One by one, big-box retailers are coming into the cities, as the this accompanying article points out. With Walmart now on a campaign to acquire urban locations, city-lovers need to take a close look at the arguments being made on behalf of retailers that for decades chose to erect single-story buildings behind parking lots rather than reinforce the life-giving complexity of walkable, mixed urban districts.
It’s encouraging that a few of the stores being contemplated — such as a mixed-use Walmart project in Washington, DC — have a genuinely urban format. Most of the time, however, big-box stores remain problematic.
I asked Harriet Tregoning, director of planning for Washington, DC, why the District government is so willing to welcome Walmart. Part of her answer: The District is underserved by retailers. “We have only 8 to 9 square feet of retail per capita in the District,” she noted. “By comparison, she said, “The region has about 23 square feet per capita. We leak about $1 billion in retail sales every year” — and thus lose tax revenue.
That’s a point worth considering. However, it should also be subjected to the kind of analysis that Public Interest Research Projects and Peter Katz conducted last year in Sarasota County, Florida, and Asheville, North Carolina. They found that on a per-acre basis, sprawling single-use developments such as big-box stores do a poor job of generating local tax revenue. As reported in the September 2010 New Urban News, their studies showed that dense, mixed-use development is financially more beneficial for local governments.
In Washington, some argue that big-box stores will produce retail employment in poverty-stricken areas where jobs are scarce. At first glance, that sounds great, but it’s important to remember that big-box retailers generally employ fewer employees per dollar of sales than do small local enterprises.
Moreover, locally-based enterprises return a larger portion of their revenue to the local economy — by using nearby accountants, nearby web designers, and so on — than do centralized retail chains. A study in Chicago by the firm Civic Economics found that every $100 spent at national chains produced an average of $43 in economic activity in the city, while $100 spent at locally owned businesses generated $68 in economic activity in the city.
The value of small stores
Smaller, local stores are often put out of business by big-box stores that siphon off much of the local trade. Professor David Merriman and others at the University of Illinois at Chicago and Loyola University tracked all of the retail competitors that were operating within several miles of Chicago’s first Walmart store. They found that within two years of the Walmart opening, about a quarter of the stores within four miles went out of business.
Emma Mitts, alderman for the district in which the Walmart is located, disputed the study, pointing out that a number of new businesses had opened. But when I questioned Merriman about this, he said he had examined retail sales and employment data in the vicinity. Sales and employment should have jumped if many new businesses had come in; that didn’t happen. “We don’t see jumps,” he said.
Stacy Mitchell of the Institute for Local Self-Reliance says economists at the University of California examined more than 2,000 Walmart store openings and found that the average Walmart eliminates 1.4 retail jobs for every one job it creates.
It’s strange, then, to see cities being urged to open their arms to mass-market, common-denominator retailers at the very time when the best urban economic thinking holds that consolidation of business into a few big players is bad for a local economy. If the domination of Detroit by three auto manufacturers turned out to be disastrous, why would domination of a city’s retailing by large-format national chains be good?
Advanced thinking, from Richard Florida and others, argues that cities prosper by having lots of small firms competing, experimenting, innovating, and at times collaborating — giving rise to the future. That’s what we should aim for. To paraphrase Bob Dylan, a city that isn’t busy being born is busy dying.