Walmart In NYC Would Devastate Small Businesses, Study Says
Walmart cuts more than just prices -- it cuts small businesses and jobs, according to a new study released by Manhattan Borough President Scott Stringer. Weighing in on the debate about whether Walmart should enter New York City, the study found that between 30 and 41 small retailers would go out of business within the first year of just one Walmart opening in Harlem. By the second year, as many as 66 small retailers could be out of business. "When you lose local businesses, you lose local jobs," Stringer says. "And Walmart wages are so low, they're basically pushing people to public assistance."
Stringer used a 2009 Chicago study as a model for his research. That study found that 25 percent of competing businesses within a one-mile radius of a West Chicago Walmart closed within a year of the Walmart opening, and 40 percent closed by the second year. Stringer applied the model to a vacant location in Harlem that was big enough to house a Walmart, and surveyed 304 licensed local retailers with a fresh food component.
"I talked to small-business owners who have put their sweat equity and life savings into keeping these stores afloat during this recession," Stringer says. "These storeowners are pioneers in this community. They invested so much of themselves making sure these businesses could make it in the community at a time when banks were not in Harlem, when developers didn’t want to do business there, when there weren't any chains. We're doing everything in our power to make sure they have a fighting chance in the face of a Walmart coming to Harlem. To simply ignore the work of middle-class people trying to advance themselves in the face of a huge conglomerate coming in and wiping out everything they built is scary to me."
Walmart refuted the study's model as well as its conclusions. "How many times are the special interests going to try and repackage the same flawed -- and repeatedly debunked -- Chicago study?" said Steve Restivo, senior director of community affairs for Walmart. "The truth is that anyone who has been to the west side of Chicago knows the positive economic impact we’ve had there, just like anyone who walks the streets of Harlem knows residents want more affordable options when it comes to healthy, nutritious food."
A Walmart release also pointed to surveys indicating New Yorkers are in favor of a Walmart in the city, and that Manhattan residents are on pace to spend more than $65 million this year at Walmart locations outside the city. Stringer acknowledges that New Yorkers have a need to buy goods at a cheaper price, but says the study aims to educate local consumers about the bigger costs they might have to pay to get those lower prices, such as seeing local businesses close down. "When you ask New Yorkers whether they want to see small businesses in their neighborhoods go out [of business as a result], the answer is 'no way,'" Stringer says. "No one wants to see their local bodega driven out of business because we didn't ask these questions about a conglomerate."
Another critic of Stringer's study is Chicago City Council member, Alderman Emma Mitts, who said in a statement, "I would like to invite Manhattan Borough President Scott Stringer to visit Chicago to see firsthand the economic development Walmart has created in my community. Walmart has been a boon to my constituents on the far West Side of Chicago. The change is obvious. No research report, especially one so flawed, will convince me otherwise."
"I would be delighted to visit Chicago, as Alderman Mitts suggested," Stringer responded. "And while I'm there, I'd like to meet with the owners of all the competing stores that had to close as a result of Walmart's opening -- more than 40 percent within a one-mile radius -- along with all of the employees who lost their jobs."
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First Posted: 12/16/11 10:53 AM ET Updated: 12/16/11 06:04 PM ET