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Data Shows Big-Box Will Harm Small Businesses

Wal-Mart has been hyping a study that suggests that their big-box format stores have no significant impact on the size, growth or profitability of the small business sector in the United States. The question is important, because SunCal Companies have indicated they want to bring in big-box stores to Alameda Point. But a review of the study by the nonprofit Institute for Local Self-Reliance finds fatal flaws with the study and it’s conclusions.

The original study, called “Has Wal-Mart Buried Mom and Pop?” was conducted by Dr. Russell Sobel, chair of Entrepreneurial Studies at West Virginia University, and Andrea Dean, a Kendrick Fellow at WVU’s Economics Department. A review of the study by Stacy Mitchell, author of the book “Big-Box Swindle”, concluded that Sobel and Dean “apparently lack an understanding of the definitions used by the U.S. Census bureau and are in fact using the wrong dataset” which leads them to erroneously count “not only genuine small businesses, but every corporate-owned chain store with fewer than 10 employees.” By using the correct data and correctly identifying true small businesses, Mitchell found that as Wal-Mart grows, the number of genuine small businesses shrinks.

The graph below charts Wal-Mart’s growth in square footage in red, and small-businesses decline in blue from 1998 to 2004. We encourage you to read the full article.

As Wal-Mart Grows, the Number of Small Businesses Shrinks

As Wal-Mart Grows, the Number of Small Businesses Shrinks

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