The current Austin phone book lists 10 Wal-Marts (5 regular
stores; 5 supercenters), 4 Sam's Clubs (also owned by Wal-Mart),
6 Targets, 3 Kmarts, 6 Weiner's, plus dozens of other chain
stores such as Penney's, Sears, World Market, Bath &
Beyond and Old Navy. Though Austin consumers still enjoy
a healthy range of shopping choices, the Wal-Mart corporation
already dominates Austin's retail landscape with over twice
as many stores as its nearest competitor. The addition of
11 more supercenters will skew this balance further, resulting
in inevitable store closures. Once Wal-Mart completely dominates
the local market, we can expect continued decreases in the
range of choice for Austin shoppers. (Source: SBC Greater
Austin Yellow Pages and Business White Pages)
Wal-Mart has targeted Austin for Supercenter Saturation.
Wal-Mart already outnumbers its nearest competitor by roughly
two to one in Austin and has now revealed plans for eleven
more 24-hour supercenters, one roughly every three miles.
If Wal-Mart achieves this kind of market saturation, it
will permanently change the face of Austin, both physically
and economically. We must begin to understand these changes
- and what choices we have to address them - before it is
too late.
Wal-Mart Poses a Unique Threat to Our Local Economy.
Wal-Mart's extreme market dominance and documented harmful
corporate practices pose a unique and substantial threat
to Austin's economy and workers. Though all national discount
retail chains share some characteristics, Wal-Mart is in
a class by itself. It is now the largest corporation
in the world, generating twice as much in total net profits
each quarter as all other retailers combined. No other
chain has the power and ability to target Austin for such
total market saturation, with such potentially devastating
consequences.
In fact, Wal-Mart is demonstrably worse than other chain
retailers on a variety of levels. Consider these points:
Wal-Mart's Size Makes It a Unique Threat Among Chain
Retailers.
Wal-Mart is now the largest corporation in the world, with
$245 billion in sales in 2002. It generates twice as much
in total net profits each quarter as the entire rest of
the discount retailing sector combined - that's more than
Target, Sears, Penney's, Dillard's and every other store
in the country put together! Wal-Mart has now also become
the nation's largest grocer, with 19 percent of that market
and still growing. Selling roughly a quarter of all products
made by such giants as Dial, Del Monte, Clorox and Revlon,
it dictates terms to suppliers as well. No other chain in
the world has the power and ability to target Austin for
such total market saturation, with such potentially devastating
consequences. (Sources: Bureau of Economic Analysis,
U.S. Department of Commerce; Business Week 10/6/03).
Wal-Mart Closes Local Businesses Through Predatory Pricing.
Wal-Mart routinely engages in a practice known as "predatory
pricing" to put local competition out of business.
When it opens a new store, it sells products at that store
below wholesale price, drawing customers away from local
shops. With over 4,700 stores worldwide and annual profits
of over $7 billion, the chain easily absorbs this temporary
loss. Once competitors close, Wal-Mart raises its prices
and moves on to its next new store. The effects can be devastating.
In Oklahoma City, 30 supermarkets closed in after Wal-Mart
saturated the area with supercenters. In Kirksville, Missouri,
a newly opened Wal-Mart supercenter quickly put out of business
four clothing stores, four grocery stores, a stationary
store, a fabric store, and a lawn-and-garden center; the
local daily paper lost major ad revenues from these closures
and began to struggle also. (Sources: Business Week;
How Wal-Mart is Remaking Our World, Jim Hightower; Puget
Sound Business Journal)
Wal-Mart Eliminates Three Local Jobs for Every Two Jobs
it Creates.
Because Wal-Mart uses a lower employee ratio than many stores,
it replaces only two-thirds of the jobs lost when local
businesses close. And because Wal-Mart defines full-time
work as 28 hours per week, these new jobs are almost certainly
bound to mean a drop in income for workers. In 2001, the
average Wal-Mart employee made $13,861, an amount below
the federal poverty line for that year. Only 38 percent
Wal-Mart employees have health care coverage, with the uninsured
relying on public assistance. Not surprisingly, employee
turnover in Wal-Mart stores averages above 50 percent annually;
many stores have 100 percent annual turnover and some reach
as high as 300 percent. The San Francisco Chronicle
observed: "If you earn a livable wage...you can probably
buy all your monthly needs at Wal-Mart. But that's because
the average Wal-Mart employee cannot do the same."
(Sources: Business Week; How Wal-Mart Is Remaking Our
World, Jim Hightower; San Francisco Chronicle)
Wal-Mart Will Not Add to the City's Tax Base.
Retail stores, in general, do not create new tax revenues
- they simply shuffle existing dollars around. A recent
study by Mississippi State University Extension Service
found that for every gain in sales by supercenters, there
was a corresponding loss in sales for local businesses.
In fact, general merchandise sales decreased nearly annually
after the opening of the first supercenter in any area.
Wal-Mart will not create new sales tax revenues; it will
simply transfer them from existing stores. (Source: The
Economic Impact of Wal-Mart Supercenters on Existing Businesses
in Mississippi, Mississippi State University Extension Service).
Wal-Mart's Money Does Not Stay in the Community.
Studies show that Wal-Mart, like most national chains,
actually siphons off three times as much money from our
community when compared to local businesses. Recent studies
in Austin and the state of Maine found that, for every $100
spent at a national chain retailer, only about $13 stayed
in the community. But when that same $100 was spent in local
stores, $45 stayed in the community - over three times the
amount!
The Maine study also found that local businesses contributed
four times as much to charity as Wal-Mart, and that, even
its own category, Wal-Mart was significantly behind the
curve. Target, another large national discount chain, donated
twice as much to charity as Wal-Mart and routinely bought
local advertising in communities where its stores were located.
Wal-Mart does not buy or bank locally and only rarely buys
local advertising. (Source: Institute of Local Self-Reliance,
Mid-Coast Maine Study, 2003; Economic Impact Analysis: A
Case Study, Local Merchants vs. Chain Retailers,
http://www.austin-iba.org/downloads/lcexecsum.pdf)
Wal-Mart's Labor Practices Hurt Workers.
Wal-Mart has sparked more lawsuits for disability discrimination
than any other corporation and the largest class action
suit in the country for gender discrimination. Cases against
Wal-Mart for forcing employees to work off the clock without
pay are pending in 25 states. In Maine alone, it has been
cited for 1,400 violations of child labor laws. Regarding
Wal-Mart, a top Equal Employment Opportunity Commission
lawyer told Business Week, "I have never seen this
kind of blatant disregard for the law." (Sources:
Business Week; How Wal-Mart Is Remaking Our World, Jim Hightower)
