So, I was just reading an article in the Salt Lake Tribune about a protest recently in Salt Lake City against big box stores. I've mentioned something about this previously, but I am going to mention it again. Can someone please explain to me what the problem with big box stores is? I don't understand why it's better to be buying from local businesses. Every time I hear people harping on this issue, they seem to just accept it without explanation that buying local is a good thing. I for one do not understand why buying locally is a good thing.
To begin with, many people will say that Wal-Mart is bad because of their health-care policies. There is some definite truth to this argument. Wal-Mart needs to fix this, and the government has started stepping in to make them do something about it. Regardless, I question the sort of health-care that people are receiving working at locally owned businesses. A small business oftentimes can't afford good health-care for their employees because of the volume issue.
The wage issue is brought up a lot as well. But what sort of wages can a locally-owned business pay? Clearly they can't compete in this area for the same reason that they can't compete when it comes to prices. Small businesses don't have the infrastructure and pull with suppliers to get the prices that stores like Wal-Mart can pull down. So, maybe I'm wrong on this, but I highly doubt that locally owned businesses are paying them employees any better than the box stores. Also, what sort of job security can they offer? Very little. Small businesses fail all the time because the owners aren't business people.
Though touched on in the previous paragraph, it bares emphasizing, box stores can get better prices for their customers. If you've never read "The World is Flat" by Thomas Friedman, it's worth a read. He explains the whole Wal-Mart supply chain. It is impressive and explains very clearly why Wal-Mart can undercut others on prices. It isn't because of they are doing anything underhanded it's simply because they have an incredible supply chain.
Now, people are quick to say that even if buying locally is a little more expensive, it's worth it. Well, that's fine for those of us who are doing well financially. But, how about the minimum-wage single-parent home? Wal-Mart is a life-saver for folk like that. Of course, the claim is that Wal-Mart is the reason they are poor. But that is just downright ridiculous. Wal-Mart has not caused an increase in the poor. Quite the opposite, it has provided jobs to a lot of people. The low prices at box stores are a huge gain for a family on a small income.
The gains from box stores are many as well. The benefit to low income families has already been mentioned. Another benefit is the gain in efficiency. Rather than drive your car to five different stores, you can go to just one place. Not only do you save time, but you also drive less--which is better for the environment. Also, the space required for one box store is far less than the space used by a sprawling downtown. Box stores are well funded so they provide security. Rarely do you see box stores going under, whereas local businesses are failing all the time. Also, since they are well-funded, they can pay for security. So they remain safe places, which cannot be said for a lot of locally owned downtown areas in large cities.
I just can't see the problem with big box stores. This may come as a big surprise to those who know me as I am generally a bleeding-heart liberal. But before that, I am a rational person. And I can't find any rational reason to fight the box stores.
Ultimately it comes down the issue of paradigm shifts. The world is changing. We can either fight it (and get trampled) or figure out how work with the changing world. Every new
innovation brings joy to many, but unemployment to a few. You can either complain and try to get the government to hold back the whole economy simply because you don't want to change jobs, or you can accept your fate and move on. Let's chose to move on.
Happy Birthday America, You’re 233
1 day ago
11 comments:
Viper, here is a great comment Ash left on the Trib site.
I will respond specifically to your article when I get a spare moment.
"So many people make the comments that have just been made without, I am afraid, actually knowing the real facts and costs of big box stores. To say that small businesses cannot stand up to big box stores because they don't know how to compete is not true; if Wal-Mart, for example, had to compete on the same playing field as small businesses, it would have to give up the 1 billion dollars in city-sponsored subsidies that it garners every decade, along with the multitudes of unfair tax breaks it receives and the ability it has, as a corporation, to participate as a "person" in the political process. Additionally, Wal-Mart's (and other mega-retailers') manufacturing processes hardly represent a level playing field when compared to small businesses. For example, Wal-Mart has such vast buying power (again, not the result of "fair" market competition) that it has thousands of people working for it that it does not actually employ or pay at all. Manufacturers and middle-men have essentially accepted that, in order to sell to big chains like Wal-Mart, they must employ (at their expense) dozens of employees that refine, market, and track Wal-Mart's products FOR THEM. For example, Wal-Mart forced Proctor and Gamble to do do all of it's research and development for a new brand of Tide, and then took Proctor and Gamble's research to make their own store-brand version of detergent and sell it at prices that beat out Tide. This is not an exception to the rule, but a common practice. Additionally, Wal-Mart passes most of it's costs on to its manufacturers, employees, or host cities rather than shouldering the costs itself. For example, Wal-Mart has made rules that they are not responsible for the inventories at their own stores. Instead of following normal rules, in which a company must assume responsibility for its inventory and accept buying the inventory as a risk investment, Wal-Mart now forces its manufacturers and middle men to assume all responsibility for inventory. Thus, OTHER people must cover the risk investments and costs of Wal-Mart's inventory, and are sometimes even responsible for making sure their products sell (there are enormous penalties if their products do not). Companies follow these exploitative rules because they would lose roughly 30 percent of sales if they did not. None of these facts have even touched on the employee issues. Wal-Mart, for instance, famously outsources their work to sweatshops, especially in the maquiladora districts in Mexico, and then shuts down the factories as soon as conditions improve enough for employees to demand better wages. Additionally, Wal-Mart's refusal to pay their employees living wages and to routinely erase hours, their habit of refusing employees full-time status, and their failure to provide health-care are not only unethical, but cost city, state, and federal governments billions of dollars in externalized costs.
None of the things I have just mentioned represent a level playing field or a fair market practice. Beyond being repugnant,none of these options are available to local business owners, who get none of the breaks and frequently shoulder the costs externalized by big box stores. This is not because small businesses don't know how to compete; Wal-Mart and other big box retailers (and there are dozens of others that participate in the same practices) win strictly because of their size, a size that itself would not have been possible without routine tax breaks, subsidies, and a corporate culture.
And so, in response to the second comment, it would be hard to stop mega-retailers. It would require people to care enough about these practices and the threat of a mono-economy--in which Wal-Mart business practices are not a choice amongst options but the ONLY choice--to actually vote with their dollars do something about it. And yes, that would also require people to care about where other people shopped, and to be active in figuring out a solution.
We need to have some imagination and a less blunted sense of economic responsibility. It is an outgrowth of the Wal-Mart economy that we do not care about anything until it directly affects us, and that freedom means nothing else but the freedom to shop--irresponsibly."
http://www.kateandneil.com/133/shop-outside-the-box-salt-lake-city/
Also, read my post about the parade.
In many cases, the above comment is just not true. Is it unfair to use your position to garner a better deal? Anyone buying in bulk gets a better deal. Wal-Mart can afford and is in a position to buy at huge volumes. This isn't unfair, this is simply how things work. If you really think this is unfair, then I urge you to stop purchasing items in bulk. Don't buy a six-pack of soda. Instead, just buy six individual cans. Clearly that is not unfair.
As to the out-sourcing, I don't understand why Democrats (of which I am one) are against out-sourcing so often. Why are working conditions improving in countries like China? Why is the standard of living constantly increasing in India? It's not because the farmers are returning bigger crops. It's because America and Europe are sending so many jobs to these countries. While I do believe we need to be careful and ensure that we are providing a safe working environment, it remains that a job in a sweatshop is superior to no job at all.
In response to the subsidies. I cannot speak to the sorts of subsidies that Wal-Mart receives. I would be interested in receiving a reference. That said, the writer above completely disregarded the fact that local businesses get TONS of subsidies. I suspect that if you were to look at the subsidies on a per-capita basis, then locally owned businesses would have more.
I guess I don't understand what the writer of the above comment means by a "fair playing field." What is that in the world of economics? Fair means the government keeping their nose out of things and letting the free-market work. In my view, any actions the government takes with regards to Wal-Mart has largely been to hamper their growth, not promote it.
Hmmm. My computer must be not recognizing links because I did not see the citation or factual reference for the "TONS of subsidies" that local businesses get, mentioned above. I would be interested in receiving a reference.
I have read "The World is Flat." I suggest you read "Hind Swaraj" Ghandi's seminal work for a less myopic view on "modernization" and modern economies.
My reply to your article is at the following link, http://www.kateandneil.com/135/people-before-profit/
It is a knee-jerk reaction since I have NO TIME to research & respond fully right now. I thought you'd like a little response better than a long one way down the road. Happy Thanksgiving (you capitalist pig :)j/k j/k.
I find it interesting that you claim that a book about modernization written 61 years ago would be less myopic than one written very recently. In any case, if I have the opportunity, I will pick up a copy.
Regarding the subsidies issue, I have looked for some information. Sadly, I have found it difficult to find much information, in aggregate form, regarding subsidies to locally-owned businesses. Here or there you find reference to individual projects (like Navy Pier in Chicago) but aggregate studies. So I can't give you a direct link to a study. Though, I will say that for the most part, subsidies to Wal-Mart do not appear undue when taken in comparison to similar subsidies. Think malls (which is one of the most common places to find locally-owned businesses in our day).
There was one interesting tidbit I found though. When people talk about the largest Wal-Mart subsidies, they are not in fact talking about retail stores. The really big subsidies are the ones that go to distribution centers. This is a different beast from the retail outlets, because the distribution centers bring a very positive net value to the community as they simply employ people, but do not receive any local money at all. And these subsidies are not undue when compared to similar subsidies to factories and manufacturing plants.
And lastly, please don't be rude. I have tried to remain polite in this whole exchange, so let's keep this discussion civil. I am speaking about the following sentence: "Hmmm. My computer must be not recognizing links because I did not see the citation..."
Thanks, and I hope you guys have a wonderful Thanksgiving as well.
What's wrong with Wal-Mart?
So, I was just reading an article in the Salt Lake Tribune about a protest recently in Salt Lake City against big box stores. I've mentioned something about this previously, but I am going to mention it again. Can someone please explain to me what the problem with big box stores is? I don't understand why it's better to be buying from local businesses. Every time I hear people harping on this issue, they seem to just accept it without explanation that buying local is a good
thing. I for one do not understand why buying locally is a good thing.
I organized the protest in Salt Lake, and I hope you will believe that I organized it because of the following facts, rather than that I am listing the following facts because I organized it. I believe that very few people have factual information about this topic, and so I will try to offer some facts to your question about why big box stores are bad. But, believing that economic discussions are frequently used to obscure the real discussion—a discussion on ethics and responsibility—I will also include comments about what I believe are better ways to frame the discussion. The ensuing facts are meant to be a kind of fact sheet, and, as such, many are paraphrased from a very informative book, Big Box Swindle, by Stacy Mitchell. While the title might make it sound like a sensationalized bestseller, it is actually an extremely responsible, well-researched book that I think everyone should read. The book does argue against big chains, but I don’t think this is a pre-decided bias; I think it is a well-earned opinion based on the massive research it contains. I would be happy to provide citations for any of the statistics below (I just didn’t want to lengthen my already lengthy response with dozens of footnotes). I would also be happy to provide stats from other books as well; I am on vacation, however, and happened to have Big Box Swindle with me. Since this is a really long comment, and since you asked for rebuttals, you could post it on your site as a guest post so that people can read it and join the discussion. Thank you!
To begin with, many people will say that Wal-Mart is bad because of their health-care policies. There is some definite truth to this argument. Wal-Mart needs to fix this, and the government has started stepping in to make them do something about it. Regardless, I question the sort of health-care that people are receiving working at locally owned businesses. A small business oftentimes can't afford good health-care for their employees because of the volume issue.
• Let’s start with some simple facts about healthcare and wages at Wal-Mart, and move to stats about small businesses. First: Although many chains provide supposed healthcare plans, the coverage is so meager and the premiums so high that almost none of their employees can afford it. Plus, most stores deny these benefits to part-time employees (while ensuring that as many people as possible work part-time) and require the employee to work a year before qualifying.
• Wal-Mart’s healthcare premium runs at $300, a significant cost for people working under the poverty line. Almost 40 percent of Wal-Mart’s workforce does not even qualify, not to mention the 1/3 that does not enroll because they can’t afford it and because the deductible is a measly $350 without even covering basics like check-ups and immunizations.
• As I’m sure you know, the chains’ deplorably meager healthcare plans (with the notable exception of Costco) cause many employees to depend on food stamps, public housing, and Medicaid. In 2006, for instance, Massachusetts reported that it was spending $212 million annually to pay health insurance for employees of the world’s largest corporations. Thirteen of these twenty businesses were retail and restaurant chains, including Target, Home Depot, Burger King, CVS, and, of course, Wal-Mart. In Arkansas, 4,000 Wal-Mart employees and 1,200 Target employees rely on Medicaid or food stamps.
• I am not very versed in facts about healthcare plans at small businesses, but I know that you are right to say that it’s a burden for these small businesses to provide healthcare. Nevertheless, the answer to the healthcare problem should not be abdicating to big box stores, who have miserable healthcare records and consider their employees as costs and resources rather than assets. We can be more economically imaginative. We could imitate Santa Cruz and transfer city pensions and stocks to local banks as a source of lending capital for local businesses, we could provide incubators to financially support businesses while they develop better business plans and learn the ropes, we could pass laws helping small businesses to provide care, or, of course, we could pass single payer healthcare. All of this money could be converted from the money we would otherwise spend on subsidies (1 billion on Wal-Mart in the ‘90s), infrastructure, and collateral healthcare costs to support big box stores. We do not have to hope for the best of the worst and tacitly or overtly support unscrupulous businesses that demean and manipulate people. We can do better by thinking a little harder. The argument that we should either accept the horrifying practices of big business or agree to the drawbacks of small businesses is a false dichotomy, and therefore fallacious. Many economists (especially students who attend BYU) love to argue by using the false dichotomy, as if the only options were to pay Chinese kids 12 cents an hour in horrible conditions or revert back to the Stone Age. There are always more than two options, provided that we don’t convince ourselves with insidious arguments designed to shrug off our ethical responsibilities in a modern economy.
The wage issue is brought up a lot as well.
• Retail wages are lagging behind increases in other sectors by a margin of 14 percent, a fact due largely to the expansion of a few mega-retailers and their ability to push down labor costs.
• One in five Americans work in retail, a figure that has skyrocketed since big box stores crowded out manufacturing and small business jobs and frequently became the only options in town. Only 16 percent of people working retail in America are teenagers; the majority are over 35. Nearly one-third earn less than $15,000 a year (stats based on supporting a family of three).
• Half of Wal-Mart’s employees quit or are fired within the first year of working. This is not accidental; Wal-Mart does this to keep costs down by hiring new people at entry-level pay. A memo about these practices even leaked to the press: Susan Chambers, executive vice president for benefits, sent out a letter reminding store managers that “the cost of an associate with seven years tenure is almost 55 percent more than the cost of an employee with one year of tenure, yet there is no difference in his or her productivity.”
• In the Minneapolis area, Target pays an average of $6.25 to $8.00 an hour. To contextualize this, a single parent with one child in Cedar Rapids, Iowa, would need to earn $12.60 an hour to meet the most basic transportation, health, and housing costs.
• Wal-Mart ensures lower labor costs by allotting store managers less money than they need to match payroll expenses. The manager, desperate to keep his (almost never her, incidentally) job, will do whatever it takes to make that amount of money work. Those who don’t are routinely fired.
• It is also the store managers’ job to snuff out unions; the National Labor Relations Board has reported sixty complaints of managers spying on, threatening, or firing workers who supported unions. When a group of Wal-Mart’s Quebec employees formed a union, the store responded by shutting down and firing all 200 workers.
• Almost all the big chains (everyone from Albertsons to RadioShack) have faced lawsuits for deleting hours, forcing employees to work unpaid overtime, using undocumented workers, violating child labor laws and discriminating against women and the elderly. Although these chains gain billions for these unethical practices, they are penalized for mere fractions of their gains.
• Big chains frequently use their might to fight measures to increase the minimum wage; in 2004, Outback Steakhouse, Olive Garden, and Publix supermarkets spent $1 million to convince voters to reject raising the minimum wage to $6.15 an hour.
But what sort of wages can a locally-owned business pay? Clearly they can't compete in this area
for the same reason that they can't compete when it comes to prices.
• It is obvious that many small businesses do not offer decent wages, either, but they also lack the market power and leverage to push prices to the bottom and to evade authorities and regulations. Additionally, a diverse market full of all sorts of small businesses—even with some that pay well and some that don’t—keeps the democratic power in the hands of the people (who can boycott stores for unethical practices) and also ensures a variety of employment options. That way, if one company is abusing its workforce, its employees can go elsewhere. Because of the glut of mega-retail, there are many cities in America where working for a big box store or chain is the only option. This leaves employees with no place to go if they are mistreated. The chains know this, and use it to exploit and mistreat employees even more than they normally would, knowing that they have the market power to determine prices and a pool of people who are desperate enough to work for them if another person refuses. I shouldn’t have to remind anybody that this kind of market concentration severely threatens the success of a democracy.
• The wages that local businesses pay vary widely from one store to another, but many pay substantially more than big box stores. This is logical for several reasons: One, they are part of their community and frequently know their employees well, which motivates them to provide a basic living for them. Two, they are more beholden to the community and more likely to be punished for bad business practices if they do err. Three, they are beholden to themselves and their employees, not shareholders and the corporate requirement to increase profits every year (it is essentially illegal, thanks to several Supreme Court decisions, to fail to increase shareholder profits). Four, they must compete with other small businesses in their community that pay employees more. Admittedly, much could be done to help small businesses pay a living wage, but the answer is not to concentrate decision-making power in the hands of giant corporations. One answer might be to use the millions of dollars that would otherwise go to infrastructure, subsidies, tax breaks, and hidden costs and use them to provide some breaks and incentives for small businesses to improve wages and provide healthcare.
Small businesses don't have the infrastructure and pull with suppliers to get the prices that stores like Wal-Mart can pull down. So, maybe I'm wrong on this, but I highly doubt that locally owned businesses are paying them employees any better than the box stores. Also, what sort of job security can they offer? Very little. Small businesses fail all the time because the owners aren't business people.
• Small businesses from a variety of different sectors are forming alliances, trade associations, and cooperatives to give them the purchasing power that bigger businesses enjoy, without sacrificing the expertise, ethics, and community ties that big box stores do not provide. The National Community Pharmacists Association is one such alliance, as is the Alliance of Independent Media Stores, the Austin Independent Business Alliance, and Ace Hardware. These cooperatives not only provide collective buying power; they also train and mentor new business owners and provide loans.
Though touched on in the previous paragraph, it bares emphasizing, box stores can get better prices for their customers. If you've never read "The World is Flat" by Thomas Friedman, it's worth a read. He explains the whole Wal-Mart supply chain. It is impressive and explains very clearly why Wal-Mart can undercut others on prices. It isn't because of they are doing anything underhanded it's simply because they have
an incredible supply chain.
• To say that Wal-Mart and other big box stores do not engage in underhanded economics is a grossly uneducated comment. I could write an almost endless paper about the illegal, unethical, and coercive business practices encouraged by mega-retail. Kate has already posted my comments about Wal-Mart’s practices of strong-arming manufacturers, so I will mention only a little more and then ask you to please be more responsible in your comments—unless, that is, you have read all the things I have and do not find them unethical. If that is the case, then I know of no better argument against you then your own self, since this would mean you have been so convinced by the 1950’s-based PR campaigns that you believe that cheap is worth any human, environmental, or externalized cost, and that our job is merely to consume as much as we can to keep the economy “booming”—an economy that has become a value in and of itself. Our only other job would be to argue for our own oppression, a feat that the chains have somehow convinced us to do in exchange for some cheap vacuums and a bargain pair of Nikes. But back to the strong-arming:
• Big chains have become so powerful that they not only determine what is produced and where, but even how it is produced, who produces it, and for whom. These chains have captured one-third of the market for most goods, and tower over even the biggest manufacturing giants. For example, Wal-Mart alone accounts for 15 percent of Proctor and Gamble’s revenue—$10 billion a year. This gives Wal-Mart such power that they can actually require hundreds of P&G’s employees to work for them for free. P&G, as I have mentioned before, employed dozens of people to do all of Wal-Mart’s research and development for a new brand of washing detergent. When they were finished, Wal-Mart thanked them by taking all their market and product research and producing a new store-brand detergent, which they hid behind another name and which now sells better than P&G’s Tide. This is just one of thousands of cases in which a big box stores passed on its costs to its suppliers and manufacturers and then reaped the benefits. The suppliers and manufacturers, in turn, must pass on their costs to others—in other words, small businesses. This practice is so prevalent that most suppliers have price sheet for chains and a separate price sheet for other businesses.
• Let’s move on to the most erroneous marketing deception: that Wal-Mart and other chains have better prices. This is important because it is what makes it all worth it, all the underhandedness and the waste and the mistreatment of people: the products are cheap! Not necessarily. Since Wal-Mart and other chains have such vast purchasing power and such meager scruples, they can afford to engage in predatory development and loss leader pricing. A big box does not move into a community because of market demand (more on that later); they move in to exercise their size-might and displace pre-existing businesses. They will move into a community and sell at a loss for several years, marking their products far below competitors’ prices and selling common items at the front of the store at a total loss—banking on the fact that these products will draw people in and get them to buy a normally-priced product somewhere else in the store. After a few years of loss pricing, which serves to convince people that chains offer lower prices, big boxes will raise their prices to normal levels. At that point, though, no one bothers to notice; they have already been convinced that big boxes are cheaper and will continue to patronize the store for, if nothing else, the few products sold as perennial loss-leaders: toothpaste, diapers, etc. Studies have shown that Wal-Mart’s prices vary widely from region to region and depend on the level of competition in the area; a cart of groceries in a town with other competing groceries will be much lower than a cart of groceries in a city where Wal-Mart has already driven out the competition.
• Don’t believe it? A comparison between Allen’s supermarket (Hastings, Nebraska) and Wal-Mart might persuade otherwise. If not, there are dozens of similar studies. Wal-Mart opened its Hastings store in 1990. As of 1993, Wal-Mart sold Crest toothpaste for $.62, while Allen’s sold it for $1.89; Bayer Aspirin was $1.56 at Wal-Mart and $4.99 at Allen’s. By 2000, Wal-Mart’s Crest was $1.87 and Allen’s was $2.15, and the Bayer sold for $5.78 and $5.49, respectively. Small businesses sometimes compete in a similar way, but, once again, do not have the dominance and power to sell at a perennial loss or to prey on other businesses. Many do not have even the desire to do so.
Now, people are quick to say that even if buying locally is a little more expensive, it's worth it. Well, that's fine for those of us who are doing well financially. But, how about the minimum-wage single-parent home? Wal-Mart is a life-saver for folk like that. Of
course, the claim is that Wal-Mart is the reason they are poor. But that is just downright ridiculous. Wal-Mart has not caused an increase in the poor. Quite the opposite, it has provided jobs to a lot of people. The low prices at box stores are a huge gain for a family on a small income.
• These claims are not factual. Since 1985, the money flowing to the middle class (the middle 60 percent of income) has decreased from 52 to 48 percent, even as the middle class puts in 400 more work hours annually than they did twenty years ago. Additionally, middle class incomes have fluctuated dramatically, and society’s middle often cannot afford even basic things like healthcare.
• As for the poorer classes, poverty is no longer the domain of the unemployed; even people with full-time jobs frequently do not make enough to cover basic living costs. Perhaps this is because 30 million Americans are making less the $8.70 an hour.
• The amount of money reaching the poorest 20 percent of the population has fallen from 5 to 4 percent since 1985, while the rich’s share has increased from 43 to 48 percent. To make things worse, the jobs that are being ‘created’ pay less than before; in New Hampshire, for example, they pay 35 percent less. Social mobility is also declining, and the poor are more likely to stay poor than before.
• Now for the compelling but false claim that mega-retailers create more jobs. Again and again, the jobs that big boxes supposedly create come at the cost of the same amount of jobs somewhere else. An example: When Wal-Mart caused Bob Sowers’ grocery to close in Athens, Georgia, it eliminated 135 jobs—jobs that paid 20 percent more than Wal-Mart and offered healthcare. Once you factor in the amount of collateral economic damage big boxes do (since they depend on their corporation to perform the services that local businesses hire out to local contractors) the losses are astounding. The amount of money people spend depends on how much they have and what they want; a new store does not increase spending power, it disperses it. The chains, therefore, do not create jobs, they steal them from an existing pool. Similarly, they do not create more wealth, they grab it through predatory pricing and opportunism. Since many stores can sell at a loss for years and have the power to saturate markets and obliterate ‘competition’, the promises lose a bit of economic luster.
• Some harder statistics: An Iowa State University study showed that Wal-Mart actually cost Iowa jobs and money. From 1983 to 1993, Wal-Mart expanded from one to forty-five stores. Nevertheless, the state lost 555 grocery stores, 591 hardware stores, 161 variety stores, 88 department stores, 291 apparel stores, 153 shoe stores, 116 drug stores, 111 jewelry stores, and 94 garden stores. It doesn’t take a mathematician to multiply the ensuing job losses. A detailed, comprehensive study by the University of California at Irvine found that, on average, a new Wal-Mart actually eliminated 180 jobs and led to total payroll reductions of $2 million. In other words, the big box store employed fewer people at lower wages.
• The most dire consequence of this race to the bottom is that it perpetuates the very shopping cycle that mega-retailers want: strapped with low-paying jobs, mounting expenses, and few other options, Americans are even more likely to be lured by cheap prices, even welcoming the problem stores as saviors. We can say that all this is worth it as long as we get cheap goods. Even if this unethical consumer philosophy dominates, however, we still don’t get our money’s worth. We will have cheap toasters at the cost of our healthcare, education, jobs and quality of life. We will be dependent on very few chains (themselves dependent on a volatile market) for everything we need—chains that have proven to care nothing for their consumers and employees.
The gains from box stores are many as well. The benefit to low income families has already been mentioned. Another benefit is the gain in efficiency. Rather than drive your car to five different stores, you can go to just one place. Not only do you save time, but you also drive less--which is better for the environment.
• Shopping-related driving has expanded twice as fast as driving for other purposes; between 1991 and 2001, shopping mileage for an average household increased by 40 percent. This is not due to greater numbers of small businesses, but, rather, a glut of chains and big boxes.
• Chain stores serve a wider geographic population than local grocery stores and are thus farther from home; as of 2001, the distance traveled for shopping averaged 7 miles (5 miles ten years earlier, and much less before that). This increasing distance is directly correlated to the rise of big box stores, since their size and scope dictate that they be built on the suburban fringe.
• This extra driving is not due to more shopping trips; rather, it is due to more shopping trips in cars—trips that are necessitated by both the distance, format, and size of a big box store. To illustrate: If the nearest grocery store is seven miles away, about 100,000 square feet big, and surrounded by an enormous parking lot, going to the store five times a week to pick up various items—a common practice when Main streets were thriving and walkable—is almost impossible. The size of the store demands a “big” shopping trip, the distance requires a car, and the parking lot reinforces the need. The format of big box stores is so hostile to pedestrians that even big box complexes located on public transit lines fail to entice pedestrian shoppers. In El Cerrito, California, for example, residents walk to the store 1/3 as often as residents in other neighborhoods with similar demographics due to one difference alone: Despite being close to public transit and most homes, El Cerrito’s shopping district is housed in a large strip mall with several big box stores and lots of parking, whereas other neighborhoods in the study did their shopping on a more traditional Main Street.
• Don’t believe it? Researchers at the University of California did a study on this very thing. They tracked shopping patterns in two communities outside of San Francisco. These communities are extremely similar in their distance from SF, their income levels, and even their transportation options. The only difference is that one—Rockridge—has a bustling, compact Main Street with many small stores, and the other—Lafayette—has low-density housing and is served by several strip malls/big box complexes. Researchers found that Lafayette residents used their car for 98 percent of their shopping trips, while Rockridge residents used their car only 20 percent of the time. What’s more, Lafayette residents traveled twice as far by car to get their groceries.
• The average adult (under 65) spends 426 hours a year driving; 100 of those hours are dedicated entirely to shopping. This much driving means that an average household spends 1 out of every 5 of its dollars on transportation. If you are keeping track, that is more money than that household spends on healthcare and food combined. This statistic does not represent gradual growth; it is double what the prior generation spent on transportation.
• The cost of maintaining the roads that allow for this car-swell is hardly efficient; even after gas taxes it costs us $2 trillion a year in direct costs alone—14 percent of our GDP and two times what other developed nations spend.
• And now, of course, the oil stats: The United States is responsible for 5 percent of the world’s population and 25 percent of its oil use. If we are driving an extra 95 billion miles compared to our 1990 level, that means we are emitting 40 million extra metric tons of carbon dioxide each year. Hardly efficient, hardly environmental.
Also, the space required for one box store is far less than the space used by a sprawling downtown.
There are dozens of objections to this argument. I will mention only a few.
• As of 2005, Wal-Mart alone boasted 6,000 stores worldwide. Each of Wal-Mart’s stores is roughly the size of three football fields. There are 3,800 stores in the United States alone, which accounts for 600 million square feet of land. If you can’t visualize 600 million square feet, think of it this way: Wal-Mart could fit every man, woman, and child in the United Sates in that kind of space. This does not include the size of other big box stores. Since most cities include dozens—the Dallas-Ft. Worth area alone has 104 Wal-Marts—the amount of land required is almost unimaginable.
• An average big box store (in its preferred suburban format) takes up 4 acres of land and requires several more for parking. This same store in a 4-story downtown building would require only one acre, and parking would be deliberately limited and then supplemented by public transportation. It is important to emphasize that few traditional businesses would ever be this big in the first place, so downtowns would take up even less space without big box stores in general.
• Big boxes do not expand to meet increases in market demand. They increase in order to drive out competitors, benefit shareholders, send a message of dominance, and increase revenue at new stores. In fact, big box stores depend on unnecessary new stores to meet impossible growth expectations. In 2004, for example, Lowes derived only 1/3 of its revenue from stores that were more than one year old. The rest came from relentlessly constructing new stores that were not dictated by the demands of the market. Small businesses do not have the power or the desire to expand at such a rate, and so a downtown filled with small businesses would be much more compact than a city filled with ever-expanding big box stores.
• From 1995-2005, both Target and Wal-Mart have expanded their total floor space at the rate of 8 percent a year, which translates into 50 million square feet of store space annually.
• One example of wasteful land use in a big box economy: Since the 1960’s, the Cleveland metro’s population has declined slightly. In spite of the declining population, big box development razed and then built up over 9,000 acres of farmland. In 2003, Cleveland added 2.7 million square feet of store space and the region zoned 77 miles of land to house 4,000 new big box stores.
• Between 1960 and 2005, the amount of square feet of retail space per person in the United States jumped from four square feet to thirty-eight. Add to that three feet of paved parking for every one foot of store space, and you have quite the land glut. The amount of land used did not come because of small businesses or market demand; in fact, median family income has increased 80 percent in the last 40 years, while retail space has increased by 850 percent. The increase came from relentlessly-expanding big box stores and their irresponsible land use practices.
• This expansion is not efficient and ends up costing the city enormously in terms of infrastructure, police, and the tax base. The illusion that big box stores bolster the economy is strong because the costs of inefficiency are dispersed, but the price tag has even increased taxes in order to offset the increasing expense of operating local governments. While big box retail costs the city $1,023 per one thousand square feet (shopping centers cost $1,248 and fast food chains cost a whopping $7,284), small businesses cost the city only $786.
Box stores are well funded so they provide security. Rarely do you see box stores going under, whereas local businesses are failing all the time.
• A study by PricewaterhouseCoopers estimated that, at the low end, 140 malls in America are dead and 250 are about to die. This means that only about 25 percent of malls are successful right now, a rate directly influenced by the unnecessary glut of newer big box retail. (If you would counter by claiming that this is a sign of big box success and small business’ or malls’ inability to compete, you would be wrong. These big box projects are usually heavily subsidized by paid-off city councils that believe the sound-bytes about jobs so much that they do not even check the retail saturation in their town before approving projects. In Cleveland, for another example, the city approved 10 million feet of new big box retail without acknowledging that they had 10 million feet of vacant retail already in their city, dealing a second death blow to the small businesses in the city proper.)
• Studies estimate that America is burdened by almost1 billion square feet of vacant retail space, not including the billions of feet of parking surrounding these stores. These vacancies include small business that have folded due largely to big box overdevelopment, but the bulk of the square footage is due to big box stores themselves, as they close smaller sites to open superstores a mile away, or move across the county line to reap more lucrative tax breaks and subsidies. Even conservative firms like PricewaterhouseCoopers are alarmed, and they spell it out in clear language: “The most over-retailed country in the world hardly needs more shopping outlets of any kind.” This is more frightening when you know the growth statistics and projections of the big box stores: Walgreens, for example, plans to open a store every day from 2005 to the beginning of 2010. Wal-Mart has similar plans, and has decided to abandon their old store formats and build only supercenters from here on out.
• Big box stores are so powerful, and their growth so out of step with actual market demand, that they have not only killed off malls and shopping centers but have started to kill off each other. As of 2001, for example, Charlotte, North Carolina contained thirty-one vacant big box stores, while Columbus, Ohio reported sixty-nine. Kansas City had thirty-nine vacant big box stores (about 2.3 million square feet) even as it approved 3 million additional square feet of big box development. These are not isolated statistics; you can find similar numbers for most cities in America.
• As mentioned before, many big box vacancies are often not even due to failure, but to success and to stock market pressures to expand indefinitely. There are dozen such stories, but I will only mention one. Wal-Mart alone has 350 empty superstores in the United States, most all of them deliberate vacancies: 28 stores in Georgia, 36 in Texas, 18 in Arkansas, 19 in Tennessee, and 15 in Louisiana. Many cities are on their third Wal-Mart, as the company abandons stores after only a few years to build bigger and bigger stores in the same local vicinity.
• These abandoned stores invite crime and vandalism and impose huge costs on their host cities. Developers and big box retailers, however, are seldom responsible for any of the costs. Since developers have cashed out long before the store goes defunct, and since many big box stores have an economic stranglehold on the community (a strategic advantage bolstered by threats to pull out and leave the city with an unusable building and a drain on tax revenue) they can coerce the city to pledge even more subsidies or tax breaks. When they leave, as most do eventually, the city is often stuck with contracts prohibiting them from leasing to the store’s competitors, and has to spend millions of dollars to raze or convert the store. Many cities, such as Charlotte, North Carolina, paid $10 million to set up Target in an abandoned Circuit City, even though Target itself had already abandoned two sites in the city. While Main Streets are versatile and can be converted to other uses if tenants move out, big box stores are almost impossible to reuse.
• This information is only the beginning, but should already make it clear that small businesses are not folding because they are weak or cannot compete. They are folding because of grossly wasteful land practices that pull resources and shoppers out of the city and into a suburban ring of big boxes that will themselves go dark and contribute to the bulk of the problem. Even more clear is the fact that big box stores are not at all interested in the economic interests of the community, and have the power and incentive (and outright lack of scruples) to exploit the city for whatever they need, a practice that few small businesses have the power—and, with their ties to the community, the desire—to imitate. Many scholars have compared this practice to the exploitative practices of colonialism, in which wealthy people do whatever is necessary to extract resources and money from a community without any intention of benefiting that place.
Also, since they are well-funded, they can pay for security. So they remain safe places, which cannot be said for a lot of locally owned downtown areas in large cities.
• In Royal Palm Beach, Florida, a big box cluster of Home Depot, Lowe’s, and Wal-Mart resulted in 1,500 additional police calls a year, which, of course, required more officers and even a new police station.
• In East Lampeter, Pennsylvania, judges have added two days to their court calendars to deal exclusively with crimes at the local Wal-Mart, which accounts for 1/3 of the area’s crime—from misdemeanors to felonies.
• After factoring in police costs, big boxes are seen to cost cities enormous amounts of money: In Barnstable, Massachusetts, big box stores cost the city 59,000 more dollars than they add in revenue.
I just can't see the problem with big box stores. This may come as a big surprise to those who know me as I am generally a bleeding-heart liberal. But before that, I am a rational person. And I can't find any rational reason to fight the box stores. Ultimately it comes down the issue of paradigm shifts. The world is changing. We can either fight it (and get trampled) or figure out how to work with the changing world. Every new innovation brings joy to many, but unemployment to a few. You can either complain and try to get the government to hold back the whole economy simply because you don't want to change jobs, or you can accept your fate and move on. Let's chose to move on.
I don’t think I need to mention again that the economy we are supporting when we support big box stores is a mono-economy—or, at very least, would like to be. It is an economy of few options in terms of ethics and freedom that is sold to us in the name of increased consumer options—which, when boiled down, are just options of choosing between different kinds of poorly-made things sold for prices that hide their real costs. The dangers of mono-economies are real; concentrated power threatens the democratic process just when it is needed most: to curb the excesses and extravagances of unchecked big business. The ultimate triumph of an ideology occurs when people use that ideology to justify their own oppression or their own right to oppress. The Wal-Mart ideology (and I use Wal-Mart as a canopy term for all big box stores) has triumphed because it has gotten us to justify our increasing poverty, poor health, lack of freedom, and degraded environment in the name of cheap things. It has also gotten us to defend our right to take these things from others, even arguing that we are doing them a favor in the long run. It has gotten us to use a partial economic language—in which cost only refers to how much something is worth and not how much it harms—to comprehensively endorse excess. We talk about this economy as if it is inevitable, and we talk about people who disagree with it as if they were naïve Luddites with a vendetta against the good life. We say that opposing these market forces is uncouth and extreme. We are wrong. These stores are not inevitable; they depend on us to consume both their products and their rhetoric. We can stop them if we stop shopping at their stores. The people who oppose them are not naïve; usually they are the same people who have looked beyond the sacred cow of cheapness and, at very least, tried to use the term ‘cost’ in its fullest sense. The basic fact is that our lifestyle is not normal. Nor are our justifications for it. Our justifications and expectations are the indirect result of public relations campaigns (started in the 1950’s to justify A&P’s dominance) that convinced us that consuming was more important than justice, responsibility, community, and ethics, and that cheapness was a god that could never be fed enough. We should be utterly ashamed if the best we can do as humans is to invent reasons why we are not responsible for our actions, and to use false dichotomies to pretend that we are forced to harm people or else obliterate our economy. There is a hidden premise: that we should not be asked to do anything for each other but consume, and that freedom means nothing but the freedom to shop. I avoid any argument that tells me that I must do harm in order to do a dubious kind of good—that I must oppress someone else to get them cheaper goods someday. If we don’t want to change our lifestyles to benefit each other, we should just say that. It is a shorter argument and spares people who have read books the task of giving facts to people who won’t care anyway. It is dangerous to use the word ‘rationality’ to hide our desire to be irresponsible; it is akin to saying “Give me the facts that will horrify me into being good,” rather than engaging in a conversation about obligations, ethics, and compassion in a changing world. Economics does not mean rationality without humanity (and, in fact, neither does the poor, abused word ‘rationality’). Economists have always understood that we do things for reasons, and that our ultimate ‘reasons’ are emotional and include words that cannot be directly quantified: happiness, care, and even quality of life. We have insulted and misunderstood economics if we turn it into a grim justification for consumer survival. At its most conservative, economics is a description of behaviors based on motive theories. At best, those description should help us to examine and assess our motives; at worst, these descriptions are use prescriptively to argue for fatalism, market relativism, and moral moderation in a time of material extremism. It is not right to abuse a whole discipline to justify our own moral mediocrity.
You make a few good points. Sadly, most of the points you make are poor, very poor. I think it's funny that you think a book whose very stated purpose is to show that box stores are bad is not biased. Bare in mind that biased does not imply false or unfair. But a persuasive work is, by its very nature, biased.
I would respond to a number of the issues you raised, except I don't care enough about this issue to spend the time necessary to answer your talking points. Though I will leave with a couple of last comments, after which I don't plan to write any more about this. You can claim that I am admitting defeat or whatever you want. But in all actuality, I just don't care enough about this topic.
First off, what is your desired endgame? Are you hoping that people will, of their own volition, stop shopping at big box stores? Or are you hoping for government laws to restrict box stores? What is your desired outcome? I'm not trying to say anything here, I'm simply interested.
Secondly, I am tired of everyone talking about how horrible a world we live in. I think I might write a bit more about this topic later in a separate post. But everyone you talk to thinks the world is going to hell in a hand-basket. Everyone talks fondly of the good 'ole days. Maybe I'm alone in this, but I think the world is better than it's ever been. There are problems, for certain. There always will be. But, on the whole, I really like this world. Slavery is no longer prevalent (it exists, but nothing like it has since the dawn of man). Women have the right to vote. We live longer than we ever have before. For most of the world, war is not an ever-present cloud that hangs over you. Homocides are the lowest they've ever been in recorded history in NYC. I don't know. Maybe I'm the delusional one, but things seem pretty good to me.
I think it is very unfair to ask a question about why someone holds a certain opinion and then claim that their points are poor, fail to mention which points those are, provide no counter-arguments, and then end the discussion. I spent two days compiling statistics that could answer what I thought were your sincere questions about the reasons why people might be against big box stores. I dealt with every point you made at length, and offered to provide footnotes and statistics from other books, as well. It is unfair to claim to want to know something, publish inaccurate information in a public space, and then dismiss the other half of the conversation by declaring that you are actually uninterested in the topic. If you are and always were uninterested, you shouldn't have contributed misinformation by publishing bored musings on your blog.
I have read many articles and books on this topic that are not persuasive, but I believe that we have been raised with a very distorted sense of what it means to be biased. As you mentioned, bias is not wrong in and of itself. I would also add that it is not "biased" to form and argue for a legitimate opinion in light of good arguments and detailed facts. In fact, I would go so far as to say that this kind of "bias" is necessary in a world in which news has been reduced to sound-bytes and discussion is, at best, a partisan standoff. Being biased means that you argue for something without an appropriate amount of information, or that you manipulate someone into agreeing with you without giving them enough information to accurately form their own opinion.
I wish that you would be more respectful toward the people who actually want to have the conversation that you claimed you wanted to have. To say that you are rational and then to reject a rational response is not only insulting, it mars your credibility and makes me suspect your use of the word. If you really didn't want to have this conversation, you would have at least resisted the temptation to include your final paragraph, in which you reassert your opinion while maligning mine for your own offenses: 'very poor', irrational argumentation that disregards facts in order to see the world the way you want to see it.
Your clear lack of commitment to actual rationality makes me incredulous about any claims you make in your last paragraph, especially the parts in which you decide, based on a few scattered fallacies (the world could be worse; therefore the world is good) that our world is doing great and needs none of our work. Also disturbing is your tacit implication that anyone who thinks the world is not great is a threat to the goodness of that world, whether because they are whiners, irrationalists, or political and economic illiterates.
I would like to point out something very obvious. The very social movements that you listed to demonstrate the world's goodness only ever occurred because large groups of people fought against people who used your kind of argumentation. They fought against these people in order to insist that the world was not fine as it was, and that things needed to change in certain areas even if things were going well in others. To argue ahistorically--without even a cursory sense of historical context--about how much better the world is now than it used to be is already dangerous. But to use the very people who would most disagree with your laissez-faire philsophy is downright irresponsible. I am positive that there were thousands of people telling suffragettes and abolitionists that there were economic, political, and practical reasons for approving the 'system' as it stood--people who told them that they were being extreme, irrational, or annoying to disrupt the happy functioning of the economy to argue for ethics. The brute fact is that you would have nothing to cite to prove to goodness of our world without using the very people who would never buy your argument.
I am not sure when it became a virtue to pretend the world was better than it is, or when it became ungrateful to believe that the world was good enough to try to keep it that way. I am not delusional; I believe that there have always been selfish, bad people in this world. I also believe, however, that changes in technology, political theory, and communication have made it more possible than ever before to do harm--and more likely that people will be too distracted, comfortable, and entertained to care. Therefore, I cannot be idle when someone dismisses both statistics and ethics in order to assert, through the fallacy of better-than-nothing, that the world is fine as it is.
Wow! I really regret having ever brought up this issue. I'm not sure what you want from me. If you are wanting me to continue the discussion of box stores, I'm sorry, I will not do so. Clearly you care about this topic far more than I do. Just because I wrote a blog entry stating my feelings about an issue does not mean I am interested in spending two days researching information. It means that I had some thoughts, be they true or false, and I felt like sharing. That's it.
I'm also confused at all of the personal attacks. I'm sorry that I disagree with you, but personal attacks will not succeed in changing my point-of-view. I apologize for whatever it is I did to incite such ire and angst. It was not my desire to do so. So, I beg your pardon for having done so unwittingly.
Viper, I don't suppose you were expecting such a tirade when you said you'd be interested in hearing what we have to say on the issue.
It is really difficult to have someone suggest that you should provide evidence just to be told that they are uninterested in what you come up with.
Blogs do tend to take away the civility of a one-on-one conversation and I apologize for any overt-sassiness on my part. Passion for a topic is no excuse for snide internet diggs. On that point we can no doubt, agree.
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