WalMart: Chicago superstore captures local retail sales without expanding the market

David Merriman and Joseph Persky and Julie Davis and Ron Baiman, "The Impact of an Urban WalMart Store on Area Businesses: The Chicago Case," Economic Development Quarterly 26 (2012): 4

The take-away: This study analyzes the economic impacts of a Chicago WalMart. The results support the contention that WalMarts in large cities, like those in small towns, absorb retail sales from nearby stores without significantly expanding the market. 

Abstract

This study, the first on the impact of a WalMart in a large city, draws on three annual surveys of enterprises within a four-mile radius of a new Chicago WalMart. It shows that the probability of going out of business was significantly higher for establishments close to that store. This probability fell off at a rate of 6% per mile in all directions. Using this relationship, we estimate that WalMart’s opening resulted in the loss of approximately 300 full-time equivalent jobs in nearby neighborhoods. This loss about equals WalMart’s own employment in the area. Our analysis of separate data on sales tax receipts shows that after its opening there was no net increase in retail sales in WalMart’s own and surrounding zip codes. Overall, these results support the contention that large-city WalMarts, like those in small towns, absorb retail sales from nearby stores without significantly expanding the market. 

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