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Protecting Locally Owned Retail

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Protecting Locally Owned Retail No. 204 FEBRUARY 2004 T H E M O N T H L Y JOURNAL o f T H E N A T I O N A L T R U S T ‘ S N A T I O N A L M A I N S T R E E T C E N T E R® Protecting By now, many community leaders LOCALLY OWNED RETAIL: recognize that when chain retail sprawls unchecked, main street PLANNING TOOLS loses, not just jobs and businesses, for curbing chains but the very essence of what and nurturing makes the district unique. Small, homegrown independent businesses CAN businessses. prosper, however, when planners use the right tools to manage economic growth in the region. by Stacy Mitchell This month, we report on some of the most promising new regulatory strategies available. © Josh Bloom — Doug Loescher, Assistant Director, NMSC in this issue National Main 16. Streets Conference Gear up for this year’s National Main Streets Conference in Albuquerque, New Mexico, May 9-12, by checking out the tours we have planned. Come to the Land of Enchantment and explore historic neighborhood business districts and landmarks stretching from ancient times—pueblos and petroglyphs—to the recent past— roadside signs and architecture along Route 66. con’t from page 1 One afternoon not too long ago, more than 200 residents of Hood River, Oregon, linked arms to form a giant circle around their downtown. They sought to demonstrate support for locally owned businesses and opposition to a proposed Wal-Mart supercenter. By encircling an area roughly equal to the footprint of the store, participants hoped to illustrate just how large the development and its {}impact on the downtown would be. The event was one of several CRG organized meetings highly visible public education and events, wrote letters to initiatives organized by the newspaper, hung posters Citizens for Responsible around town, and launched a Growth (CRG), a grassroots website. Bit by bit, they built group that formed to block a case against large-scale chain the 185,000-square-foot super- stores. Their argument came center and generate support partly from the heart. They Mitchell © Stacy for a countywide ordinance talked about Hood River’s Communities that protect their distinctive character and maintain one-of-a-kind banning stores over 50,000 vibrant downtown, about a square feet. sense of community, about lost businesses are more interesting places to live and to visit. They also tend to open space. But they also made attract a skilled populace, the kinds of people considered to be key drivers of © Stacy Mitchell a sophisticated and detailed job creation and prosperity. economic argument, much of it drawn from information they’d are adopting size limits and a role. Land-use and transporta- gathered on the web (see side- other kinds of land-use polices tion policies have fueled sprawl bar, “Resources,” page 6). that restrict the growth of and undermined the viability CRG won a partial victory chains, support downtown of older commercial centers. when the town and county revitalization, and create an Chain store developers routine- voted in favor of the measure environment in which locally ly receive multi-million dollar capping stores at 50,000 square owned businesses can thrive. subsidies that are rarely offered feet. But the new ordinance to local businesses. State and would not apply to Wal-Mart, federal tax policies tilt the which had submitted its appli- The Case for Locally playing field as well, giving cation before the vote. Owned Retail national retailers an advantage With the help of a land-use Independent businesses have over their smaller rivals. attorney and a water consult- faced a tough road over the last Communities have encour- ant, CRG convinced the county 15 years. Tens of thousands aged the expansion of large that the supercenter violated its have closed as chain retailers retailers for the perceived existing comprehensive plan such as Home Depot, The Gap, economic benefits. But there’s due to floodplain impacts and and Barnes & Noble have mul- mounting evidence that these incompatibility with surround- tiplied. Biggest of all is Wal- stores actually weaken local ing property. Finally, in early Mart, which now has 3,000 economies and entail signifi- January, the county commis- stores in the U.S., commands cant costs that far outweigh sion voted to reject Wal-Mart’s nearly nine percent of all retail their benefits. proposal. spending, and accounts for One of the most persistent Similar scenes are playing one-tenth of our trade deficit myths about chain retailers is out across the country. More with China. that they expand employment. and more communities are Consumer choices are only Towns often welcome big-box Because they tend to be located in dense questioning whether large partly responsible for the rise of stores for the jobs they produce. commercial areas, Main Street retailers chains are really such a bargain. chains and decline of local busi- But many studies have found are efficient users of public infrastructure And many, like Hood River, nesses. Public policy has played that large chains eliminate as and services. 2. M A I N S T R E E T N E W S No. 204 FEBRUARY 2004 revenue. Take the case of file for a major big-box retailer amount of consumer spending Pineville, North Carolina. operating in the region and from chains to locally owned This town of 3,400 people has estimated that only 14 percent stores would generate millions added some 6 million square of the revenue taken in by the of dollars in new economic feet of retail—a mall and many store is re-spent within the activity and create hundreds big-box stores—over the last state. Payroll accounts for most of new jobs—the equivalent of decade, only to find that the of this in-state spending. The attracting a major employer. new stores generate so many rest, 86 percent, leaves the Lastly, it’s worth noting that police calls—for bad checks, state, flowing to corporate in a time when so many cities shoplifting, and parking lot headquarters and out-of-state are ringed by identical sprawl- accidents—that they consume suppliers. ing boxes or overrun by ubiq- all of the revenue they produce. We then surveyed about a uitous chains like The Gap and The town recently raised prop- dozen locally owned retail busi- Starbucks, uniqueness has © Stacy Mitchell © Stacy The arrival of a big-box store is erty tax rates across the board nesses and found that 54 per- become a rare and valuable often welcomed for the jobs it and, desperate to control rising cent, or more than three times economic asset. Those commu- costs, blocked further big-box as much, of their sales revenue nities that have protected their produces. Ironically, the job construction. was re-spent within the state distinctive character and main- losses from local stores that In contrast, Main Street (almost all of it within the tained many one-of-a-kind downsize or close frequently retailers, because they tend to surrounding two counties). businesses are more interesting equal or exceed the job gains be located in relatively dense from the new superstore. commercial areas, are very effi- cient users of public infrastruc- many jobs as they create. That ture and services. The differ- is because consumer spending ence is dramatic, according to is a relatively fixed pie. Sales a recent study in Barnstable, gains at a new shopping devel- Massachusetts, a city of 48,000 opment are invariably offset by people. The study, conducted losses at existing businesses. by Tischler & Associates, com- It’s “a zero-sum game,” accord- pared public revenue and costs ing to Dr. Kenneth Stone of for various land uses. It found Iowa State University, who, for that the city’s small, downtown more than a decade, has tracked stores generate a net annual Wal-Mart’s, and more recently surplus (tax revenue minus Home Depot’s, impact in Iowa. costs) of $326 per 1,000 square As local stores lose sales, they feet. Big-box stores, strip shop- either downsize or close. The ping centers, and fast-food resulting job losses typically outlets, however, require more equal or even exceed the gains in services than they produce in at the new superstore. revenue. A big-box store creates The new jobs at Target an annual tax deficit of $468 or Wal-Mart, moreover, often per 1,000 square feet. Studies have shown that land-hungry chains, strip shopping centers, pay less and offer fewer benefits If that’s not enough to and fast-food outlets frequently require more in services than they than the jobs they replace. give city officials pause before produce in revenue. Taxpayers end up picking approving a new megastore, up the difference. Half of consider the many non-retail These independent retailers places to live and visit. They Wal-Mart’s workers qualify for businesses in the community support a variety of other local are also more likely to attract food stamps. Washington state that depend on local retailers businesses, we found. They skilled workers and entrepre- reports that Wal-Mart employ- at least in part for their liveli- advertise in local newspapers, neurs—the kinds of people ees are the largest group of hood. A few months ago, the bank with local banks, pur- many economists consider to be users in its taxpayer-funded low- Institute for Local Self-Reliance chase inventory and supplies key drivers of job creation and income health care program. teamed up with Friends of from local firms, and hire local prosperity in today’s economy.
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