Researcher Reports Facts & Myths About Big Box Ret
Corvallis, OR, May 27--Since his ground-breaking 1988 study on how Wal-Mart stores impact local economies, Iowa State University economist Kenneth Stone has spoken on the topic in every U.S. state and every Canadian province.
At Oregon State University on Wednesday night, he proved he can still draw a crowd.
The Corvallis, Oregon, Gazette-Times reported that more than 100 people — some of whom drove as much as three and a half hours to get there, according to organizers — filled the small auditorium at the LaSells Stewart Center to glean some of Stone's wisdom on the subject of Wal-Mart and other "big box" retailers.
With Wal-Mart planning supercenters in Lebanon and Albany and a pair of home-improvement warehouse stores being considered in Corvallis, he had an attentive audience — and he seemed to know it.
"I don't know how many of you came expecting me to be a Wal-Mart hater or a Wal-Mart lover," Stone said at the outset of his presentation, sponsored by OSU's Rural Studies Program, "but I try to be factual."
Stone affirmed some of the widely-held beliefs that have given the Bentonville, Ark.-based company a bad name in some circles, but he also dismissed some criticisms as myths.
Yes, he said, Wal-Mart pays lower wages than unionized grocery stores, but in general its wages and benefits are in line with those of most retailers.
"Retailing's just a low-paid profession," he said. "That's all there is to it."
Yes, he said, Wal-Mart puts a lot of pressure on local businesses, but it also saves consumers money on a host of everyday staples.
Yes, he said, his research shows that Wal-Mart draws business away from existing stores when it comes to town, especially in such market segments as grocery, apparel and hardware. But other segments, such as restaurants, taverns, and consumer services, tend to benefit from the customer traffic Wal-Mart attracts.
Stone said a typical Wal-Mart supercenter will bring in $70 million a year in sales. Overall, his research shows, counties tend to see a gain in net sales for the first few years after a supercenter arrives, followed by a drop-off after Wal-Mart builds more stores in the region.
"It's pretty much a zero-sum game when you come right down to it," he said. "If a store does 70 million in an area that's not growing very rapidly, it doesn't come out of thin air. It comes a little bit out of this merchant's cash register, a little bit out of that merchant's cash register."
Addressing a concern of many local residents, he said big box home-improvement centers can have a similar impact on the local economy.
"It's essentially the same, but in some ways it's worse," he said. "They hit hardware stores and lumberyards directly."
He also questioned the assertion that one of the home improvement centers proposed for Corvallis might back out if the other moves ahead. Home Depot and Lowe's, Stone said, are locked in an all-out war for market share.
"It's just crazy what's going on right now," he said. "One can't stand to see a competitor in a market without competition."
In the end, Stone urged the business owners in the audience to adapt to the changing economic realities and find ways to differentiate themselves from their big box competitors.
While he cautioned against giving economic incentives to attract mega-retailers, as some towns have done, he advised local merchants to take a hard look at the way they're doing business and do what it takes to succeed in the marketplace.
"If you believe in the free enterprise system," he said, "really all firms ought to be free to compete."
