' customer-service may be.
Third, in an apparent effort to appeal to unemployed city residents, Wal-Mart's announcement also focuses on "creating" jobs. Numerous studies show, however, that Wal-Mart does not create jobs, it destroys jobs.
Fourth, in what may be an effort to appeal to city politicians looking for increased tax revenues, Wal-Mart's announcement speaks of "old shopping centers in need of revitalization." Numerous studies show, however, that when Wal-Mart moves in, tax assessments and tax revenues on traditional shopping streets go down.
