We’ve all heard of it: Wal-Mart moves into your neighbourhood or shopping mall near you and after a few months, (or years), you gradually see other shops shutter their doors. The impacts of the so-called big-box stores on your local mom and pop shops are no big secrets: they’re the Goliaths of the retail world trying to steal business from the many Davids out there. Big-box stores require large sales volumes, so they often use predatory marketing and sales strategies to take sales away from existing retailers. On average, within 15 months of a new Wal-Mart store’s opening, as many as 14 existing retail establishments close and it is responsible for 40 to 50 percent of the decline in the number of small discount stores since the 80s and 90s.
For me though, I need no numbers, no statistics to tell me what these stores are doing to independent retailers: I see it in the weathered face of my own father, who has been running a local retail shop in Hamilton’s Jackson Square since 2006. Business hasn’t been the same since 2009, the year of the Great Recession. The fact that another chain retailer, Ardene, moved three stores down to my father’s business hasn’t helped matters. My father often complains to me how customers have become so picky in the post-Great Recession world: “they all complain to me how expensive my Marvel t-shirts are compared to Wal-Mart, even though I have more variety than they do,” or “Ardene is selling their girl tees at $30 for two! And I sell at $25 for one! How can I compete??” The bad economic retail environment has also compelled former retail stores not involved in the clothing industry to get involved in the ever shrinking, ever competitive pie. This forces people like my father to seek out other niche markets, like humour t-shirts, which he sells at a discount. The net effect, as my father would say, is that the price market has been “ruined” by these large chain discount stores. Not only is my father making less profit per shirt sold, but he is constantly facing a price war with the big box stores and whichever other retail store decides to sell rock tees on the side.
The impact isn’t just limited to small shopkeepers either. My father used to hire two people on the weekend to open and close the store, but since business has been going on the declining side of things, he’s had to lay off the pair of husband and wife and run the shop for eight hours a day, seven days a week for the past six years. And though he never told me, I know my father is close to shutting his doors for good. He always says: “I’m past the age of retirement, so I’ll have to shut it down eventually anyways,” but I know he doesn’t really want to close the store. If he does, it will be because he can’t maintain it.
All this spells the death knell of the small retail sector. My father’s case was a personal one, but by no means isolated: one of his neighbours recently shut down her store, a small gift shop doubling as a Chinese tea café because of increased competition from existing retail shops like Ardene or Bluenotes after they started muscling in and selling the same type of gifts that she was. Another reason not to shop at big-box stores: large retail chains often do not pay their fair share of rent to the mall landlord. A study of more than 2,500 stores found that 73 percent of mall anchors (such as Wal-Mart) paid no rent. Instead, mall owners use their presence to attract smaller retailers that pay elevated rates in the hope of benefiting from the big stores.
There are many other impacts on a community or environment that a big box store can have, such as the spread of sprawl, discouraging public transit, increasing crime rate in the immediate area. But for me, what I see is this: Goliath is beating the crap out of David, and that should make everyone worried.