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Report: Wal-Mart same as competitors

TEXT OF STORY

Doug Krizner: Wal-Mart has often been demonized as a destroyer of the mom and pop shop. The conventional wisdom has been when Wal-Mart moves into town, it undercuts prices and hurts local economies. But a new study from the Federal Reserve Bank of Minneapolis suggests the criticism might not be fair. And as Bob Moon reports, the world's biggest retailer might even be a business booster.


Bob Moon: Wal-Mart's critics have long claimed the retail giant lays waste to local businesses, jobs and wages. A small-business owner complained about the Wal-Mart effect in an activist group's movie called "The High Cost of Low Price."

Movie Clip: I've seen a lot of small communities crucified.

But the Minneapolis Fed compared counties in its region with Wal-Mart stores to similar-sized non-Wal-Mart counties. And it found business growth, employment and total earnings were actually somewhat stronger in the Wal-Mart counties. The report concludes Wal-Mart is "no different from any new business coming to town and competing with existing businesses."

Economist Terry Fitzgerald wrote the report. He's quick to say his study looked only at economic benchmarks in the local communities. It did not, for example, pass judgment on the retailer's labor practices or corporate citizenship:

Terry Fitzgerald: We're only looking at the impact it seems to have on local communities. And that impact seems to be pretty small.

And considerably smaller, he says, than Wal-Mart's reputation might suggest.

In Los Angeles, I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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