Report: Wal-Mart helps businesses
Sacramento Business Journal - by Kelly Johnson Staff writer
A new study commissioned by Wal-Mart Stores Inc. said the retail giant’s grocery-selling, supersized stores in California benefit communities by growing new tax revenue of both new Wal-Mart Supercenters and other retailers, and by spurring other retailers to open new stores.
The report, released Wednesday, was prepared by Lon Hatamiya, who led the California Technology, Trade and Commerce Agency before it was dismantled a few years ago and is now a director of international consulting firm Navigant Consulting Inc. (NYSE: NCI). He lectures at the University of California Davis School of Law.
“The presence of Wal-Mart Supercenters in any California community enhances as it relates to local revenues and business development,” Hatamiya said in a news release. “According to the study, Wal-Mart’s benefits are not limited to metropolitan or suburban communities, but also help economically challenged rural areas such as the Central Valley and Imperial Valley.”
Critics of Wal-Mart (NYSE: WMT) disagree that Wal-Mart Supercenters boost communities’ economies. The release of the report follows some recent bad public relations for the Bentonville, Ark.-based retailer. A Wal-Mart employee in New York died after being trampled by Black Friday crowds.
For years, Wal-Mart’s critics have blasted the retailer over employee pay and benefits and for the tough competition it poses for small, independent retailers.
One critic is Wal-Mart Watch, a national nonprofit in Washington, D.C.
“Wal-Mart uses studies like this to distract from the real reasons why communities oppose Wal-Mart: because it brings in low-wage, low-benefit jobs at the expense of locally-owned business, while trying to dodge as many state and local taxes as it can,” deputy press secretary Eric Bull wrote in an e-mail. “Californians will not be fooled, and Wal-Mart can expect years more of opposition to superstores in their communities.”
Bull noted that California has fought Wal-Mart Supercenters at the grassroots level in California, including in cities such as Inglewood, Merced and Redlands.
Wal-Mart has built 33 Supercenters in California after originally planning in 2004 to build 40 over the following four years, Bull noted.
Wal-Mart’s study examined the retailer’s 21 Supercenters operating in California between 2003 and 2007, including stores in Sacramento, Roseville and Dixon. The retailer’s remaining 11 Supercenters opened in last year or this year and didn’t have more than one year of data. Stores are located from Shasta County south to Imperial County.
Among the findings:
• In the communities in which the 21 stores operate, citywide sales-tax revenue increased an average of more than $79 million one year after the opening of a Supercenter compared to the year before the store opened. Taxable retail sales increases averaged 15 percent for all cities.
• In the 10 cities in which Supercenters have been operating for two years, citywide taxable sales averaged almost $123.9 million two years after the Supercenter opening compared to the year before the opening. Taxable retail sales increases averaged more than 25.9 percent.
• In the three cities that have Supercenters operating for three years, the numbers were $206.2 million and 39.6 percent.
•Taxable sales for auto dealers and suppliers, restaurants, sellers of building materials, and other retailers also grew in the communities after a Supercenter opened. The increases averaged more than $72 million a year after 15 Supercenters opened, compared to the year before. The average increase was 10.5 percent for each city.
• In 18 of 21 communities, the number of retail business permits increased in the year following the opening of a Supercenter compared with the year before the opening.
• In nine of 10 communities, the number of retail business permits increased two years after the opening. The average increase was 65.8 new permits per city, or a total of 658 new permits collectively in the 10 cities.
• After a Supercenter opened in Sacramento in 2006, retail sales in the city grew the next year by $122.3 million. The number of permits increased by 64 from the year prior to the year after.
• After a Supercenter opened in Roseville in 2005, retail sales in the city grew the next year by $127.2 million. Like in Sacramento, 64 more permits were sought.
In the years studied, the retail industry was still growing in Greater Sacramento — with or without Wal-Mart.
The full report can be found at walmartstores.com/FactsNews.
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