Bureau of Business Research

 

Date of this Version

6-2006

Comments

Published by the Bureau of Business Research University of Nebraska - Lincoln. Used by permission.

Abstract

This is a study in three parts: the general impact of Wal-Mart and big box stores on the economy; an empirical look at Wal-Mart’s impacts on 15 Nebraska communities; and a review of research on ways that local retailers can compete against big box stores.

Part one suggests that Wal-Mart has both positive and negative impacts on the economy. Wal-Mart helps increase productivity and causes consumer prices to fall. Further, a number of studies found that employment increased in communities that received a new Wal-Mart store. However, other studies found that entry of a Wal-Mart failed to lead to net increases in local employment, and one study found a correlation between Wal-Mart locations and rising local poverty rates. More generally Wal-Mart entry increased concerns in many communities about the changes it may cause to the size and structure of the retail industry.

Part two shows that entry of a Wal-Mart does not seem to have a significant effect on retail employment, but can impact the number of retail establishments in rural Nebraska communities. Wal-Mart’s effect is also visible in general merchandising, particularly with respect to the level for employment.

In part three, four strategies are suggested for competing against Wal-Mart and other big box stores. They are improving service quality, improving merchandising, improving marketing, and improving management of marketing information.