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Speech: The Impact of Chain Stores on Community

The following are excerpts from a speech by Stacy Mitchell, delivered at the annual conference of the American Planning Association, April 2000. Stacy Mitchell is a researcher with the New Rules Project, a program of the Institute for Local Self-Reliance in Minneapolis. The New Rules Project provides research and innovative policy solutions for building strong local economies and healthy communities. Mitchell is the author of The Home Town Advantage: How to Defend Your Main Street Against Chain Stores and Why It Matters. She advises communities nationwide on strategies for strengthening their homegrown economies and produces an e-mail newsletter that tracks grassroots efforts to curb the spread of corporate chains and revitalize locally owned businesses.

Developers often present new chain store developments as major additions to the local economy. They note the growth in retail sales and shopping options. They tally up the number of new jobs and the added tax revenue that the development will bring.

What is often overlooked is the other side of the balance sheet. Unlike new manufacturing facilities, which do create real economic growth, new retail stores simply shift consumer spending from one area of town to another. A new big box store can only be successful at the expense of existing businesses.

A study in Iowa, for example, found that new Wal-Mart stores derive on average of 84 percent of their sales from existing businesses within the community. Similar conclusions have been reached in studies of big box development in Massachusetts, Maine, Vermont, New York, California, and Virginia.

What all of the studies find is that very little of the sales generated by a new retail store represent new retail spending. Instead these developments simply shift economic activity from one part of town to another. The end result is not economic development, but rather economic displacement.

From an economic perspective, there is much to suggest that chain stores may not be our best value. But perhaps more significant than any of the economic considerations are the qualitative benefits of local ownership. Locally owned businesses build strong communities. They provide a foundation for the web of connections and trust that Jane Jacobs believed so essential to a healthy neighborhood.

Continue reading Stacy Mitchell's speech...