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The Impact of an Urban WalMart Store on Area Businesses

Author

Listed:
  • David Merriman

    (University of Illinois Chicago, Chicago, IL, USA)

  • Joseph Persky

    (University of Illinois Chicago, Chicago, IL, USA)

  • Julie Davis

    (Loyola University, Chicago, IL, USA)

  • Ron Baiman

    (Center for Tax and Budget Accountability, Chicago, IL, USA)

Abstract

This study, the first on the impact of a WalMart in a large city, draws on three annual surveys of enterprises within a four-mile radius of a new Chicago WalMart. It shows that the probability of going out of business was significantly higher for establishments close to that store. This probability fell off at a rate of 6% per mile in all directions. Using this relationship, we estimate that WalMart’s opening resulted in the loss of approximately 300 full-time equivalent jobs in nearby neighborhoods. This loss about equals WalMart’s own employment in the area. Our analysis of separate data on sales tax receipts shows that after its opening there was no net increase in retail sales in WalMart’s own and surrounding zip codes. Overall, these results support the contention that large-city WalMarts, like those in small towns, absorb retail sales from nearby stores without significantly expanding the market.

Suggested Citation

  • David Merriman & Joseph Persky & Julie Davis & Ron Baiman, 2012. "The Impact of an Urban WalMart Store on Area Businesses," Economic Development Quarterly, , vol. 26(4), pages 321-333, November.
  • Handle: RePEc:sae:ecdequ:v:26:y:2012:i:4:p:321-333
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    File URL: http://edq.sagepub.com/content/26/4/321.abstract
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    Cited by:

    1. Håkansson, Johan & Li, Yujiao & Mihaescu, Oana & Rudholm, Niklas, 2016. "Big-box retail entry in urban and rural areas: Are there productivity spillovers to incumbent retailers?," HUI Working Papers 118, HUI Research.

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