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.

In Wal-Mart’s early days, Stone said, competitors didn’t know how to react.

“They didn’t understand how potent of a force Wal-Mart was,” he said. “They had to change their business models. They really started thinking about how to compete.”

Hardware stores, for example, once carried full lineups of general merchandise. Wal-Mart’s high-volume, deep-discount style quickly priced them out, and surviving hardware stores scaled back the general merchandise and focused on specialty tools.

Businesses with more niche markets — video game and cell phone shops, shoe stores, chain restaurants and “category killers” like Home Depot and Staples — now also gain from the influx of Wal-Mart customers.

“They are clearly an economic anchor wherever they locate their big stores,” said Rett Tucker, a partner in Little Rock’s Moses Tucker Real Estate. “Other national retailers flock to be near them.”

“So there’s a good educational process that’s occurred over the years,” Stone said. “It’s quite a bit different than it was. Many companies learned how to compete against Wal-Mart.”

Stone said the non-Wal-Mart towns survived, stabilizing mainly because smaller chains like Dollar General appeared to soak up the local shoppers. Now, Wal-Mart is seeking to emulate the Dollar General model with its Wal-Mart Express stores.

Stone’s report examined Iowa towns. The smallest, he said, suffered greatly. In towns with fewer than 2,500 people, sales declined by 30 percent — or $1.5 billion — in the time since Wal-Mart showed up.

“I think for smaller towns, and for many towns, bigger and small, it really hurts the downtown,” Stone said. “Wal-Mart hurts the stores selling the same type of merchandise as them.”

As for Wal-Mart’s growth model, Stone tends to think it may be nearing the end of its life.

“They deny this, but I think they are about to peak out,” he said. “They’ve hit every county seat in the country and any city with a viable chance for business.”

Wal-Mart’s final frontier in the U.S. is the biggest cities like New York and Los Angeles. Stone said Wal-Mart was still growing overseas as well, with its main footholds being Mexico and China, but that it found success elusive in Japan, Korea and Germany.

 

 

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