Chapel Hill Herald, Saturday November 19, 2005
Last summer, as the threat loomed of a Wal-Mart just south of the Chatham County line, there was much talk of how to stop the retail giant from moving in and sucking the life-blood out of local business. Less attention was paid to strengthening our home grown retail sector to create an economic base that might withstand such an onslaught.
As the Wal-Mart style big box has spread, the business districts of small town America have been hard hit, losing their historic retail anchors and leaving residents to drive out to a freeway interchange for the nearest strip mall.
In 2001, Powell, Wyoming was in trouble when the Stage store, the latest owner of the downtown department store that had operated for generations, decided to pull out.
Citizens of Powell formed a corporation and began selling stock to open their own store. Some 800 investors bought shares, and in the summer of 2002 the Mercantile opened in a 7,500-square-foot space downtown that once housed a portion of the Stage store.
The store was an instant success with sales, topping projections in the first year. "We surpassed the goal we had last year and this year is looking even better," said Ken Witzeling, a retired pharmacist and president of the Mercantile's board. The store has since added a children's clothing shop.
The community-owned model gives residents a stake in the store, while making the business responsive to both their needs as consumers and to their values as citizens. Community-owned businesses keep profits recirculating locally and are likely to turn to local sources for goods and services.
Powell Mercantile has created a great deal of excitement across the west and other community-owned stores are now popping up. Although the trend has not yet reached our area, it is akin to the model that has led to the success of Weaver Street Market in Carrboro.
Weaver Street Market, like Powell Merc, is capitalized on the basis of low-cost ownership shares sold to community members. The key to Weaver Street's success has been its commitment to member services and to actualizing a sense of ownership among its 8,000 member-owners.
In the early 1990s, when Whole Foods arrived, Weaver Street responded by calling on its then 1,800 members to intensify their commitment to the store and by challenging its board, management and staff to make the benefits of membership more of a day-to-day experience.
The community responded and the store quickly rebounded from a 15 percent drop in sales. In addition, Weaver Street Market increased its investment in the Carrboro store, adding a bakery, a new kitchen, new restrooms, wider aisles and a bigger delicatessen area and cafe.
Over the next 10 years, Weaver Street expanded further, opening Panzanella Restaurant, a store in Southern Village and will soon open a Hillsborough market. Earlier this year, as Earth Fare opened in Eastgate, Weaver Street again responded by intensifying its relationship with its members.
The question thus is not whether our area can support cooperatively capitalized retail but whether that support can extend beyond the natural foods market that Weaver Street has developed so well.
The Weaver Street Market experience shows that there is a population committed to community-oriented economics as well as a significant customer base. Powell is a town of only 6,000 and home to a two-year community college. We have many times both the year-round and student populations.
The time is right for an increased emphasis on community-owned business. In recent years, community has come to be understood as incorporating economic activity that connects the various aspects of our lives rather than driving them apart. Many no longer accept the post-war fragmentation of our lives that places work in an office park, shopping in a mall, housing in a subdivision and a gas-guzzler in between.
Everyone I've met who lives in Southern Village, for example, speaks enthusiastically of the pedestrian ambience that brings their community together. But despite the strengths that New Urbanist-style development brings to places like Southern Village, it still leaves a gap between the commercial investment of entrepreneurs and the community investment of homeowners.
Cooperative capitalization, a la Powell Mercantile and Weaver Street Market, is certainly no panacea but it knits a tighter bond between entrepreneurs and their customers and offers consumers a more active role in charting their economic destiny.
As with any business, there are challenges to getting these cooperatives off the ground. Key among these is the need for a entrepreneurial leadership committed to the retail cooperative undertaking. Locally, Orange County and Carrboro both have economic development staff and advisory boards that could play a supportive role.
Judging by the hundreds who've expressed concern about a possible Wal-Mart, a "South Orange Mercantile" could get an exuberant welcome.
Issues:
Comments
At the risk of sidetracking
At the risk of sidetracking the thread, and feel free to say if I am, what businesses went under in Hillsborough when Wal-Mart moved in or when it upgraded to a supercenter?
As for the co-op idea, hey, if it makes for a better place to shop and better stuff to buy, I say go ahead. Obviously when done right it can compete, so it must be doing something right....
Chris, The information you
Chris,
The information you requested isn't tracked so the best anyone can do is provide anecdotal information. I have plenty of that to offer.
When Hampton Pointe (the name of the shopping center in Hillsborough that is the home to Orange County's only Wal-Mart Supercenter) was going through its two year approval process, no one knew what the two “big boxes†would eventually become.
It was widely speculated that Hillsborough's existing Wal-Mart would move if Hampton Pointe was approved. It was also speculated that if any “big boxes†came to Hillsborough, they would irrevocably harm our town beyond recognition. The rhetoric of panic and fear was high. The obligatory mentions of downtown Hillsborough small businesses, Lloyds Pharmacy and Dual Supply, were frequently thrown around as perspective casualties of any “big box†that would locate in Hillsborough. Political candidates were espousing “Big boxes are the wave of the past, not the wave of the future!â€Â
Hampton Pointe was approved in November 2001. The Wal-Mart Supercenter in Hillsborough opened in September 2003. Home Depot opened last month (October 20th). Lloyds Pharmacy and Dual Supply are still in business. Due to no efforts by any one individual, politician, or organization, there are arguably more businesses in Hillsborough's downtown today than there were in 2001 and 1999 with more on the way. There has been a renewed buzz about town regarding Weaver Street Market (it has been talked about for years but yet to materialize) locating in the recently approved Gateway Center building.
While most of the old Wal-Mart building in Hillsborough Commons remains vacant, a portion of it was re-opened in 2004 as a Dollar Tree store. Some of the businesses in Hillsborough Commons moved to Hampton Pointe as well, leaving high priced vacant spaces in the older shopping center. The remaining businesses seem to be struggling as a result of losing their large anchor store but also seem to be hanging on.
It has been rumored that a local Hillsborough businessman wanted to lease out the remainder of the old Wal-Mart building to start up an entertainment center for kids and teenagers but was ultimately refused by the owner. Apparently Wal-Mart bought out its remaining lease and the owner has the vacant space priced in such a way to make it affordable only to a large national retail chain (his company's preferred clientele).
Over in Hampton Pointe, new shops and stores have opened. Mapleview Ice Cream Too, Papa Johns, Great Cuts, and Gamespot are just a few new Hillsborough businesses. More retail commercial space is being constructed next to the new Home Depot.
What about the politician who said “big boxes are a wave of the past� Apparently in Hillsborough, “big boxes†are the wave of the future. The Waterstone master plan (Hillsborough's version of Meadowmont or Southern Village) was unanimously approved by the Town Board with 90 acres of retail commercial space (Hampton Pointe is 75 acres). No provisions were included in the plan that would prohibit “big boxes†at the prime real-estate location (the intersection of I-40 and Old Highway 86).
So what businesses have left Hillsborough due to its new Wal-Mart Supercenter? I haven't noticed. As Hillsborough continues to solidify itself as a bedroom community, its retail commercial business sector seems to be growing as opposed to shrinking.
Wal-Mart Watch has a flyer
Wal-Mart Watch has a flyer on Wal-Mart and Local Economies. Here's one item:
Rather than take the word of
Rather than take the word of a Wal-Mart Watch flyer, maybe we should read Dr. Stone's actual research.
http://www.econ.iastate.edu/faculty/stone/1995_IA_WM_Study.pdf
After doing so, I recommend that we not get too attached to that number of lost businesses (7,326). It is important to note that it is not a real number.
Dr. Stone uses a questionable method for estimating the losses: "The total number of businesses lost was derived by dividing the lost sales by the 1993 average sales per business in the state."
Given that the average grocery, apparel or auto parts store likely has higher average sales than the local tailor, barber or auto repair shop, Dr. Stone's estimate likely inflates the actual losses.
Additionally, the article implies that every Iowa business that went under between 1983 and 1993 was due to Wal-Mart's influence. It ignores the inherently unstable nature of small businesses and the impact on businesses of people leaving rural areas for the larger towns.
The key things to take away from Dr. Stone's work are some of his recommendations for competing with Wal-Mart:
"In general it is best to take a positive attitude toward the opening of a new mass merchandise store in your area. The following thoughts are offered in this regard.
• In a free enterprise economy, all firms are free to compete. However, local officials should be careful not to offer unduly generous incentives to large firms that could place smaller firms at a disadvantage.
• Recognize that a discount mass merchandise store will probably enlarge your town's retail trade area size. Try to figure out ways to capitalize on the increased volume of traffic to town.
• It is possible to co-exist and even thrive in this type of environment.
• You may need to change your methods of operation as described below."
Stone's more recent research
Stone's more recent research leads him to a less ambiguous conclusion:
Is that based on new
Is that based on new research? Or, a restating of his earlier work?
Can you post a link to the entire paper/article?
Nevermind, I found
Nevermind, I found it.
http://www.econ.iastate.edu/faculty/stone/MSsupercenterstudy.pdf
Here is another quote from the same paper that offers a conclusion of its own:
"Conversely, a local government that is strictly anti-growth may also do harm to its local merchants as residents leave the community to shop in other towns with big new stores."
How hard would it be to get
How hard would it be to get Wal-mart #1, #2 and other Hillsborough businesses sales tax revenues? It should be fairly easy to do the math once we have tax generated minus tax outlays (if any bu OC to buildout #1 and #2) to get a sense of the "worth" of Wal-mart to OC.
Maybe then we could find out if OC Wal-mart workers get public assistance above-and-beyond other Hillsborough businesses (including the other big boxes like Home Depot) and factor that into the "worth" of Wal-mart.
Using that as a base, you could then start layering in "quality of work" for each type of respective jobs at local business versus Wal-mart (like the average Hillsborough business retains folks for 6 years versus Wal-mart retaining them for 6 months - that kind of analysis).
Right, which brings us back
Right, which brings us back to the point of my column: it is not enough to "stop wal-mart"; we need locally based options that meet the needs of residents.
The findings of this study
My point is somewhat
My point is somewhat different.
If you develop locally-based options that meet the needs of residents, you don't need to "stop wal-mart."
As Dr. Stone says, "It is possible to co-exist and even thrive in this type of environment."
Well, as I'd pointed out
Well, as I'd pointed out over at the DTH blog (http://apps.dailytarheel.com/blogs/pivot/entry.php?id=283), if people don't want to shop at Wally World they don't have to.
But I do think we can all agree that having more viable businesses that meet the needs of consumers is a good thing, whether you're a town citizen interested in fighting Wal-Mart or are an economics student at UNC.
Unfortunately, not everyone
Unfortunately, not everyone agrees that people should have the choice of shopping at Wally World.
As a former economics student at UNC, I agree that a more viable business community is a good thing.
However, I believe viability can only be built on competition, and never on protectionism.
That quote is taken out of
That quote is taken out of context from a section in which Stone advises merchants threatened by big-box on how to adopt a positive attitude and compete. He offers a menu of changes many of which involve changing a store's product mix, some of which are similar to the customer service approaches taken by WSM.
The fact that local businesses may be able to take a defensive strategy and "compete" (primarily by not competing) with Wal-Mart does not mean that Wal-Mart is not overall a drain on the local economy.
Short of posting the entire
Short of posting the entire paper, every quote is out of context (your earlier ones included).
Actually, the paper does not say that having a Wal-Mart is an "overall drain on the local economy." In fact, it states that it is much better to have a Wal-Mart in your community than to do business in a nearby community with no Wal-Mart.
The paper says that the general merchandise retail segment consolidates to include a large player and fewer smaller players that have adapted to compete.
I think Weaver Street Market is a perfect example of a store that has found a way to compete with much larger competitors.
The larger point Stone makes is that local merchants can compete with Wal-Mart, and some will actually thrive.
He does not say it will be easy.
He does not say they can do it without making changes to their current business strategy. But, at the risk of being accused of taking another quote out of context, Stone says they must get "back to the basics of running a good business" and learn to compete.
Wal-Marts are also ugly, but
Wal-Marts are also ugly, but I guess aesthetics isn't part of standard economics.
How about if it was
How about if it was "mediterranean-style"?
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20041231/NEWS08/...
That's hilarious...I had no
That's hilarious...I had no idea they had other looks. However, it's all double-ugly on the inside.
How often would you see it
How often would you see it from the inside? :)
Just remember, friends of
Just remember, friends of free enterprise, Walmart's documented (in US courts) track record of deliberately selling products at a loss to drive the competition under (not legal), and selling forged goods of major brands. Not to mention its recent stated policy of designing jobs to drive out people who might be in less than perfect health (so much for the handicapped employees that often show up in their ads!). The major lesson of serious economics research over the last twenty years has been that 'market competition' often leads in weird, self-destructive directions. Walmart is about as good an example of that as anything.
I asked this in an earlier
I asked this in an earlier thread, but received no response.
Can you cite a case where Wal-Mart was proven to have used illegal predatory pricing that survived appeal?
Timely that Washington Post
Timely that Washington Post editorial page writer Sabastian Mallaby wrote a defense of Wal-Mart in Monday's (ran in the H-S today) Washington Post. Interesting take on the issues, especially this part:
"Wal-Mart's critics also paint the company as a parasite on taxpayers, because 5 percent of its workers are on Medicaid. Actually that's a typical level for large retail firms, and the national average for all firms is 4 percent. Moreover, it's ironic that Wal-Mart's enemies, who are mainly progressives, should even raise this issue. In the 1990s progressives argued loudly for the reform that allowed poor Americans to keep Medicaid benefits even if they had a job. Now that this policy is helping workers at Wal-Mart, progressives shouldn't blame the company. Besides, many progressives favor a national health system. In other words, they attack Wal-Mart for having 5 percent of its workers receive health care courtesy of taxpayers when the policy that they support would increase that share to 100 percent."
Will, I will ask Dianne at
Will, I will ask Dianne at the OC EDC if she has access to any of the information you mentioned. I think it is pretty tough to get individual business' sales tax information, but I might be wrong.
I do know that New Hope Commons, in its zip code surveys, has Chapel Hill/Carrboro to thank for about 70+% of its sales. Of course, that sales tax goes to Durham County.
I saw that Mallaby piece and
I saw that Mallaby piece and was impressed by its sophistry. Right, progressives generally favor national health insurance. Instead, we have a meager program for the poor and elderly. The lack of national healthcare creates a double-squeeze: on the tens of millions of uninsured who cannot afford healthcare, and on the corporations that struggle to pay high employee health insurance premiums.
But the point of the criticism of Wal-Mart is that they are paying poverty wages. That's why 5% of its employees qualify for Medicaid. I think Mallaby will find that progressives are in general agreement that working Americans should receive wages above the poverty/Medicaid-eligibility level and that their employers should provide adequate health coverage (while in lieu of a national plan). Wal-Mart does neither. No "irony" there, more like tragedy.
Allan--Internet searches
Allan--Internet searches have not yet turned up a case of predatory pricing where Walmart was convicted in court. But in Oklahoma, they settled by agreeing to pay double fines in the future. In Florida, they are actively trying to repeal predatory pricing laws. etc. The appeals you refer to can, perhaps, be viewed as an effort to bankrupt their opponents. Walmart's habitually violates many laws and ethical codes. Until the very recent negative press it's gotten, its habit was to pay off local governments, plaintiffs, etc to minimize publicity. Its quite easy to find info on its vast array of sexual discriminatory habits, vicious union busting, not to mention the recent 'slave labor' immigrant scam (another thing fans of free enterprise might wish to look into). But don't think for a minute that what you can find out there is more than the tip of the iceberg. Since there are no unions in Walmart, its difficult to lodge complaints, nor are people likely to be entirely familiar with their rights when Walmart violates them. I ran a blog where I posted a couple of articles about Walmart. For years afterward, I received emails (probably over one per month) like 'Walmart locks us in the store and makes us work overtime without pay--do you know a lawyer who can help us." Sad and pathetic. Let me reiterate that this was in response to a couple of articles posted on a blog, and not a very professional looking blog, either.
Striking isn't it, that Mallaby and John Tierney of the New York Times should find nice things to say about Walmart the very same week. Tierney is convinced their is a consensus among anti-povery experts about the virtues of Walmart. This is someone paid in the mid six figures for his column.
If I'm not mistaken almost
If I'm not mistaken almost any industry can unionize forcibly by taking a secret ballot style vote. But sometimes unions would rather know who voted against them so that they can try to persuade them to change their minds. At least, that's been the sticking point for efforts to unionize UNC's dining hall workers. They just don't want to use the secret ballot process. Feel free to correct me if that's not the case universally.
So while companies may discourage the economically inefficient behavior of unions, most sectors can't really *prevent* it if the push is overwhelming.
Chris, Google is your friend
Chris, Google is your friend ;-)
Google NLRB (National Labor Relations Board) + Walmart and these type stories appear first:
here,
here,
and here.
The Bush NLRB has been a disaster. Starting with the appointment of Brame to the recent nomination of Kirsanow, the NLRB has gone from a weak ally of working folk to corporate lapdog and enforcer.
Heck, they even approved of employers trying to regulate who their employees can meet with after work. I guess, in their water-carrying zeal, they kind of forgot that right of assembly bit in the Constitution.
"Teamsers' claims" "NRLB
"Teamsers' claims"
"NRLB charges"
"union alleges"
When are any of those quotes going to use phrases such as: "prosecutors proved", "jury convicted", or "courts confirmed"?
Wow Steve, that sure is a
Wow Steve, that sure is a lot to chew on. But, much of it merely distracts from your answer to my original question about something you stated as fact.
You: "... Walmart's documented (in US courts) track record of deliberately selling products at a loss to drive the competition under (not legal)..."
Me: "Can you cite a case where Wal-Mart was proven to have used illegal predatory pricing that survived appeal?"
You: "Internet searches have not yet turned up a case of predatory pricing where Walmart was convicted in court."
We are fine up to that point, but then you turn around and try to deflect the discussion by implying that Wal-Mart did something wrong by settling a case in Oklahoma (legal), lobbying to change the laws in Florida (legal), and winning court appeals of lower court decisions (also legal).
If that wasn't enough, you throw in accusations of a "vast array" of "sexual discrimination", "union busting", and "slave labor".
To close it out, you try to discredit writers at two of the nation's most liberal newspapers who disagree with you because they make "six figures."
In case anyone was distracted, "Internet searches have not yet turned up a case of predatory pricing where Walmart was convicted in court."
So Google "wal-mart fined"
So Google "wal-mart fined" on Google News
Besides some interesting news on Wal-mart's contractors continuing to mishandle the dead (good to know they think as little about the dead as the living), there's some fun little bits like:
for pricing issues (an oldy but goody).
for violating child labor laws. So 19th century!
The piddley $11M for civil immigration issues.
And then there's the little $50M settlement to 69.000 Colorado workers for labor violations.
Imagine Wal-marts dilemma if they hadn't contributed so well in the 2004 Congressionals.
Chris, I prefer 10 local 20,000 sq/ft businesses rather than 1 200,000 sq/ft business because of the quality of jobs, traditional community involvement and the low wear-and-tear on the taxpayer. But if we're going to have some kind of mega-mart, wouldn't it be better to have one with far fewer problems?
"Imagine Wal-marts dilemma
"Imagine Wal-marts dilemma if they hadn't contributed so well in the 2004 Congressionals."
It's a wonder we aren't all unionized given what they contributed in the 2004 elections.
http://www.politicalmoneyline.com/cgi-win/x_ee.exe?DoFn=04L
Interesting what
Interesting what PoliticalMoneyLine can show. Say for 2004:
Seems like someone has some explaining to do. $2,500 from Wal-mart in 2004 but $138,000 from organized labor!
"Judging by the hundreds
"Judging by the hundreds who've expressed concern about a possible Wal-Mart, a "South Orange Mercantile" could get an exuberant welcome."
An exuberant welcome?
Dan, do you see this cooperative as a contiguous one-stop shopping center or many stores scattered here and there?
If you're thinking more along the lines of a new shopping center, what spot do you have in mind? Would you like the "South Orange Mercantile" to be in Carrboro?
Let's say that you do want it in Carrboro. Do you think many people would be amenable to having the cooperative near their neighborhood?
Mary, those are all good
Mary, those are all good conjectural questions best worked out by the entrepreneurs (if they're out there) who might actually develop such a venture. Both Chapel Hill and Carrboro have identified commercial areas so I don't think a "shopping center" is warranted nor do I think it is suggested in my column. From what I've read, I don't think these are the kind of businesses that are likely to construct their own facilities, at least not initially. Carrboro does offer the revolving loan program that could help such an enterprise get started.
Dan, I get the feeling that
Dan, I get the feeling that perhaps you think a group of cooperative shops clustered together for the pupose of shopping is a good thing so long as we don't call this collection of shops a 'shopping center'. What would you like to call it instead?
I have this thought that if you don't convey that the shops constitute a shopping center, then the coop feels unwelcoming to the general population and lots of regular folks stay away. Would you intend the coop only to have appeal for a certain group of people?
Mary, I'm sorry but I really
Mary, I'm sorry but I really have no idea what you're talking about. Where have I made reference to anything like "a group of cooperative shops clustered together"? Not knowing what this "group" would constitute, it's hard to have an opinion as to where its constituents should be located let alone whether they should be clustered together (regardless of what you call it).
Let me add that I don't
Let me add that I don't think the nature of ownership would affect the location of a business other than that a consumer-owned cooperative would want to be located conveniently for its owners. Otherwise, siting would be determined using similar criteria to those used by any business in deciding its most desirable location.
oy!
oy!
Let me add that I don't
These are probably quite different. Standard retail location theory tells you to slap up a windowless box as near to a freeway interchange as possible to maximize catchment area via drivetime.
A co-op would be more likely to be driven by different motives (investing in local community, providing access to those without cars, reducing environmental footprint) which would suggest a location in or near a downtown.
Nevertheless, I have read about Powell Mercantile before and this is a very interesting idea. One would think the Andrew Riggsbee hardware building site would be an ideal location with South Orange Merc on the bottom and residential or office space above.
If anyone carries this further, I think a good first step would be asking Weaver Street Market if they could provide some information to those interested about the locations of their customers, to help understand how a moderately parking-constrained co-op business in southern Orange County attracts customers, and from where.
Actually, Patrick, there are
Actually, Patrick, there are all sorts of coops, not all of which ascribe to the kind of values you describe. There very well could be a coop that decided to locate near a freeway interchange. Interestingly, we had exactly that debate when I was on the board of New Pioneer coop in Iowa City. Market research indicated that a site near the freeway was desirable, especially for attracting customers from Cedar Rapids. Ultimately, a more in-town but on-the-strip location was selected (with plenty of parking). I was among those arguing for a larger store downtown.
I agree that the Riggsbee site could be a great location.