Wal-Mart not always an urban booster

Marketplace Staff Feb 18, 2010

Wal-Mart not always an urban booster

Marketplace Staff Feb 18, 2010


Steve Chiotakis: Retail giant Wal-Mart releases quarterly earnings in just a few hours. Analysts expect higher profits over a year ago, and part of that growth can be chalked up to Wal-Mart’s strategy of expanding into urban markets. Supporters say Wal-Mart provides urban economies a much-needed boost, but a new study questions that claim. From Chicago Public Radio, Adriene Hill reports.

Adriene Hill: Political headwinds against Wal-Mart have been fierce all over the country. In Chicago, Wal-Mart has only gotten a toehold in the city, where it has just one store on the west side.

It’s late afternoon. The parking lot is about three-quarters full. Will Wells is walking out with some lemonade, Hawaiian Punch and underwear.

Will Wells: Yeah it’s pretty good. It has a lot of things that I need, and like I said it’s not that far from my house.

Right down the street, Smokey Lee runs a shop that sells and installs audio equipment. He’s pretty happy with Wal-Mart, too.

Smokey Lee: People buy radio from there and come get installation from here.

Hill: So since it’s opened you think it’s been better?

Lee: Yeah, more people more traffic.

But economics professor David Merriman the University of Illinois at Chicago says the study he co-authored shows Walmart’s opening here has forced small businesses out. And:

David Merriman: The net effect is that the number of jobs that were lost by those businesses closing is pretty much a match by the number of jobs that Wal-Mart added when it opened its stores. So it was kind of pretty much a wash.

Merriman says that should change the debate for big cities that are thinking of letting Wal-Mart in.

Merriman: Instead of talking about jobs, whether this is, whether being for or against Wal-Mart is pro or anti-jobs, what we really should be talking about is what kind of neighborhoods do we want, what kind of development do we want.

For its part, Wal-Mart is contesting the validity of the study. It hired a third-party research firm to review Merriman’s findings. The report finds flaws with the original study.

Right or wrong, Morningstar analyst Joel Bloomer says research like Merriman’s might slow Wal-Mart’s move into big cities, but won’t stop it.

Joel Bloomer: I think in the end, their kind of low-price offering will win out. So it happens eventually, it’s just it takes longer.

Bloomer guesses it’s just a matter of time before Wal-Mart shopping bags are as ubiquitous in cities as they are everywhere else.

In Chicago, I’m Adriene Hill for Marketplace.

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