In Business, Creating Sustainable Enterprises & Communities

MEGARETAILERS CREATE GREYFIELDS

In Business, March-April, Vol. 29, No. 2, p. 16

Driving big box stores and malls out of business is the goal of the megastore, but bigger is no sweet deal for local communities.

Jennifer Weeks

SOME REALLY big items are being offered in Nebraska this spring by Wal-Mart - ten of its own stores totaling nearly 700,000 square feet. It might sound as though they're liquidating, but Stacy Mitchell argues in Big-Box Swindle (Beacon Press, November 2006) that it's standard practice for megaretailers to close existing stores and build bigger ones in the same area. It's part of what she describes as a development arms race, in which big box companies build more stores to lure business away from existing retailers. “You do it bigger than the other guy and just knock him out of the market,” one retail analyst tells her.
And it's not just happening in Nebraska. Vacant big box stores and malls, many driven out of business by megaretailers, are so common nationwide that they are referred to as “greyfields.” Mitchell, a senior researcher with the Institute for Local Self-Reliance, estimates that there may be a billion square feet of greyfields across the United States. They symbolize how big box retailers make profits: by building as many stores in as many locations as possible. The point is not to meet rising consumer demand (in fact, retail store acreage is growing ten times faster than household incomes), but to siphon business away from smaller competitors.
Big-Box Swindle is a sweeping attack on the mega retailing approach to commerce, which Mitchell presents as a sort of antisustainability for everyone involved except executives and stockholders at companies like Wal-Mart, Target, Home Depot, Lowe's, and Barnes & Noble that are based on the big box model. As suburban megastores draw business away from town centers, they undercut local businesses and choke public roads with traffic. When independent retailers go out of business, consumers lose outlets that offer wider selections, better customer service, and sometimes even lower prices than chain retailers. The big box stores only look cheap, according to Mitchell, and they often raise their initial low prices after competitors close, a strategy known as “price flexing.”. And while megaretailers tout the number of jobs they bring to communities, most pay notoriously low wages with minimal benefits (exceptions include the Costco warehouse chain and unionized supermarkets).
MAJOR ECOIMPACTS
Because big box growth hinges on building lots of stores, megaretailers also have major environmental impacts. One Wal-Mart Supercenter covers about 220,000 square feet, five times the footprint of a standard supermarket, with a 15-acre parking lot. As large chain retail centers spread, shoppers spend more time driving between them. This increases auto emissions and creates local dirty air hotspots around retail centers. Runoff from strip malls and megastore parking lots carries surface contaminants like motor oil, pesticides, and road salt into lakes and rivers. Ports that receive goods from overseas factories and ship them to superstores' U.S. distribution centers are also major air pollution centers.
Counter intuitive as it may seem, Mitchell argues that these trends are driven by government policies that foster big box development. For example, zoning codes and tax laws in many states let big retailers shelter profits, but make independent businesses pay higher rates. Subsidies and accelerated depreciation promote mall development, and towns offer free or cheap land and property tax breaks to attract megaretail chains. Federal courts have set extremely high standards for demonstrating predatory pricing, so there has been little investigation of pricing policies by large chain retailers, even those who have been documented to rely on selling items below cost.
Just when the picture seems hopeless, Mitchell points out that we can change many of these rules. She cites communities across the nation, in Maine (her home state), the Midwest, Idaho, New Mexico, Oregon, and elsewhere that have adopted store size caps, restricted areas where superstores can build, and required new retail proposals to pass economic- and community-impact analyses. In short, host towns have more control than they may think.
DEFEATING A MEGARETAIL PROJECT
According to Al Norman, an organizer quoted by Mitchell, communities need four things to defeat a megaretail project: a citizens coalition, a land-use attorney, fund-raising, and visibility. Some campaigns have turned big box retailers' clout against them: an initiative to block a Home Depot store in Frisco, Colorado publicized the large number of residents who made small contributions to the campaign compared to one funder for the pro-Home Depot side. Cape Cod and the state of Vermont have adopted regional planning processes that limit large-scale development, and some states are considering ending subsidies for big box development or taxing megaretailers.
The other half of the solution, Mitchell writes, is supporting independent retailers. Communities can do this by revitalizing downtowns (where small businesses can thrive in close proximity to customers), and providing training, financing, and affordable space for new businesses. Some sectors already have supports in place: for example, most independent hardware stores belong to one of three large buying and distribution co-ops (Ace, True Value, and Do It Best) that let owners offer prices competitive with Home Depot and Lowe's. Some communities like Austin, Texas are promoting the trend toward shopping locally by urging consumers to buy from local independent retailers: decals for the Austin Independent Business Alliance urge, “Break the Chain Habit.”
Big-Box Swindle would be stronger if Mitchell wrestled directly with the question of how sustainable a big box store can be. Given the physical impacts of building a big box store and paving acres for parking, it's valid to ask how much credit Wal-Mart deserves for selling compact-flourescent light bulbs, using recyclable packaging, or preserving an acre of land for every acre it develops (all of these are current company initiatives.) These steps are certainly worth taking, but it's hard to see how a business model based on promoting material consumption can ever claim to be truly green.
Nonetheless, this book is feisty and controversial. Several publishers passed on it because they were afraid of promoting a book that criticized Barnes & Noble and Borders, their biggest customers (“Our publisher shut it down immediately - didn't want to bite the hand that feeds it,” one agent wrote to Mitchell). Big-Box Swindle is a bracing affirmation for anyone who has ever doubted the impact of their own buying power. Get it at your local independent bookstore.

Jennifer Weeks is a freelance writer in Watertown, Massachusetts.