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The Impact of an Urban WalMart Store on Area Businesses

Author

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  • David Merriman
  • Joseph Persky
  • Julie Davis
  • Ron Baiman

Abstract

This study, the first on the impact of a WalMart in a large city, draws on three annual surveys of enterprises within a four-mile radius of a new Chicago WalMart. It shows that the probability of going out of business was significantly higher for establishments close to that store. This probability fell off at a rate of 6% per mile in all directions. Using this relationship, we estimate that WalMart’s opening resulted in the loss of approximately 300 full-time equivalent jobs in nearby neighborhoods. This loss about equals WalMart’s own employment in the area. Our analysis of separate data on sales tax receipts shows that after its opening there was no net increase in retail sales in WalMart’s own and surrounding zip codes. Overall, these results support the contention that large-city WalMarts, like those in small towns, absorb retail sales from nearby stores without significantly expanding the market.

Suggested Citation

  • David Merriman & Joseph Persky & Julie Davis & Ron Baiman, 2012. "The Impact of an Urban WalMart Store on Area Businesses," Economic Development Quarterly, , vol. 26(4), pages 321-333, November.
    • Handle: RePEc:sae:ecdequ:v:26:y:2012:i:4:p:321-333
    DOI: 10.1177/0891242412457985
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    References listed on IDEAS

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    5. Russell S. Sobel & Andrea M Dean, 2008. "Has Wal‐Mart Buried Mom And Pop?: The Impact Of Wal‐Mart On Self‐Employment And Small Establishments In The United States," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 676-695, October.
    6. Srikanth Paruchuri & Joel A. C. Baum & David Potere, 2009. "The Wal‐Mart Effect: Wave of Destruction or Creative Destruction?," Economic Geography, Clark University, vol. 85(2), pages 209-236, April.
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    Cited by:

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    2. Wei, Sheng & Huo, Hong & Xu, Ming & Kadirov, Djavlonbek & Fam, Kim-Shyan, 2021. "Shop-hop till you drop! The effect of the image gap on spillover patronage within retail agglomerations," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    3. Rudholm, Niklas & Li, Yuijao & Kenneth, Carling, 2018. "How Does Big-Box Entry Affect Labor Productivity in Durable Goods Retailing? A Synthetic Control Approach," HUI Working Papers 130, HUI Research.
    4. Grimmer, Louise, 2021. "Drivers and barriers for city shopping: Perspectives from retailers and consumers in regional Australia," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    5. Wang, Bingbing, 2023. "Is walmart the same as ten years ago? A non-parametric difference-in-differences analysis of walmart development," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    6. Martin J. Murray, 2021. "Ruination and Rejuvenation: Rethinking Growth and Decline through an Inverted Telescope," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 45(2), pages 348-362, March.
    7. Håkansson, Johan & Li, Yujiao & Mihaescu, Oana & Rudholm, Niklas, 2016. "Big-box retail entry in urban and rural areas: Are there productivity spillovers to incumbent retailers?," HUI Working Papers 118, HUI Research.
    8. Chung, Hwan & Ahn, Dae-Yong & Ahn, Seungho, 2022. "Spillover effects of a mega shopping complex on pre-existing, small retail shops over space, over time and across retail types," Journal of Retailing and Consumer Services, Elsevier, vol. 65(C).

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