Experts Say Carroll Businesses Can Compete With Wal-Mart Supercenter

CARROLL, Iowa — Iowa State University professor Kenneth Stone, a nationally regarded expert on Wal-Mart and the first academic to do serious studies on what is now the largest company in human history, says Carroll’s existing business community is strong enough to adapt to the arrival of a Wal-Mart Supercenter Wednesday morning.

“I think taking a positive attitude is the best course,” Stone said in a recent interview. “I have seen several towns take a very negative attitude. It’s usually prompted by the grocers getting together or somebody that’s really going to be hurt.”

Added Stone, “The bottom line is there are many, many successful towns that have a Wal-Mart Supercenter and all the hysteria that went on about how bad it was going to be just didn’t happen.”

Jack Schultz, author of the book “Boomtown USA” and an evangelist for rural America, said he was in Pryor, Okla., several months ago and talked to people there about the arrival of a Supercenter.

“The Chamber president told me that sales in their downtown have increased with more people coming to town,” Schultz said.

Here is Schultz in a recent post on his blog about rural America and small town development:

There is a life with Wal-Mart … I see it over and over as I travel around the country. Generally, small towns appreciate their Wal-Marts and the most complaints are from towns that don’t have one or that didn’t allow one to build in their town years ago and today regret having let the big fish swim to a neighboring town.

Douglas Burns of Iowa Independent and Iowa Political Alert discusses some of the economic and cultural issues in Carroll, Iowa. The above is filmed at the historic Carroll Depot, home of the Chamber of Commerce.

Editor’s Note: Jefferson is 30 miles east of Carroll. Burns misspeaks on this during the video.

The arrival of a Supercenter in a community is a many-sided story, with a myriad of effects on individuals and businesses, according to Charles Fishman, author of the recently released book “The Wal-Mart Effect.”

“Wal-Mart is either one of the boldest, most democratic creations in human history, a validation of free markets harnessing its enormous power on behalf of the needs of ordinary people, or it is an insatiable, insidious beast, exploiting the people it pretends to defend,” Fishman writes.

More and more communities are getting to sort out the question with Supercenters.

The primary feature of the Supercenter, what separates it from the existing Wal-Mart in Carroll’s central business district, is the presence of a grocery store.

Stone, who has spoken to thousands of groups about Wal-Mart, including local merchants in a session at the former Tony’s Restaurant in Carroll in the early 1990s, said Wal-Mart’s impact on the community occurred then with the construction of the original store in downtown Carroll.

“The major damage was done by the original Wal-Marts that came around,” he said.

Stone said Carroll has been fortunate to have the Wal-Mart in the central business district, not on the outskirts of the city.

“The main problem as I see it is I think if in fact the old Wal-Mart was instrumental in helping to keep trade downtown, this will hurt to some extent since it’s a little further away from downtown,” Stone said.

The impact of the Supercenter in Carroll obviously will be on grocery stores, Stone said.

Studies in Iowa, Mississippi and Texas reveal that that average reduction in sales for existing grocery stores in the first year of competition with a Supercenter will be around 10 percent.

But Stone said two of Carroll’s grocery stores have strong track records when it comes to competing against Wal-Mart.

“Usually it’s the smaller independents that are hurt worse than the bigger stores,” Stone said. “Frankly, I think Hy-Vee and Fareway have done a good job of competing against Wal-Mart. Those two chains in particular have figured out a way of beating Wal-Mart at their own game.”

Schultz, who lives in Effingham, Ill., said that city’s local supermarket saw sales fall by about 20 percent in the first year of competition with a Supercenter.

“The owner had to let some people go and regroup,” Schultz said. “But, he survived and his sales are higher today than prior to Wal-Mart coming to town. He now says that he gets people from a larger area than he got before.”

Stone said any efforts by city councils or other local leaders to block a Supercenter siting are counterproductive.

“Many towns have adopted ordinances and most of them are to the effect that no new retail store can be bigger than 100,000 square foot, nor can more than 10 percent of the floor space be dedicated to selling food – and of course that’s aimed directly at Wal Mart Supercenters,” Stone said.

Stone, author of the 1995 book “Competing with Retail Giants” and an ISU professor emeritus, said people in the Carroll area are going to find a Wal-Mart Supercenter one way or another.

“You’d be surprised how many people, probably even people living in Carroll, but certainly in the outlying area that really are enamored so much with Supercenters that if Carroll doesn’t have one they will drive to the nearest town that does have one,” he said.

Stone said that retail trade centers such as Carroll generally have Supercenters. Without one, the business community loses traffic to nearby Supercenter communities like Atlantic and Fort Dodge.

“As a last resort when they can go to the next city over, usually that just pulls trade from the city that kept them out is what it amounts to,” Stone said.

There’s also a matter of resources to consider for anyone itching for a legal fight with Wal-Mart.

Every seven days, 100 million Americans, or one third of the nation shops at a Wal-Mart, according to Fishman. In 2004 the company had a profit of $10.3 billion – enough to finance a legal team that can best the state departments of many nations.

“The other thing is Wal-Mart has an army of attorneys and lots of resources so if it came to the point if they thought they were being unfairly treated they could put together a lawsuit that would make the city wish it hadn’t gotten involved,” Stone said. “The statement I use is Wal-Mart can out-lawyer most cities and most corporations in the world to tell you the truth about it.”

They can also depress wages and benefits for working-class people in the regions where the stores are the largest employers for that demographic.

“The Wal-Mart economy is a place where the jobs are traps: low wages, miserly benefits, stultifying work, no respect, no future,” Fishman writes. “In the Wal-Mart economy we as consumers often buy too much just because it’s cheap. We are slaves to our impulse for a bargain.”

There are other global issues involving outsourcing of American jobs and pressure on suppliers in which Wal-Mart plays a pivotal role, Fishman writes.

Looking at the question through a purely local lense, Stone sees some positives associated with the arrival of a Supercenter in Carroll.

“You’ll probably draw people back to Carroll who live out in the fringes and are now going to Storm Lake or Fort Dodge or wherever,” he said.

Moreover, total retail sales and sales tax revenue will increase in the city.

“Wal-Mart will keep more people at home to shop,” he said. “More importantly, they bring people in from a bigger surrounding area so that’s a good news.”

He suggests following the lead of Pella and other cities and working with Wal-Mart on design and aesthetics and other such requests – something Wal-Mart expects to do in Carroll.

“If they do due-deligence with those things then there’s not really much excuse for keeping them out just because some merchants feel like it’s going to hurt their business,” Stone said. “In fact, Wal-Mart’s really made a lot of merchants a lot better than they had previously been just simply because they upped the competition to the point where you have to get better or you don’t make it.”

Added Stone, “Anybody that’s selling something different from what Wal-Mart’s selling is subject to benefit from the additional traffic that Wal-Mart will draw.”

Schultz agrees.

“I think that to try to fight new competition is fruitless and comes across badly,” Schultz said. “It looks like you are trying to maintain the status quo and `good old boys.’ I don’t think that it plays well with the general population.”

The best thing local merchants can do, says Stone, is walk through the recently opened Wal-Mart Supercenter in Atlantic and find angles where they can out-compete Wal-Mart.

“Most local stores offer a lot better services, a lot more personal service and that’s what they really need to capitalize on,” Stone said.

Schultz said he’s seen many businesses that have learned how to compete with a Supercenter.

“I’ve seen others that have given up,” he said. “The lessons that I’ve learned from those that succeeded is to try to do something different from what Wal-Mart is doing. You can add a higher level of service to what you are doing. You can sell different things that Wal-Mart. You can add other lines of business.”

Schultz draws an analogy between Supercenter opponents and those in past generations that sought to keep the Sears catalog out of smaller towns.

“The local merchants couldn’t compete with the prices in it, Schultz said. “My mother said that her mother was able to make clothes for all of the children (8 kids) because of the lower prices in the Sears catalog.”

Schultz said he’s heard of towns that passed laws to ban the Sears catalog and fired city employees who received the catalog.

“Today that sounds very quaint,” Schultz said. “I think that people will view those who fight Wal-Mart in much the same manner.”