Politics from the Palouse to Puget Sound

Monday, February 19, 2007

Wal-Mart's Impact on Retail Sales and Pull Factors

PARD claims that, "Based on national patterns, local businesses are likely to lose between 47% and 63% of their sales to Wal-Mart, while receiving little if any 'spillover' of business from those attracted to the new Wal-Mart."

I'm still waiting to see what "national patterns" they refer to or the research behind it.

There is ample evidence to the contrary, however.

A paper by Charlotte Batson of the University of Southern Mississippi titled "The Effect of Wal-Mart on the Stone County Economy: A Look at FY 2004 Retail Sales and Pull Factors" provides hard data, not apocryphal stories.

For example:

After Wal-Mart had been open nearly a year, in FY 2003, retail sales for the city increased by 30 percent, and retail sales for the county increased by 16 percent. During the first full year of Wal-Mart’s operation, FY 2004, county retail sales increased by an additional 24 percent to $134 million, and city retail sales increased an additional 14 percent to $105 million. This compares with an increase in Mississippi retail sales of 8 percent over the four-year period from FY 2001 to FY 2004, an average of 2 percent per year.

In Wiggins and Stone County, citizens have been driving out of the county on a daily basis for years to shop for everything from groceries and ordinary items to specialty items to major purchases. Now that Wal-Mart has expanded the merchandise available locally, people are shopping at home much more, as seen in the tremendous increase in retail sales. Those dollars, formerly spent outside the county, are now being captured and the county is reaping their benefit in increased sales tax revenue.

The impact on local merchants can vary, however, depending on the degree to which the business is in direct competition with the Wal-Mart or other supercenter. Those retailers selling different products, or businesses located near the supercenter, may benefit from increased local traffic. Finding a niche or gap in the big box’s inventory can also be a successful strategy. Businesses in competition with the Wal-Mart, on the other hand, will face stiff competition on price and sales will likely suffer, at least at first. Even these businesses, however, can compete favorably on niche or specialty products, personalized service and customer relations.

Other sectors have shown decreases, especially in the first year after Wal-Mart’s opening, as existing businesses struggled to adapt to Wal-Mart’s presence. In the second year after Wal-Mart’s opening, however, signs of successful adaptation are apparent, as pull factors in several sectors have increased somewhat, both inside and outside the city limits. Some businesses and sectors have benefited from the additional traffic in town, and services have picked up to serve the people staying at home to shop.
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