Will Walmart Kill Small Business in New York?

by Kevin Casey on January 17, 2011
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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).”

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