BigBox Retailer Impact on Communities and People June 4, 2005

1
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)

4
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)

5
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)

8
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)

10
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)

11
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
  

12
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