There have been several stories written this week which seek to dispel the widespread belief that Wal-Mart is bad for small businesses. A piece in The Washington Post claimed that Wal-Mart can have a neutral effect on small business while a story in Risky Business, a U.S. and World Report blog, made an even bolder argument that Wal-Mart can be good for them. The facts, however, indicate otherwise and both pieces make flawed arguments.

The Risky Business piece relies on a recent study, conducted in Chicago, on the impact of Wal-Mart on urban small businesses. The author claims that:

in urban areas Wal-Mart has not driven out small competing businesses, as it often has in rural and more distant suburban areas

However, in actuality the study found that Wal-Mart's impact on urban small businesses is just less severe, though still significant and negative, than its effect on small businesses in rural and suburban areas.

The Washington Post article discussed the impact of a new Wal-Mart in Landover, Maryland, the first in the Washington, D.C. metro area, and claimed that small proprietors have not suffered from the construction of the new Wal-Mart store. However, the article used only anecdotal evidence drawn from interviews with a few local businesspeople to make its claim. Al Norman, founder of the anti-Big Box organization, Sprawl Busters, says that's problematic for many reasons:

The Post reporter interviewed the owner of a mall with an exotic pet store, a pancake restaurant, and a bank. Of course that mall felt no impact---it does not sell products that compete with Wal-Mart. I have also found in 15 years of talking with merchants, that they will NEVER tell reporters how their bottom line is doing, until the draw the shutters and close. The Post reporter told me this story was "local story only" but articles like this one show the danger of extrapolating from two or three ancedotal reports. It takes at least 2 to 3 years to see merchant impact.

Today, the Rutland Herald stepped into this debate with a story that assessed the potential impact of the proposed expansion of a Wal-Mart store in the town of Bennington, Vermont. The article featured an interesting approach: it was based on facts! The story cited a comprehensive study by local economists which found that the planned expansion will have a devastating impact on local businesses:

The report estimates that 10 to 15 percent of the existing downtown businesses are likely to be hurt by the Wal-Mart expansion, including those selling clothing, beauty and hair products, sporting goods, electronics, eye wear and home and hardware goods. It added that empty storefronts may remain so for longer periods.

Further, although the expansion will create new jobs in the short term, in the long term, it will result in a net job loss for the town:

On the jobs front, the report said, “In 2009, operation of the expanded store will generate a total of about 78 jobs, mostly in the retail trade sector. Total county employment impacts over the longer term, however, shrink to zero by 2013 and ultimately decline by about 35 jobs,” the report states.

For the people of Bennington, this study is likely pretty shocking news, but its findings are quite similar to those of most comprehensive impact studies that have been conducted on Wal-Mart. I hope local leaders take this study into account when planning for the future.

Furthermore, I hope that our readers are not swayed by anecdotes or distortions. The facts are in: Wal-Mart is bad for small business.