Is this a good thing? I don't think so, and neither does Stacy Mitchell in her book Big Box Swindle. She makes a powerful case that this new concentration of power in the hands of large retailers hurts local communities and the entire nation by driving out local businesses, reducing manufacturing jobs and damaging the environment. The middle class is shrinking, wealth is flowing to the top and the quality of life in our community has suffered.
The power of the big chains is now so great that they dictate to manufacturers how to produce the goods that are sold in their stores. If a manufacturer does not comply with the wishes of the big retailer regarding price, packaging, and other matters, he will most likely find himself excluded from the shelves of his biggest account and thus struggling for survival. The price pressure has forced more and more manufacturing offshore, first to Mexico and then to China and other developing nations. If you think this results in high-paying jobs in these countries, then you are mistaken: The big boxes, and the manufacturers who supply them, are relentless in cutting costs, even in these countries. This results in long hours for workers, low wages, poor working conditions and always the threat to move the contract to another manufacturer in a lower-wage area. The pressure to cut costs often results in lower-quality -- and sometimes dangerous -- products.
Three arguments are generally made in favor of big-box retailing -- more jobs, increased tax revenue to local government, and low prices. The first two are mostly illusions that disappear on close inspection; the third is not always as advertised. Most people don't realize the tax breaks and subsidies that are regularly given to big retailers to encourage development. These subsidies are paid for by regular citizens, including the same small-business people who are being driven out by these big retailers. When the small business disappears six months or two years later, the jobs lost are at least equal to what was gained when the big box opened. The pie is only so big: When a big retailer comes to town, people's disposable incomes do not rise -- the spending just shifts somewhere else.
When chains displace local businesses, dollars that once returned to the local economy -- buying goods, hiring professionals and advertising in local newspapers -- no longer do so. Corporate chains require little in the way of local goods and services, and most of the money spent at a big chain is drained out of the community and into corporate headquarters. Also lost is the community involvement of local business owners, both financially and in terms of the time they donate to local causes.
Most people I am acquainted with don't realize how their buying decisions affect their small-business neighbors. Ask them about their purchases, and they usually name a big chain. But then ask them where they go for donations to schools, civic organizations and nonprofits -- and they will most likely mention a local retailer. How long can that continue?
Richard League is the owner of Mother's Cupboard Nutrition.