The Research on Big Box Retail

There is a growing body of research into the impact of big boxes on community institutions. Some of the research is academically based and is suitable for consideration over a wide range of situations. Three such researchers and their work are highlighted below.

Other research is more site specific and reflects the findings of a particular community dealing with a particular proposal. In general, these studies have been done by paid consultants and are not readily available. Although any number of web sites may provide excerpts from such studies, the inability to review them in their entirety makes utilizing them as a general reference somewhat risky. This is not to discount their findings or meant to reflect negatively on the quality of their work but we would suggest that a community interested in utilizing their results for their own purpose contact the author and request the complete document set.

When analyzing the impact of big box retail, it is important to recognize that different communities may have different needs and desires. In some cases, a big box retailer may actually deliver on their promises and provide an economic boom while in another community the results can be disastrous.

For example, a study conducted by Michael Hicks, Ph. D. of Marshall University, found that the opening of Wal-Mart stores in southwestern West Virginia had positive impacts on jobs, salaries, the unemployment rate and even resulted in additional retail opportunities. On the surface, this study conflicts with the common perception that the opening of big box retail has a negative impact on the local economic base. However, one must factor in the extremely low per capita income of the areas studied as well as the exceedingly high unemployment rates to get a more realistic picture. Given the very depressed nature of the region studied, it is quite plausible and not even surprising that Wal-Mart, now the largest employer in the state with over 5,700 employees (1999), did in fact provide for both an increase in employment and an opportunity to increase per capita income.

However, in situations where the economic climate is more robust than that which was studied by Dr. Hicks, big box retailers represent a real and substantial threat to the existing economy. Kenneth E. Stone of Iowa State University has spent years studying the big box retail and is recognized as one of the leading researchers in the field. In his 1997 report, The Impact of the Wal-Mart Phenomenon on Rural Communities (1997) he says:

" There is strong evidence that rural communities in the United States have been more adversely impacted by the discount mass merchandisers (sometimes referred to as the Wal-Mart phenomenon) than by any other factors in recent times. Studies in Iowa have shown that some small towns lose up to 47 percent of their retail trade after 10 years of Wal-Mart stores nearby.”

Perhaps the most important study on the impact of big boxes to date, and certainly the most robust, is the 1997 report entitled "Measuring the Economic and Sociological Impact of the Mega-Retail Discount Chains on Small Enterprise in Urban, Suburban and Rural Communities". by Edward B. Shils, the Director Emeritus of the Wharton Entrepreneurial Center of The Wharton School, University of Pennsylvania.

The Shils Report, as it is known, provides a detailed look into the impact of big box retail and its impact. For anyone fighting against a big box retailer, this report is essential reading, even though it is quite lengthy.

Dr. Shils examines the big box issue from a number of different angles and his views are well documented with substantial research. In his conclusion he writes:

" In the urban areas, the closing of apparel stores, drug stores, shoe stores, sportswear stores and hardware stores has destroyed the economic balance of the enclave or neighborhood. These stores have been unable to compete with the mega chains, such as Wal-Mart, Kmart, Target and others; and jobs have been lost within the enclave and neighborhoods. A lack of jobs in small family type businesses reduces the purchasing power of the neighborhood and eventually affects even the prosperity of regional chains such as Bradlees and Caldor, both having declared bankruptcy within the past few years. Moreover, Kmart has recently reported serious losses which have been noted on Wall Street. Problems have also been reported at Charming Shoppes and other regional and national chains.”