Commercial Development: Towns Before and After Wal-Mart

by Luke Jones  on Monday, Jul. 2, 2012 12:00 am  

The acreage required for a Wal-Mart store was one of several factors that helped move commercial development from downtown to the edge of town. Shopping malls and the post-WWII car culture also played their roles.

As recently as 50 years ago, downtown was still America’s commercial center. A variety of factors moved the center to orbital suburbia. One of those factors was Wal-Mart.

Wal-Mart’s ubiquity on the edge of town didn’t happen overnight. Kenneth Stone, professor emeritus of economics at Iowa State University in Ames, has been studying Wal-Mart’s development for 25 years.

According to a 10-year study Stone published in 1997, small retail faced adversity from the beginning of the 20th century and onward as Montgomery Ward and Sears Roebuck catalogs offered better selection than mom-and-pop shops and railroad infrastructure provided effective delivery.

As the automobile developed into the country’s main transportation mode, rural shoppers could more easily visit larger cities. After World War II, shopping malls delivered one of the greatest blows to downtowns due to “ease of access, large selections, controlled climate, easy and free parking and their extended shopping hours,” Stone said. “Shopping malls fundamentally changed the way Americans shopped.”

The year 1962 introduced the trinity of Wal-Mart, K-Mart and Target. The latter two grew in mostly larger communities, spreading fairly rapidly.

Wal-Mart’s strategy, however, was to move into smaller Southern towns where it could easily become the dominant retailer.

“Furthermore, Wal-Mart’s founder, Sam Walton, did not want to outrun his logistical support, namely his distribution centers,” Stone said.

The reason for its positioning on the outskirts of town was mostly necessity: One store requires between 25 and 30 acres of land, and in some early Wal-Mart towns, that’s the same size as an entire downtown area.

“Wal-Mart progressed methodically across the United States, always building stores within a day’s drive of its distribution centers, and taking over 30 years to become a fully national chain,” Stone said.

Wal-Mart had a dramatic effect on the small towns. Stone said his most recent study, yet to be released, showed that Wal-Mart host towns had greatly increased retail sales and had evolved into “regional trade centers.”

“But one has to keep in mind that most of that gain was by Wal-Mart stores, and they did have negative impacts on a lot of other businesses in town — mainly any store that was selling essentially the same thing they were selling,” Stone said.

Shops that sell fabric, drugs, toys, hardware — strong areas for Wal-Mart — couldn’t compete.



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