Intellectuals love to hate Wal-Mart. A vast cottage industry exists for the sole purpose of criticizing and thwarting the the opening of new stores. I suppose you could call me a fellow traveler. While I respect the retail giant for pioneering a logistical revolution that has squeezed tremendous costs out the distribution system to the benefit of us all, I find its big box stores an abomination. Wal-Mart’s massive, hulking buildings surrounded by acres of parking lot are desolate and soulless. You go to Wal-Mart for one reason, to shop, and you usually get there by bypassing neighborhood stores and driving long distances. Wal-Marts and other big boxes are pillars of the auto-centric society and the antithesis of the vibrant and walkable communities where I enjoy hanging out.
My attitude, I concede, is snobbish. Not everyone shares my predilections. Wal-Mart appeals to lower-income (but not so low-income they can’t afford a car to reach a superstore) consumers who need to stretch a dollar. And, it turns out, many people who live near Wal-Marts don’t share my aesthetic sense.
A recent analysis published by the National Bureau of Economic Research concluded that Wal-Marts actually raise property values of surrounding houses, though only modestly. Write Devin G. Pope and Jaren C. Pope:
The results … suggest that a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within a half mile of the store and by 1 to 2 percent for houses located between a half and one mile from the store. For the average priced home in these areas this translates into an approximate $7,000 increase in housing price for homes within a half mile of a newly opened Walmart and a $4,000 increase for homes between a half and one mile.
The authors acknowledge that the Wal-Mart effect might combine both positive and negative influences. If households value the convenient access to Wal-Mart’s goods and services, as well as those of other merchants that might choose to locate nearby, the impact would be positive. If Walmart brings pollution, crime and traffic to a neighborhood, the impact could be negative. There is no way to know a priori which effect is the stronger.
Pope and Pope compiled a data set of 159 Wal-Marts that opened in the United States between 2000 and 2006 and then analyzed the impact on housing sales prices within one and a half miles from the stores. Their results show that Wal-Mart lovers prevail over Wal-Mart haters.
That’s fine as far as it goes. But I wonder if it might be possible to refine the analysis. Not all Wal-Mart stores are the same. The stereotyped big box is a 140,000-square-foot behemoth in a free-standing building. But having largely saturated the market for those monstrosities, the retailer has been building considerably smaller stores, in the range of 40,000 square feet, in recent years. There is one three miles from where I live in Henrico County, and it’s not so bad. Wal-Mart plugged it into an an existing shopping center, so it did not diminish the surroundings. Visually, it’s a marginal improvement over the failing K-Mart that had stood there. While I never patronize the behemoth Wal-Mart 20 minutes away, I find this one convenient and relatively inoffensive. Meanwhile, the company is experimenting with even smaller stores, around 16,000 square feet in size, in urban areas under the “Marketside” brand.
Just as McDonald’s has learned to succeed in urban environments by foresaking its tacky golden arches, is it too much to hope that Wal-Mart might one day learn to do the same? Is there any way to integrate Wal-Mart’s hyper-efficient, low-cost supply chain into a compact, walkable, fiscally sustainable setting? If Wal-Mart wants to continue growing market share, it may have no choice but to adapt.