6.12. SR 10-18-1999 - Laserfiche WebLink

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Chapter 10 Page 3 ot 25 IIHorizon Beauty Suppliesl It is reasonable to assume that since Wal-Mart does present strong direct competition and a major challenge to many of the current mall tenants, that many of these tenants may not continue in business. The argument or assumption that Wal-Mart will increase traffic must be questioned. The reverse is more likely to be true. A consumer, who traditionally shops at the mall in some of the smaller businesses or chains may be now more inclined to visit Wal-Mart while in the mall. However, the traditional Wal-Mart shoppers will not leave the store to see what else is available. They are drawn to Wal-Mart in the first place because their needs are met from a selection and price standpoint. Therefore, those traditional mall stores offering the same or similar merchandise as Wal- Mart will lose traffic and eventually close. Their closing may have a ripple effect on other non- competing mall stores as the "traffic" flow weakens. . Let us presume that as a result of a mega-retail discount "Big Box" moving into a mall, it created a loss of 250 full time equivalent jobs. A calculation of the average salary expense including salary and fringe benefit expense per employee would total $6,250,000. However this estimate is hased upon direct wages and benefits paid to mall employees. If one were to then consider the multiplier effect of these wages using a conservative multiplier of2, the result on the regional GDP would be $12,500,000 without income gains in GDP brought by the new mega-retailer. Obviously the gains would not match the losses here. Moreover, the "Main Street" impact of these small businesses which will close can be seen in the facts presented by the House Committee on Small Business: "The establishment of a small business has a large, positive effect on the local economy. A small business with 100 employees in a town adds: 351 more people; 79 more school children; . 97 more families; $490,000 more bank deposits; one more retail establisrilllent; $565,000 more retail sales per year and $1,036,000 more personal income per year."l These figures attest to the power ofthe multiplier, an issue which is seldom raised when. describing the impact ofthe "Big Box" upon the mall or the community. Now, if 50% of the mall's stores were to close as a result of a mega-retail discount chain's opening, there would be a negative impact ofGDP. It is true that the new mega-retail discount chain such as Wal-Mart or Kmart will bring jobs to the area; however, as it has been discussed, an average mega- retail discount chain job is not full-time with full benefits. The multiplier effect or buying power generated by a "Big Box" job can not fully compensate for the loss of a traditional retail job. There will be a net effect on regional GDP from the competition presented by this mega-retail discount chain and it believed that it will be negative for the reasons presented above. The "new" jobs created by the mega-retail discount chain will not compensate for the jobs lost from the traditional retailers who will close from direct competition. Added to this is the effect on the non-competitive mall stores and the surrounding restaurants and businesses to the mall. Superstore Sprawl and Its Potential Harm The 1994 publication of the National Trust for Historic Preservation, entitled How Superstore Sprawl Can Harm Communities....., (and what citizens can do about it) describes the fact that rosy promises . of increased revenues for cities, more jobs, affordable prices and good products don't always arrive as promised. Were it true, there would not be the hundreds of citizen groups throughout the nation attempting to hang on to the "land we love." http://www.shilsreport.org/ chap 1 O.html 10/6/99