Study looks at long term impact of Wal-mart on small towns

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May 14th, 2012 by Ric Hanson

A new study by Iowa State University economists shows small towns in Iowa that saw a Wal-Mart move in had moderate increases in sales 15-years later. Economist Ken Stone, became an expert on the study of the impact of the retail giant before retiring from I-S-U in 2004. He co-authored the new study and says Wal-Mart came into many of the towns 25-years ago as they were seeing population and sales declines.  “Even though towns that got a Wal-Mart store get an initial surge in sales, they start going down, and earlier we found that sometimes the go down more than what they were when (Wal-Mart) first came in. We attributed that to too many Wal-Mart stores too close together,” he explains. “What we concluded after this study was — that’s still true — but it was a lot better than if they had continued on the trend line they had been on before.” Stone says they also found the small towns that didn’t get a Wal-Mart to move in, didn’t see everyone leave to shop elsewhere.

“Even though they were at a little lower level, they sort of stabilized. And I attribute that to what I call the capitalism at work. We had companies like Hy-Vee and Fareway locate in those towns and we had Alco and Dollar Generals and so on,” Stone says. He says he has always gone by the premise that people don’t want to leave town to shop, and the smaller stores that filled the gaps in the non-Wal-Mart communities took advantage of that idea. Stone says the research shows the small stores in the Wal-Mart communities that tried to go head to head with the big retailer in areas like sporting goods and pharmaceuticals, did not survive. But he says those who adapted and offered something different have been able to make it.

“And it could be more upscale merchandise or specialty categories. Even hardware stores, if they’re handling more fasteners and tools and things (and provide) better service than what Wal-mart has, they’re doing okay,” according to Stone. “So there’s pluses and minuses others benefit from the additional traffic that Wal-Mart brings in if they are selling something different.” Stone says he can’t take all the information and make one general statement on the impact of Wal-mart on small towns.”So if a town has local option sales taxes for example…then they’re going to benefit from the additional sales. So that’s a plus. On the negative side, there’s a lot of environmental impacts. Many of these super centers take 20 or 30 acres and that’s can create drainage problems, and parking problems, and traffic problems and all kinds of things. So, it’s really hard to say yes or no it just depends on the local situation,” Stone says.

The study looked at 28 Wal-Mart host towns and 22 non-Wal-Mart control towns with populations between three and 30-thousand people. Stone says he doesn’t know of a study that’s taken such a long look at the impact of Wal-Mart. Stone, who is now a professor emeritus, co-authored the study with assistant economics professor Georgeanne Artz for publication in a future issue of Economic Development Quarterly.

(Dar Danielson/Radio Iowa)