Wednesday, June 1, 2005

The hidden costs of big-box retail

Guest opinion by Aaron Domini and Christopher Simms

Guest opinion by Aaron Domini and Christopher Simms
Christopher Simms is the executive director of Citizens for Smart Growth. Aaron Domini is the organization's community planner.

Once again, the Wood River Valley is being faced with the decision of how to deal with the size, scale, and economic impacts of big-box retailers. Many Blaine County residents shop at big-box retailers in neighboring Twin Falls. This trend is not without impacts to the environment or the local economy. Initially, I considered the possibility that local big-box retail could alleviate some of the negative impacts caused by commuting to acquire goods so long as certain location and design issues were addressed.

I believe that competition for goods and services in a regional market would drive down cost to the consumer, a function of capitalism upon which this country was founded on. Lower prices would save consumers money that could be spent elsewhere in the local economy. The lower-prices argument, in theory, is unquestionably true, at least for a time. According to Internet sources, The Wall Street Journal reported Wal-Mart cuts prices long enough to weaken competition, then raises them. Wal-Mart uses its size and clout to bleed its rivals dry (WSJ, 11/18/93). Wal-Mart has been sued and convicted for unfair trade practices (WSJ, 10/13/93).

Even assuming the local big-box retail would bring continued lower prices do these "cheap goods" come without serious local implications? The biggest myth is that big-box retailers bring jobs. According to a study done by The National Trust for Historic Preservation, each dollar of sales at big box retailers generates less employment than each dollar of sales at local retailers. Dr. Kenneth Stone of Iowa State University stated, "As local stores lose sales, they either downsize or close. The resulting job losses typically equals or even exceeds those gained at the new store."

Big-box retailers also have serious implications for main street business districts. In Greenfield, Mass., an economic impact assessment of a 134,272-square-foot Wal-Mart—paid for by Wal-Mart—found that their project would lead to a loss of 239,000 square feet in retail space throughout the city. A study completed by Tischler & Associates indicates that for every two jobs created by a big-box retailer, the community loses three as a result of local retailers going out of business.

The potential tax consequence of big-box retail is the most alarming revelation of our research. Tischler & Associates have found that big-box retailers generate a net annual deficit of $468 per 1,000 square feet versus a net annual return of $326 per 1,000 square feet produced by small specialty retail. A study completed by the consulting group Civic Economics found that $100 spent at a large-scale retail chain creates only $13 worth of local economic activity, whereas that same $100 spent at a locally owned store generates $45 worth of local economic activity. Another study conducted by The National Trust for Historic Preservation reports that only 6 cents on the dollar is retained in town by big-box retailers, while 60 cents is retained on the dollar by local independent retailers.

Economic issues are important when evaluating the impacts of big-box retail in a local and regional economy. The comprehensive plans of all the municipalities in the Wood River Valley have policies to protect the economic viability of our existing "business/commercial" zoning districts. These provisions give our cities the authority; in fact require our cities, to evaluate the economic impacts of large-scale retailers upon main street economic activity.

Citizens for Smart Growth does not argue that we should stop all big-box developments, or stop shopping at big-box retailers. We are, however, demanding that we fully evaluate all the impacts big-box retailers may have on our regional community and economy including traffic congestion, loss of open space and farmland, displaced small businesses, loss of community identity, impacts on municipal services (fire and police), job loss, and the impacts on local tax revenue, before making a decision. We are optimistic that the enlightened leaders of the city of Bellevue will adopt an ordinance that does not simply limit retail-building size. Smart Growth promotes an ordinance that requires an independent economic impact study in addition to strict design review and parking lot standards to avoid overwhelming the city economically and visually.

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