Chains That Choke


The True Cost of Mega-Retailers

and the Fight for America's

Independent Businesses

By Stacy Mitchell -- Beacon Press -- $24.95

In 2005, Kepler's, a 50-year-old independent bookstore in Menlo Park, Calif., shut down, another victim of national chains. Grief-stricken patrons dug into their wallets, and Kepler's reopened. The irony: Many of the bookshop's fervent supporters admitted that they, too, had been buying more books at chains and online.

This anecdote, which opens Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses, captures America's love-hate relationship with chain stores. We love their convenience and often low prices, but hate that they push out mom-and-pop stores. In Swindle, Stacy Mitchell, senior researcher at the Institute for Local Self-Reliance, a Washington nonprofit that promotes sustainable communities, makes clear she considers our support of big-box stores a Faustian bargain. Her book is a prodigiously researched, lucidly written diatribe against them.

The first part of Swindle describes the federal, state, and local policies, including tax breaks, subsidies, and lax antitrust enforcement that fueled the rise of megaretailers. It also examines the far-reaching economic, environmental, and social consequences of their dominance. The much shorter second part is a primer on how communities can stop big chains from moving in.

While chain stores were already a presence by World War I, changes to the federal tax code in 1954 turned them into tax shelters. Within three years, new shopping center construction had increased more than 500%; Wal-Mart, Target, Bradlees, Kor-vettes, and Caldor are among the retailers that soon appeared. These days, local governments lure the chains with generous subsidies and tax breaks, thinking the stores will bring jobs to town. Mitchell, building on her own and others' research, counters that the boost "is nothing more than an illusion." The stores do create hundreds of jobs, but eliminate just as many by forcing other businesses to downsize or close. The tax dollars they generate are offset by lost sales and property tax revenue from local business districts and shopping centers. A 2006 working paper by the Public Policy Institute of California examined several markets and found the opening of a Wal-Mart resulted in a drop in countywide retail earnings of 2.8%.

When local businesses decline, so do the ancillary services they use. Mitchell calls this the "local premium" a community pays for a superstore. Locally owned businesses spend more than twice as much as superstores on local newspapers, accountants, ad agencies, and the like. While small businesses spend that money in their own backyard, big retailers usually centralize spending.

But Mitchell offers some hope. She provides case studies of communities thwarting megaretailers by using zoning codes, traffic studies, environmental reviews, and comprehensive land use plans. Between 2000 and 2004, some 132 citizen campaigns succeeded in blocking superstores. The megaretailers, Mitchell writes, "face organized opposition on as many as one out of every three of their proposals." Category-killers, beware.

By Marilyn Harris

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