Will Walmart Kill Small Business in New York?

What would happen to small businesses if Walmart opened shop in the largest city in the United States? Nothing good, according to Bill de Blasio, Public Advocate for the City of New York.

The Hunter College Center for Community Planning and Development, working with de Blasio, recently released “Walmart’s Economic Footprint,” a review of 50 prior studies on Walmart’s impact nationwide. The study found that when Walmart moves into town — or, in this case, a mega-metropolis — it eliminates three local jobs for every two it creates.

The biggest of big-box retail chains wants to enter the country’s most heavily populated city, but it faces fierce opposition from de Blasio — who likens Walmart to a Trojan Horse — and others.

“Walmart’s record of driving small businesses out of town and paying below-poverty line wages to its employees will only exacerbate the current decline of New York City’s middle class,” de Blasio said in a statement. “We must do everything we can to spur job creation in New York City, but that does not include opening our doors to a proven job-killer.”

The numbers in the Hunter College report are equally gloomy for existing businesses and their employees: Research conducted on a Walmart that opened in a Chicago neighborhood in 2006 showed that retail employment in the community — defined by the store’s ZIP Code — did not increase, and actually decreased in surrounding neighborhoods. Supermarkets and discount variety stores suffer the most when a Walmart opens nearby, losing between 10 and 40 percent of their sales, according to the report.

Perhaps the most frightening number of them all: After the Chicagoland Walmart opened, 82 of the 306 small businesses in the surrounding neighborhood were shuttered within 18 months.

Walmart, with more than $400 billion in annual sales, operates around 4,300 stores in the U.S. and 8,800 around the globe. That latter number is about to increase substantially, following Monday’s news that Walmart will acquire a South African chain that has stores in 14 African countries. CNBC.com produced a good interview with an analyst who recaps the issues surrounding Walmart and its efforts to bite into the Big Apple, including the company’s problematic relationship with local businesses.

The Hunter College report notes the fundamental role that small businesses play in New York City’s storied neighborhoods, and laments Walmart’s “particularly damaging effect to ethnic retailers…. In New York City, small retail businesses are a particularly important means of economic and social advancement for immigrant families.” The report continues: “Independent retailers flourish, for example, in the dense commercial districts serving immigrant communities, in Flushing and Corona (Queens), Sunset Park (Brooklyn), Melrose (The Bronx), and Washington Heights (Manhattan).”

About Kevin Casey

Kevin Casey is a regular contributor here, at InformationWeek and elsewhere. Find him on Twitter @kevinrcasey.
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3 comments
moses
moses

 

Hi. I'm a student of UNN and here's the school's website(www.unn.edu.ng).Please, I'll like to know more about your website and how I could actually contribute. Thanks.

 

celestineanikwe
celestineanikwe

this issue has been extenssively discussed in university of nigeria.unn.edu.ng

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shop with pride
shop with pride

Great article! Thank you so much for your honesty about what a BAD employer Walmart is!!! No one should be impressed with their business practices either, they squeeze suppliers to get products for next to nothing. Don't shop Walmart support businesses that actually have a soul!

Mercedes Gonzalez
Mercedes Gonzalez

Sounds like “chicken little” is out and about again. Why aren’t any of the positive statics posted with this story? Like studies that show living near a Wal-Mart is like getting a 20% raise? When we have such high unemployment! A JOB is better than no job. As to paying below the poverty level; I suggest you petition your government and raise the minimum wage. No one speaks about the technology that has been developed because of Wal-Mart. The standard of safety that has been raised, the price reduction across the board. How they have streamline 1000’s of business making them more effective and profitable. YES! There are thousands of vendors that sell to Wal-mart and are very profitable! How about the lives of people that would be other wise unemployable? When’s the last time you hired a senior or handy-capable person? As far as small business getting hurt; are you talking about the dirty dusty bodegas that never seem to have fresh stock of anything? It's not really that hard to compete with Wal-Mart. Service, better product/s mix, higher quality goods. Let's face it, a gift from Wal-Mart just doesn't say I love you like one from a boutique. But if you take a let’s wait and see attitude about the impending situation….you will be wiped out. Consider it an opportunity to grow, learn and be competitive. Consumer trends indicate that are all about the small independent retailer. Think how the new malls all look like little towns, or how stores like anthropology disguise itself as a boutique while being a national chain. In this country we are not necessary money poor we are time poor. Why would anyone buy a book when they are free at the library? Why does anyone pay $5 for a cup of coffee when it’s a $1 at the deli. It’s a matter of convenience and retail environment. Suck it up and take action…you too might find yourself profitable and full opportunities because of the increased traffic and boom of the area!

Alyssa
Alyssa

I can't even imagine other implications like traffic and parking patterns in a dense city like NYC!As someone who is and has been pretty broke, it is tough to argue with the immediate gratification of ultra low prices. But when these tragic statistics are in our faces, there is no denying the fact that in the long run, we are only hurting ourselves. A national home improvement center just shut its doors locally and laid off 81 people. How many small hardware, home improvement and garden stores have suffered because of this big player? Now they pull up stakes and we still have to bear the brunt of it. It seems like a no-win situation. Walmart is the same way. I hope they are successful in keeping it out of their city.

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