The hidden costs of big-box stores

Out of every $10 Americans spend at retail stores, $1 goes to Walmart. It’s an unprecedented consolidation of the market—and one that has a big impact on local communities.

The retail giant wants to turn its south Chico store into a 208,000-square-foot supercenter. It also has plans to build supercenters in Redding, Red Bluff, Willows, Paradise and Oroville.

Just the thought of all those retail dollars going to Walmart headquarters in Bentonville, Ark., has local business owners—like Heather Lyon, of Lyon Books and Learning Center in downtown Chico, and Maria Venturino, of Red Tavern—organizing in support of independent businesses.

Monday night (Nov. 17), Lyon Books, in coordination with Chico State’s Institute for Sustainable Development, hosted Stacy Mitchell, a senior researcher at the Institute for Local Self-Reliance, who spoke on how Chico can help independent businesses thrive. The author of Big Box Swindle, Mitchell has worked for the ILSR for 11 years studying the rise of chain stores like Walmart, Home Depot and Lowe’s.

Her research led her to travel the country seeing first-hand “how far-reaching and profound an impact” these stores have in communities across America. Her frustration inspired her book, but she says in just the past five years she has become more optimistic. She’s seeing an explosion of grassroots opposition to big-box stores.

Indeed, in the past 12 months Walmart has pulled out of 20 applications for new stores (including a supercenter for North Chico).

“As time goes on, there is more evidence of the hidden cost of big-box stores—that they eliminate more jobs than they create,” Mitchell said prior to her presentation to around 35 people at Trinity United Methodist Church. She later cited a report by a UC Irvine professor who studied the economic impact of 3,000 Walmarts and found that on average each takes 150 jobs away from the community.

To some, Mitchell said, it’s tough to understand how these stores take away jobs when logic says the same number of jobs would be available.

“Well, if you have ever walked around the aisles at Home Depot looking for an employee to help you, you know these places are understaffed. It’s part of their profit model.”

When all is said and done, communities lose when consumers get hooked in by “Always Low Prices,” Mitchell said. But low prices don’t necessarily translate into savings. Manufacturers now make two versions of many of their products: a quality version for the independent stores and a cheaper version that looks the same but is full of cheap plastics—and will need replacement sooner—for the big boxes.

These stores are not designed to spread prosperity, Mitchell said. Money spent at independent businesses stays in the community at three times the rate as money spent at big-box stores.

Mitchell said she was encouraged by changing attitudes, citing especially the local-food movement. Of the 4,385 farmers markets nationwide, one-third have started since the turn of the millennium, she said.

“I suspect people enjoy the experience of farmers’ markets more than shopping at the grocery stores,” Mitchell said. She noted that a person has a 9 percent chance for social interaction at a grocery store and a 63 percent chance at a farmers’ market.

Big boxes aren’t eco-friendly, either. Because they pull customers from a large area, they require more driving. Since 1990, the average number of road miles logged for shopping has risen 40 percent, according to the Department of Transportation, outstripping other driving purposes threefold.

In addition, filling the big boxes requires global shipping, and the stores themselves occupy huge footprints with parking lots three times their size.

To compete, local businesses need to form independent-business associations. So far, Mitchell said, 70 IBAs have popped up in American cities. Their goal is public education and marketing the benefits of shopping locally. Lyon and Venturino, among others, started Think Local, Chico and thus far have recruited 20 to 30 businesses, which together will soon be launching their own marketing campaign.

In fact, “local” has become such a buzzword in the global business community that Mitchell stresses “independent,” which means the owner of the business has final say in the decision-making process. Case in point: HSBC, one of the world’s largest banks, has a marketing campaign that labels itself “The World’s Local Bank.”

“It’s heartening because these corporations see that ‘local’ is seeping into the public consciousness,” Mitchell said. “People understand that communities that support and strengthen independent businesses are better off in the long run because they will be more prosperous and reduce their environmental impact.”