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Winners and Losers in the Wal-Mart Supercenter Sweepstakes

Brief by Central Staff

Commerce – April 1997 – Colorado Central Magazine

Wal-Mart already gets about 25ยข from every retail dollar spent in Salida, and it stands to increase that share soon when it opens its new 24-hour 7-day superstore now under construction.

Kenneth E. Stone, a professor of economics at Iowa State University in Ames, has been studying the effects of Wal-Mart Supercenters in Texas, the state which has more than any other.

His full study isn’t ready yet, but he has some preliminary findings.

Grocery stores, especially small independents, get hit hard. Stone found that sales at existing grocers decline by 17% in the three years after a big Wal-Mart opens. Chains like Safeway and City Market have the resources to compete and carry on, but the little guys don’t.

Drug stores also suffer, Stone said. “In the Texas study, host-town drug stores experienced a 20% loss of sales by the third year.”

Other frequent Wal-Mart victims include auto-lube and tire centers, and “there are other lesser losses to existing businesses,” which will be detailed when he completes his study.

But the news is not all dismal. Stone concluded that “Overall, I would have to say that a Supercenter is a plus for a town of your size. It increases the size of the trade area, and keeps a lot of people at home that otherwise would be out-shopping somewhere else.”

We’re staying in touch with Professor Stone, and as more results are available, we’ll pass them along.