The Economic Impact of Wal-Mart on Small Towns: Three Wisconsin Examples

Abstract

The impact that Wal-Mart has on the economy is a question that economists have pondered for years. The issue at hand is the impact that Wal-Mart has on other retailers in small towns in Wisconsin. The Wal-Mart stores in Wisconsin were used in a geographic information system to distinguish which were in small towns with less than 10,000 people and which ones were at least 15 miles from another Wal-Mart store. Three stores were selected to analyze and they were in the cities of Chilton, Shawano, and Minocqua. Retail trade data from the United States Census broken down by zip code was used to analyze the establishments in sectors that would be competing with Wal-Mart. The data included the total number of establishments, number employees of each establishment, and types of establishments. Relevant sectors of the retail trade category were selected to be analyzed. The data was put together for each city for the years between 1994 and 2002. The same data was put together for the entire state of Wisconsin to compare and to observe any economic trends or changes during this time. The results from this investigation are that one can conclude that Wal-Mart does have a negative impact on the retail of smaller towns in Wisconsin. All of our stores that were analyzed opened in either 1995 or 1996. In the before and after analysis ofthe total number of relevant establishments in these towns it was found that the average drop was 23.9%. In the first three years after Wal-Mart entered these markets there was a notable percentage drop for firms with less than 1 00 employees. The data has also shown that grocery stores are the most negatively impacted of the retailers. The data indicates that after a Wal-Mart store enters a market that it lowers the total number of establishments, effects smaller retailers, and has impacts on specific types of retailers.