Economic impact - Wal-Mart 1

http://en.wikipedia.org/wiki/Walmart#Corporate_affairs

Kenneth Stone, Professor of Economics at Iowa State University, in a paper published in Farm Foundation in 1997, found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening.

He compared the changes to previous competitors small town shops have faced in the past—from the development of the railroads and the Sears Roebuck catalog to shopping malls. He concludes that small towns are more affected by "discount mass merchandiser stores" than larger towns and that shop owners who adapt to the ever changing retail market can "co-exist and even thrive in this type of environment."

One study found Wal-Mart's entry into a new market has a profound impact on its retail competition. When a Wal-Mart opens in a new market, median sales drop 40% at similar high-volume stores, 17% at supermarkets and 6% at drugstores, according to the June 2009 study by researchers at several universities and led by the Tuck School of Business at Dartmouth College.

 A Loyola University Chicago study suggested that the impact a Wal-Mart store has on a local business is correlated to its distance from that store. The leader of that study admits that this factor is stronger in smaller towns and doesn't apply to more urban areas saying "It'd be so tough to nail down what's up with Wal-Mart".

A June 2006 article published by the libertarian Ludwig von Mises Institute suggested that Wal-Mart has a positive impact on small business. It argued that while Wal-Mart's low prices caused some existing businesses to close, the chain also created new opportunities for other small business, and so "the process of creative destruction unleashed by Wal-Mart has no statistically significant impact on the overall size of the small business sector in the United States."

For the concern of jobs, a study commissioned by Wal-Mart with consulting firm Global Insight, found that its stores' presence saves working families more than US$2,500 per year, while creating more than 210,000 jobs in the U.S.

 Alternately, the Economic Policy Institute estimates that between 2001 and 2006, Wal-Mart’s trade deficit with China alone eliminated nearly 200,000 U.S. jobs.

 Another study at the University of Missouri found that a new store increases net retail employment in the county by 100 jobs in the short term, half of which disappear over five years as other retail establishments close.

Studies of Wal-Mart show consumers benefit from lower costs. Another study by Global Insight found that Wal-Mart's growth between 1985 and 2004 resulted in food-at-home prices that were 9.1% lower and overall prices (as measured by the Consumer Price Index) that were 3.1% lower than they would otherwise have been.

A 2005 Washington Post story reported that "Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion per year."

A study in 2005 at Massachusetts Institute of Technology measured the effect on consumer welfare and found that the poorest segment of the population benefits the most from the existence of discount retailers.

A 2004 paper by two professors at Pennsylvania State University found that U.S. counties with Wal-Mart stores suffered increased poverty compared with counties without Wal-Marts.

They hypothesized, to explain their results: This could be due to the displacement of workers from higher-paid jobs in the retailers customers no longer choose to patronize, Wal-Mart providing less local charity than the replaced businesses, or a shrinking pool of local leadership and reduced social capital due to a reduced number of local independent businesses.

Dr Raj Patel, author of Stuffed and Starved: Markets, Power and the Hidden Battle for the World Food System, said in a lecture at the University of Melbourne on 18 September 2007, that a study in Nebraska looked at two different Wal-Marts,

the first of which had just arrived and "was in the process of driving everyone else out of business but, to do that, they cut their prices to the bone, very, very low prices".

In the other Wal-Mart, "they had successfully destroyed the local economy, there was a sort of economic crater with Wal-Mart in the middle; and, in that community, the prices were 17 per cent higher".