“The hardest thing to see is what’s right in front of your nose”
“To see what is in front of one’s nose needs a constant struggle.”
In television-marinated America, where a reality show shuck-and-jive con artist can win a major party nomination for the White House, the amount of struggle needed to see reality accurately is magnified by several orders of magnitude.
One of the most interesting examples of that problem is in the rise and conquest of America by the “Big Box” stores, behemoth warehouses of goods that have done more to destroy the middle class than nearly any other social innovation, and yet are held blameless by most Americans for their sins, which are almost entirely unrecognized.
Happily, not entirely though. One of those engaged and often successful in the struggle to see reality is “Strong Towns,” led by its free-thinking president and founder Chuck Marohn, who will be touring and speaking in Oregon for three days in early October, with OregonPEN a principal sponsor of his Salem appearances.The schedule is Monday, 3 October, in Portland, Tuesday, 4 October, in Independence and Newberg, and on Wednesday, 5 October in Salem.
Another clear-thinking group is the Institute for Local Self-Reliance, another heroic organization fighting against the tide of unreality and shuck-and-jive consumerism. Stacy Mitchell, of ILSR, is author of the outstanding book, “Big Box Swindle.“ Mitchell spoke with Chuck Marohn on a podcast interview recently, transcribed below.
The ghostly images are a perfect accompaniment to the theme this week — even stock graphic image suppliers can’t bring themselves to actually show real Big Box “power centers” (as they are known in the trade), so the graphics-seller whitewashes off all the identifying features, which only serves to show how soulless and ubiquitous the actual “Big Box” centers are.
Chuck Marohn: Hi everybody, this is Chuck Marohn with Strong Towns. Welcome back to the Strong Towns podcast. This week is “Big Box Week.” We are taking a look at Big Box retail. When we were thinking about this a few weeks back, I said there’s nobody that I want to talk to more than Stacy Mitchell. I have her on the line today.
She is the co‑director of the Institute for Local Self‑Reliance. She directs their community‑scaled economy initiative. They produce research and analysis, and partner with a range of allies to design and implement policies that curb economic consolidation and strengthen community‑rooted enterprise.
Her book is, “Big‑Box Swindle: The True Cost of Mega‑Retailers and the Fight for America’s Independent Businesses.” I love the book. I love the concept. I love your TED talk and I’m excited to chat with you. Stacy Mitchell, welcome to the Strong Towns podcast.
Stacy Mitchell: I’m so glad to be here. At ILSR we’re huge Strong Towns fans.
You guys come up in staff meetings all the time. When we throw open discussion. It often starts with “Hey, I was just listening to the Strong Towns podcast, and they were talking about this.” We’re big fans. It’s great to be here.
Chuck: That’s humbling. As I was growing up, we had the mall. I have pictures of me on Santa’s lap at the mall and all that stuff, but we didn’t have the Big Box Store. Where did Big Box Store come from? How does its genesis relate to the mall movement?
Stacy: They both grew out of sprawl. They both grew out of the landscape that we started to create beginning in the 1950’s and ’60s. The sort of auto‑oriented, no man’s land of development. [If] we did not so heavily favor — with public policy, cars, and that kind of scattered development model, your Big Box retailing as we know it, would not exist. They were very closely linked.
We have the mall starting in the ’50s. Then it evolved into the idea of this free standing store that sold everything, or, a lot of the same kind of things. 1962 is the important year because that’s the year that Walmart, Kmart, and Target, all opened their first stores. There was clearly something in the air that year.
Chuck: A portion of the book talks about the subsidies that were given to the malls. There was maybe some logic to them at the time as they apply to the malls. I mean that’s arguable but they certainly became on steroids, once they were applied to the Big‑box stores.
The Big‑box stores used them in a special way that the people who even were creating them for the malls hadn’t anticipated. What were some of the steps going from that, you were going to have it downtown but all enclosed so now we’re going to one big store here, one big store here kind of process.
Stacy: I think from the standpoint of the companies that developed the idea of the big‑box store, it’s a cheaper thing to create. It’s a very cheap building, on very cheap land, typically, or just cheap as you can get. The first Walmart store people often go, harking back to ‑‑ Walmart tells its history from the standpoint of Walton’s 5&10, which is in downtown Bentonville, Arkansas, a little Main Street store.
The Waltons had that store for sure, but the first Walmart is really on the outskirts. It’s in a place called Rogers. It was on a big open piece of land that was fairly cheap out on a major roadway, a very simple cheaply constructed building, staffed by a bunch of women who were paid less than minimum wage, under a weird loophole that the Waltons figured out that they could use to pay people. It’s all there from the beginning.
From the standpoint of those companies that develop the stores, they were going after mall revenues as well as downtown revenues. This was a really cheap way to push a lot of cheap goods out there and to have a format that not only would carry clothing, which is most of what a mall is. Most of the mall is apparel, but Big‑box stores would carry everything else in one place. That was the evolution from their standpoint.
From the standpoint of towns, it’s part of our system, part of the pressure that local officials feel is that they’ve got a show job creation. They want to be at those ribbon‑cuttings.
Unfortunately you when you develop a mall or a Big‑Box store, it looks like you’re creating economic expansion. You have a vacant piece of land. Now there’s building on it. There’s a bunch of people employed there. You’ve created jobs, you’ve created tax revenue. It becomes something that you can tout and you are for it and it’s very easy for Walmart or Target or whoever to come in and say, “Hey, we’re going to create these jobs for you. We’re going to create this tax revenue for you.
How about you give us a tax break? How about you help us buy down the cost of the land? How about you fund this?”
That’s a carrot that a lot of local officials have found very hard to resist.
Walmart, through its big development years, was asking for and often receiving subsidies on one out of every three stores that it built. It’s received over a billion dollars from local governments to fund its expansion, and of course a local hardware store, local bicycle dealer, those guys never get a dime of this sort of public money.
We’ve also discovered, in the end, that the jobs and the tax revenue that we thought we were going to get is completely not the case at all. It’s the opposite, we lose more jobs than we gain.
Chuck: When we start talking at Strong Towns about Big‑Box stores, one of the pushbacks that I always get from people is that, “Well Chuck, it’s a market preference. The free market system has spoken, and has shown a clear preference for this kind of development. Clearly they’re more successful, they’re more competitive than the Ma and Pa retailer.” How is that starting from a false premise?
Stacy: It’s starting from a false premise in two really big ways.
One is the government help, and there is a lot of government help that has gone to these companies. The direct subsidies, and the billions of dollars to help fund their expansion.
There are also a lot of tax loopholes. Walmart, for example, Target, they’ve been able to get out of paying income taxes in about half the states. Which again, if you’re a small business, you can’t do that. You’re paying income taxes on 100 percent of your business earnings.Guess what? Your biggest competitors are not.
There’s a particular kind of loophole at the state level that exists in about half the states. Same thing with federal taxes, if you have a Ma and Pa grocery store, do you have a shell company in Luxembourg where you’re shifting your profit so that you don’t have to pay federal taxes? Of course not, but all these big guys do.
The result is that local businesses pay a higher tax rate, both at the state and federal level, than their biggest competitors. We’ve got all the ways in which we subsidized the car, and how car‑dependent these kinds of developments are, down to the way that our zoning laws work.
As you know well, lots of towns have basically zoned in such a way that the only kind of development that is allowed is a Big‑Box model of large‑scale shopping center, large‑scale, Big‑Box store development along these big roads. You’re not actually allowed to build the kinds of projects that local businesses can find space in, and can actually compete in.
Government has stepped in and really put its thumb on the scales in a big way, and has heavily favored Big‑Box retailers against small businesses.
The other big way that that idea of the free market, this is what consumers want, that kind of thinking, the other big way that that goes wrong is that it ignores the huge hidden costs that we all pay for these stores.
Those costs come in many forms. One of the most measurable is the fact that a huge number of their workers rely on public assistance, because they don’t make enough to get by. Walmart, for example, is a hugely profitable company, but most of the people who work there are on food stamps, public health insurance, and so on because their wages are so low.
That’s a price that everybody pays, whether you shop there or not. It doesn’t show up on the price tag, and so again, it’s a kind of hidden subsidy. You can look at the environmental destruction. You can look at the impact that it has on the quality of life in our communities, and our civic and social well‑being.
There’s a whole bunch of hidden costs that are not really factored into the price, and therefore it’s not really a fair playing field.
Chuck: If I’m a state, let’s just take my state. I’m the state of Minnesota. I’m projecting out my budget for the next 12 months. I’m getting a healthy amount of income tax, which is coming from the people who work at these places. I’m getting a healthy amount of sales tax, which the mall transactions take place, the better off I’m doing, but I’m not getting property tax. I’m not getting any of the local taxes tied directly to the wealth of the community. I’m more of a transactional type of entity.
At the end of the day, if I can pump up the size of the stores, pump up the number of transactions, pump up the basically gross GDP statistics, that’s good for my next 12 months budget forecast in a way that cities don’t directly benefit from.
Here’s what I’m trying to understand. This is what I really don’t quite get.
“I think it’s very clear, when we take a long view, that this type of development just destroys cities, financially. “
The state, like you said, has created all of these loopholes, and subsidies, and programs that are benefiting these people.
I think it’s too simplistic almost to say, they just have better lobbyists, [laughs] although that’s part of it. I think the incentives for the state maybe are misaligned with what the incentives are for local governments. Does that make sense?
Stacy: It does make sense. I’m not sure that’s my assessment.
Chuck: I’d like to hear your assessment.
Stacy: I think the short‑termism is definitely true, but I think it’s true on the part of cities as well as states. That’s a huge thing, in the sense of, yeah. I want to show that I’m doing development. I’m creating jobs, so I’m just going to say yes to anything that comes my way. Even if what I’m approving . . .
There’s a ton of research. Maybe even I know better, as an elected official, that this thing is going to destroy more jobs in the long term than it’s going to create. That it’s going to cost more in public services than it’s going to generate in tax revenue. Those things are true for Big‑box retail. They’ve just been approved to such a huge extent.
I’m not sure there’s a real huge difference between state and local on that.
In a lot of ways the local officials have driven, and been much more aggressive proponents of this kind of development, in my observation.
“Local officials have driven, and been much more aggressive proponents of this kind of development”
States are a little bit more removed. I think the state tax loopholes that we were talking about, it is a question of the lobbyists, and of the fact that it’s not something that your average citizen is really engaged in, or knowledgeable about. Or that a small business owner is even aware that it’s going on. They’re not aware that they’re not able to take advantage of something. That means they’re paying a higher tax rate than their competitor. They’re not organized in any way to have a voice, even if they are. In that black box of law‑making it’s very easy for the lobbyist to have even a bigger hand than they do normally. I think that’s part of what goes on there.
Cities, between the potential property tax revenue from these things — which they look at as an add‑on, without really thinking, oh. “In 10 years I’m going to lose all this revenue from my downtown.” Or “this thing is going to require so much, in the way of police services and road maintenance, because of the nature of the development, that I’m going to pay for it all. I’m going to lose all that tax revenue.”
It’s just going to go right out the door in higher services cost. They don’t really do that math, . . . very often. Then, that little bit of sales tax, particularly — it’s a lot more in places like California and Arizona, where cities do rely a lot on sales tax, this kind of development is on steroids.
In New England, we’re safer, because there generally isn’t a local sales tax. Our cities are a little more sensible about this. In places like California and Arizona, they can’t get enough of it, because they just look at that sales tax dollar figure. Often it means they’re attracting dollars that are now being spent in a neighboring town at some other mall. That mall is going to go dark.
They’re going to have the shiny new development that everyone is going to come to. Then in a few years some other town in the region is going to build the latest and greatest Big‑Box power center. That’s going to undermine [the others.]
There’s also this lack of regional cooperation that feeds the whole thing. In the sense of, I’m going to get what I can right now in the short‑term as an elected official. I’m not going to pay attention to the huge economic cost regionally of this over the long‑term.
“It really makes no sense, unless you’re Pavlov’s dog, just drooling over the next treat.”
Chuck: To me, when I look at the local government side, it’s completely irrational.
It really makes no sense, unless you’re Pavlov’s dog, just drooling over the next treat, but not thinking anywhere beyond next week. I’m trying to discern whether or not at the state level it’s somewhat rational.
In other words, if the state government has a policy that puts out the local shoe store, it’s not like people buy less shoes. The guy who runs the local shoe store now becomes the shoe salesman at the Big‑Box store. They’re drawing a salary, so the state gets essentially the same amount of sales tax revenue. The same amount of income tax revenue. Maybe even a little bit more, if we can induce people to spend more. If we were just looking, strictly, at state policy, maybe it’s rational for them ‑‑ because of where they get their revenue from ‑‑ to favor this kind of bigger top‑down, let’s grow the GDP top‑line as fast as we can.
Because the state doesn’t have to police this.
The state doesn’t have to provide fire protection.
The state doesn’t put in the road and the sewer and the water, and have all those liabilities.
I guess what I’m trying to figure out — and this has been something brewing in my mind for a while: Do we just have very different incentives in place? The state government has one set of rules that they’ve set up that really benefits them. At the local government level we’re kind of induced to do really dumb, crazy things because of the system. Do you see what I’m saying?
Stacy: I do. I think, in a big picture way, there is an element of that going on.
I do think the part about cities are sort of induced to do really stupid things is definitely true. Because the position the cities are put in, in terms of their limited powers of raising money, the kinds of tax streams they have to rely on, and so on, is very constrained.
The lack of support in most states for broader regional cooperation around planning issues also really undermines their authority. Yeah. They can control theoretically what goes on in their borders, but what happens outside their borders has such a huge impact on them that, in effect, they’re between a rock and a hard place a lot of times. That’s, in a lot of ways, the fault of the state. That part I agree with.
It may also be true that the incentives for other kinds of development outside of retail are [irrational.] The revenue incentives, from the state’s perspective, say, [is to] green light everything. With retail, I still think there’s a tremendous amount of irrationality at the state level.
Because on the income front, just to take that piece of it, the rise, the growth of Big‑Box retail — which, just to be clear, these are companies that over the last 25, 30 years, have come to dominate a huge portion [of sales.] If you go back to the 1980’s, local independent retailers had more than half of all retail sales. Their share is now down to about 23 percent.
You’ve got a company like Walmart, which captures $1 out of every $10 Americans spend on everything, $1 out of every $4 we spend on groceries, and in 40 metro areas, $1 out of every $2 we spend on groceries. Just to give a sense of the economic power of that company in particular. Then you add in Target and the others, huge, huge, hugely powerful.
As those companies have grown to have that kind of dominance in our economy, they have undercut two key pillars of the American middle class.
One are small business owners. We’ve lost hundreds of thousands of those. Businesses that typically supported a family, were anchors in their community’s local economy.
The other pillar of the middle class that they’ve heavily affected, are manufacturing jobs, often unionized manufacturing jobs. That again, also paid family‑supporting kinds of wages.
As those companies have grown to have that kind of dominance in our economy, they have undercut two key pillars of the American middle class.
Walmart and Target have come in and they’ve sent those jobs, obviously, overseas, and they’ve played a huge, direct role in doing that. They’ve destroyed a lot of those small business livelihoods. In their place, what they have given us are jobs making an average of $9 an hour in their stores.
A huge part of the inequality story in this country is really you can lay it right at the feet of these companies. Because they’re not only retailers, but because they’re the gateway through which consumers go to reach everything that’s manufactured, they have a huge control over the nature, shape, location of manufacturing. So for those reasons, they are really directly responsible for a growth in the number of people who are working, but poor, and the shrinking of the American middle class.
Those things are obviously very bad for state governments in the long run too. I’m not sure that their rationality on this particular slice of it is any more [than that.] That they’re any more rational than cities are, though I think you’re right. In some bigger, broader ways, there’s something about what you’re saying that rings true to me. In this case, I think it’s different.
Chuck: I want to get into that manufacturing part of this because one of the things that we’re hearing right now, in this election cycle in particular, is that we have off‑shored a lot of jobs, we’ve lost our manufacturing, we need to get manufacturing back. Yet, when we talk to people at the local level about, “OK, you need to shop local, locally produced goods,” they’ll say, “Well, it’s more expensive.”
My reaction to that always is well, yeah, if you want people to have decent wages, you’re going to have to pay more for your iPod and your power drill. I mean, that’s the way things work out. Can you talk a little bit about how the Big‑Boxes use their predatory pricing to force down costs and how that relates to what our expectations then become as consumers? There’s a downward cycle there that we’re trapped in, and I’d like you to explain that.
Stacy: All of these companies push manufacturers year after year to lower their costs.
Chuck: Which, as a consumer, I love, right?
Stacy: Yeah, I mean, in theory. Manufacturers have done that in a number of ways. Obviously sending jobs to lower‑wage countries is one way that they’ve managed to meet those price requirements of the Big‑box retailers. Another way that they’ve managed to meet those price requirements is by dramatically cutting their R&D budgets.
This is hard as a consumer because the result of that is that there’s not as much innovation and new product development going on as there used to be. It’s hard to know what you’re missing because it’s missing. There’s a way in which it’s hard for us to calculate or recognize what we’re giving up as consumers because of that loss.
The sectors where you find that that’s not true are sectors where there’s still a really strong, independent channel. Toy stores, for example. Independent toy stores have certainly shrunk, but they remain the outlet for innovative toy designers. They’re not getting their stuff on the shelves of Target, at least certainly not right away when they come out with a new product, but they are getting all this support from independent toy retailers. There’s a way in which the independent channel really matters for R&D, and as the Big‑Boxes have pushed manufacturers, those budgets have really been cut.
The other way that manufacturers have met those lower price points is by cutting corners in the quality of their products. You used to be able to buy a pair of Levi jeans that was really sturdy and would last for a long time, but there was a point when Levi’s realized we can’t continue to do that and sell our product to a shrinking number of retailers. We need to be on the shelves at Walmart. In order to be on the shelves at Walmart, we have to use less rugged material, less rugged sewing processes, and so on.
The result is a product that doesn’t last nearly as long. You might be paying less, but you’re having to replace it more often, so it’s not really clear in the long run that what we’re paying is actually significantly lower because of the degree to which we now have to throw things out and replace them. As I said, there are all these hidden costs in terms of product development that’s not happening as a result of this.
Chuck: We as consumers demand the lower prices, but the lower prices affect the jobs that people can have and the amount that they can get paid. Then that fuels a demand for lower prices. Yet, you hear this when you watch CNBC. Unemployment is going up and they say, “Well, that’s good for Walmart.” [laughs]
Well, it’s good for Walmart. Why? Because the less money people have, the more they’re going to shop at the cheapest possible place for the cheapest possible stuff.
It seems like we’re trapped in a cycle where the lower we make prices, the more bifurcated our economy becomes. The reason I brought up the current election is you see this attempt to blame whoever. If you’re on the right, there’s someone to blame. If you’re on the left, there’s someone to blame. A lot of this is just us, isn’t it? Us as Americans demanding something that at the end of the day is irrational, right?
It seems like we’re trapped in a cycle where the lower we make prices, the more bifurcated our economy becomes.
Stacy: Well, it’s true, when we think of ourselves as actors in the economy, we think of ourselves almost exclusively as consumers. Right?
Chuck: Right, yep.
Stacy: It’s a very narrow, short‑sighted way to think about yourself, because your economic well-being is just as much a function of the quality of the job that you have. Whether you’re able to apply your trade in a meaningful way, and get a decent wage out of it, has as much or more influence on how well you’re doing economically. Yet, somehow we ignore that when we’re out in the world. We just think of ourselves as consumers. We’re trained by the media and everyone else to do that.
We focus narrowly on that low price, and the consequence of it is all of these lost job opportunities that we’re all paying for, fewer opportunities for ourselves, fewer of us who are able to make a decent middle‑class living than used to be. We’re undercutting our own well-being as we do that, and of course the more desperate people are in terms of your working that nine‑dollar‑an‑hour job, it seems like the only place you can afford to shop is Walmart. It becomes this terrible self‑reinforcing cycle.
This consumer mindset was really created in the 20th century. Americans didn’t used to be that way. We used to have a much broader conception of ourselves. If you go back and look at the debates that used to go on in the 1930s and ’40s when A&P and Woolworth’s and these other chains were coming to the floor. You go back and look at the debates about Standard Oil and the trust busting and that whole era, earlier and earlier in American history.
It’s fascinating because people talk about themselves as producers, as farmers, as small business owners, as workers. When they articulate what they’re concerned about in terms of those monopoly companies, that’s how they articulate it, not as a consumer. This consumer identity was really invented sometime after the war. It’s a huge disservice to us. I think one of the bigger‑picture things that we need to rethink as we think about who we are.
That said, I do want to just go back to the policy issues because I think that if we try to solve this problem [we need to think of ourselves as more than consumers.] It works in reverse, what you’re saying. If we try to solve this problem purely as consumers, we’re not going to succeed. I’m a big believer in “buy local” campaigns. I’ve been involved in helping a lot of independent alliances get started around the country and do great “buy local first” messaging campaigns and education on this issue to help people think about those choices, why they matter, what those hidden costs are, and to really bring those to light.
Those initiatives have had good success, and we’ve measured it through surveys and other things, but they’re only so far that we can go with that. There’s only so much we can align our collective decisions as individual consumers in such a way to get the outcomes that we want in terms of the economy, especially when we’re pushing uphill against all of these ways in which public policy is pushing us in the exact opposite direction, towards more Walmarts, more Amazons, and more consolidation. It’s those things.
We have to change the underlying rules of the game in such a way that the hidden costs of the Big‑Box retailers are actually forced on to their balance sheets, and that the independent businesses and the truly community‑supporting enterprises are freed up from the constraints and unfairness that they’re under to actually be able to compete and thrive because they can. It’s not that there’s anything inherently wrong with that model. It’s that we’ve made it impossible for them to really succeed.
“We have to change the underlying rules of the game in such a way that the hidden costs of the Big‑Box retailers are actually forced on to their balance sheets“
Chuck: I’ve mentioned the election three times. We are not a political organization. I certainly [laughs] don’t have a candidate preference in the craziness that is our national debate, but it seems to me like what you’ve just said illuminates so much. I feel like we have two parties, one of which is saying, “There’s no problem here. Look away.”
The other one is saying, “We’re going to keep the underlying game and just change things — Redistribute the spoils after the bad game is run.” You’re really saying if you don’t like the outcome of this game you’ve got to change the rules of the game. Is that a fair assessment of what you said?
Stacy: Absolutely. We have a lot of our own history that we can draw on in doing that.
We’ve lost sight of the fact that democracy, as it was conceived here, was both about dispersing political power and dispersing economic power. The Boston Tea Party, when they went and dumped all that tea into the harbor, it was as much a protest about the power of East India Company, this huge international trading company, as it was about the power of Parliament.
Chuck: I actually have a quote of yours because I love that the British government thought, “We’ll give them cheap tea with the East India Company and they’ll just shut up.” The colonists go out and say, “No.” Here’s your quote from the book. You say, “Local self‑reliance and dispersed ownership, the colonists judged, were essential to political freedom and democratic self‑government.” I thought that was beautiful.
“Local self‑reliance and dispersed ownership, the colonists judged, were essential to political freedom and democratic self‑government.”
Stacy: Yeah, it’s so true and that’s the history. We’ve lost sight of it at different points.
We had the Gilded Age in the late 19th century when we just had these huge monopolies form, but we regained our footing. In the teens and ’20s and ’30s, we put in place these really strong anti‑monopoly policies, not only in terms of sort of anti‑trust legislation, but also in a whole bunch of other ways.
Public policy really favored small‑scale enterprise and said, “We’re going to have a level playing field. No matter how small a business you are, you’re going to be able to compete on fair terms. We’re going to make sure that the hidden costs of that kind of consolidation are acknowledged. We know in the end that our liberty, our democracy, everything that we value as citizens depends on having that freedom from centralized power.”
That centralized power is not just centralized political power, government power. It’s also centralized economic power. I think you’re right. The current construction of the two parties ignores that. You just don’t have either party really out there with this critique that is about local self‑reliance, true democracy, and liberty across both the economic and the political sphere.
I will say it was really nice to see, a couple weeks ago, Senator Elizabeth Warren from Massachusetts gave a really terrific speech that’s worth reading about growing concentration and the power of Walmart, Amazon. She names a bunch of names and talks about it, not just in terms of the hidden economic cost of concentration and consumer prices and all that stuff. She talks about it from the standpoint of democracy and the fact that these companies have gained control of our government and what that really means.
It’s a wonderful speech and I feel there hasn’t been any one at that level of politics in decades, who’s said what she said. I’m hoping, somewhere in all of this crazy political alignment, we might actually reconnect with that part of our history because it’s so important right now.
Chuck: We had an Independence Day celebration here a couple of weeks ago. This is the fourth or fifth year in the row, I’ve looked at our local parade which, as an adult — I remember back as a kid, there being all kinds of floats and all kinds stuff going on. I remember marching in it for different local businesses that had supported my baseball team as a kid.
Our parade today was pathetic. It had people driving their monster trucks through and the lawn mowers and a couple of service clubs, but all the businesses were gone. Home Depot doesn’t have a float, Costco doesn’t have a float, Walmart doesn’t have a float, Target doesn’t have a float. I was reminded, again, how much is missing in terms of the local ecosystem of businesses here.
I’d like to give you an opportunity to talk about that. We had a guy here, who used to own the local grocery store, who now is the night manager at the Walmart. I know this guy, I grew up with him. He’s a nice guy, but he used to own a business. He had a building, it was building equity, he was creating wealth for himself and his family.
Now, sure, he might have a retirement plan and he might be one of the handful there that has a healthcare benefit or what have you, but he’s not building wealth. He’s a consumer now, not an investor in other local bank, the local marketing people, the local newspaper, all that.
How does the Big‑Box scene change that local ecosystem and why is that so important?
Stacy: When a Big‑Box retailer comes in, you might lose anywhere from 20 to 40 local businesses, depending on the particular situation, and that loss is consequential in a couple of big ways.
One is, that you talk about in terms of the engagement of local business owners in the community, in the way which they support local causes and tend to be engaged because their future, both personally and financially, is tied up in their community in a very deep way.
You lose, as well, what it means to have a local decision making, if you’re a business owner and your town is considering whether or not to cut the property tax rate. If you’re Walmart, you’re all in favor of that, because you’re going to pay less property tax. If you’re a local business owner, it’s a very different calculation. Yeah, your business is going to save some money on its taxes, but your kids go to the schools that that tax revenue funds.
Now, you’ve got a way more complicated decision and what we see is that local business owners make decisions about their business in ways that are much more aligned with the needs of the surrounding community, because they’re part of the community. They rise and fall with the community, in a way that a distant chain store does not.
The other thing that’s really important from the civic and social health angle of what the rise of Big‑box stores has done to America, is that local retailers tend to create the places that foster interaction.
When you shop at a neighborhood business district and you’re set up along a public sidewalk and you’re going in and out of stores you’re much more likely to get into conversations. Maybe the person that you’re interacting with at the business, the owner, they know you by name, you tend to run into people, your neighbors, the other folks that you know.
We know from studies that people have a lot more conversations when they’re running their errands, standing in line at the bakery or they bump in to someone at the hardware store or what have you. There’s a lot of interaction that goes on in that kind of situation.
If you think about it, that’s the stuff that’s like, yeah, all those conversations seem meaningless, these are a lot of acquaintances, they’re not deep friendships necessarily, but all that stuff really adds up to the sense of community, the sense of connection. How you run your errands is really how you experience your community to a large extent.
That’s all completely uprooted in the Big‑box model. You’re shopping at a large store that’s usually designed to draw from a regional area. You’re getting there driving alone in your car, typically, rather than being there on foot.
Researchers have followed people around in those situations. You don’t tend to run into people and have those happenstance conversations. There’s a lot of ways those companies have designed their spaces in order to encourage you to get in and get out, so it’s purely transactional and they’re not really supporting.
How many times have you stood around in the parking lot at a Target and engaged in a meaningful conversation with someone? It just doesn’t happen in the same way.
The end result of all this is, sociologists have done these studies and they’ve found that, if you live in a community where a large share of the economy is in the hands of businesses that are locally owned, people in that community are more likely to belong to community organizations.
They’re more likely to go to city council meetings, they’re more likely to know their neighbor and they’re more likely to vote than people who live in communities that are otherwise demographically the same, but where the economy is dominated by one or two or three big businesses and they don’t have those local economic structures anymore. It makes a huge difference in the long run.
Again, it’s this rise of Big‑Box retailers, connected to these things in ways that we don’t…these big picture issues about what’s going on in our country that we don’t even necessarily recognize.
Chuck: One other thing that has always startled me about cities and the way cities approach Big‑Box stores, is the asymmetry of commitment. Business land within our city boundaries, we run all the utilities to it and beyond it then for other things, we agree to provide police protection and fire protection. Those are promises that extend beyond this generation, they are indefinite.
Yet, the big box stores have a 12 to 15 year commitment. [laughs] What is the impact of a dark store? Are cities starting to wake up to the risk that, the day a Big‑Box store is built, that’s the highest tax value it’s ever going to have? From that point on, there’s only one direction, really, for it to go, and that’s down.
Is that starting to have an impact as the case studies pile up and more and more cities have experienced this?
“Are cities starting to wake up to the risk that, the day a Big‑Box store is built, that’s the highest tax value it’s ever going to have?“
Stacy: There are a growing number of places that have been saying no, and there are more cities that have put in place policies, either store size caps or zoning policies, other kinds of ordinances that limit or prohibit Big‑Box development or limit or prohibit chains in general.
There has been an uptick in the awareness of the costs and more places taking proactive steps to protect themselves and to steer development in a different direction. Those places still remain very much in the minority, which is unfortunate.
The growing amount of Big‑box plight that is out there is really startling. In lots of places, lots of metros that have dozens of vacant Big‑Box stores that are unlikely to be redeveloped into new retail.
As you noted, the lifespan of those [is often] 10, 15 years maybe, before it goes dark. Often cities are approving these things in the context of 30 year comprehensive plans or in the context of 30 year property tax breaks on a property that actually isn’t going to open for more than 10 or 15 years, at best.
Again, it’s back to the long term thinking that’s really missing. We’ve so overbuilt retail in this country, we now have lots of dead malls. There are more that are going bankrupt. In the last couple of months, the bankruptcy rate for mall properties has really shot up and is only going to get worse.
More people are shopping online. The amount of retail space that we actually need is going to shrink, even as we are continuing to build more.
Chuck: I want to give you a chance before we’re done here. You and I have talked about a lot of the bad stuff today, but your book also has a lot of positivity to it, and a lot of things that are trending in the right direction, people who are pushing back and positioning their cities and their neighborhoods to do better.
You talk about this being not even necessarily a government‑led thing, but an individual‑led thing. Can you talk a little bit about that? I sense you have some optimism here. Can you share that optimism with people?
Stacy: Absolutely. Over the last five, six, seven years, there’s been a tremendous growth of independent business alliances. Sometimes they’re known as Local First groups. There are now about a 150 of these organizations around the country and they probably have 50,000 small businesses as members. These are organizations that have a lot of community citizens or ordinary folks who are supporting them, as well.
These organizations have been doing a lot of on‑the‑ground education about all of the stuff that we’ve been talking about today and also providing a space for independent businesses to network and figure out how to be stronger together and to be more effective in what they’re doing.
In a lot of those cities we’re seeing the tide shift in the other direction. We’re seeing a return of independent book stores, we’ve added over 500 new independent book stores in the last five years nationwide. We’re seeing a big uptick in the number of locally‑owned neighborhood grocers, which is growing partly out of this new neighborhood workable urbanism thing.
Chuck: The foodies. [laughs]
Stacy: It’s also growing out of the local food movement, it’s coming from different angles. We’ve got more independent pet supply stores and fabric stores. These are all small trends while there’s still this big picture trend of, Walmart is continuing to grow and become bigger, we’ve got Amazon now that’s really becoming aggressive and has a lot of implications for local communities.
That’s still happening, but there’s this growing counter trend. The big question now is, will that counter trend continue to grow and at some point, overtake the bigger picture trend? I’m hoping that it will.
The key question right now is, can what is largely a consumer oriented movement, shift into being a movement that’s about changing policy? A movement that’s about rebuilding community and changing how we do economic development, changing how we do planning, getting rid of these tax inequities and subsidies. Bringing back anti‑trust and making it about democracy, changing how we think about monopoly and so on.
Can we go in that direction, because there’s a huge amount of support out there? When I started working on this issue, right around 2000, so it’s been over 15 years now and I used to go out and give talks to communities and groups of people. At that time, a lot of people didn’t really exactly know what I was talking about. It would take them a while to catch up with chain retailers.
Now, that’s not the case, people are on board. It’s more a question of, “How do we deal with this? How do we change things in a way that will lead us in a different direction?” The change in public opinion is there and we’re seeing evidence of some change in some communities where things really are headed in a different direction economically.
The question is, can we now grow that into a movement that shifts some of these bigger forces that raid against our local economies?
Chuck: In the closing moments here, can you talk a little bit about the Institute for Local Self‑Reliance, the work that you do and how people can get a hold of you?
Stacy: ILSR is a 42‑year‑old, national non‑profit organization. We’ve got a staff of about 18, we’re in Minneapolis and Washington D.C. and Portland Main and we work all over the country. We do research and then we develop policies and tools to help communities take charge of their local economies and create a more equitable and sustainable future.
Our Independent Business project which, if you go to our website, you can find by clicking on Independent Business, has a bunch of resources from, here’s some local zoning ordinances that people have created, that help support local business, here’s the history of anti‑trust and how we can change that. Lots of research and analysis, you can find.
One of our most popular tools there is, something we call a Key Studies page, which is all of these studies about the economic and fiscal and community benefits of locally‑owned businesses and then also the costs of Big‑box retailers, as well. It’s a huge compendium of all the information you need to make the case.
Chuck: Stacy Mitchell, thank you so much for taking the time to be on the podcast. You’re brilliant and I love your writing. I’ve got to say, I will admit something, I’m like what Imelda Marcos is to shoes, I tend to be to books.
When I saw your book the first time, I picked it up and I thought, “Oh, I really like this!” I started thumbing through it and I went and bought it. I have this huge stack of books I’m going through. A few months later, I was some place and I saw your book and I thought, “Oh, I really have to read this! This looks like such a good book,” and I bought it a second time. I own two copies of your book.
Stacy: Excellent. That’s great. Now you have an extra one to give to the right person.
Chuck: Thank you, and thanks everybody for listening. Keep doing what you can to build strong towns. Take care.
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