Will big box stores financially ruin your city or town?

[capitalcityguy]

OK….everyone has pretty much been beaten over the head with the stories of big box stores and how they kill mom and pop shops (e.g….Wal-Mart killed Main St USA) , suck money out of the local economy, have below average customer service, and/or pay substandard wages. Some of this can be countered with examples of the savings they provide the average household by using economies of scale and their powerful distribution networks to offer a large variety of products at a much lower price than smaller, locally owned merchants can do. We’ve all heard this, maybe debated both sides, etc.

No matter where you fall on the scale of love-hate with the big boxes, it turns out there is a much more important issue to consider as to the viability of these stores and how they could be leading towards seriously hurting the future finances of your city or town. Have you considered if the huge footprint and all the related infrastructure these big boxes require ever generate enough tax revenue to pay for themselves long term? Could they actually end up being a net long term drag on your cities’ bottom-line?

Very interesting article on this issue that might have you rethinking if that shiny new development on the edge of your city is actually a good thing or not. At the very least, it will have you questioning why your city leaders would ever want to provide any tax advantages to such developments.

This all serves to illuminate the fact that big box development is extremely risky. We, the taxpayers, put a pipe in the ground in our name and we’ve made an eternal promise that generation after generation is expected to make good on. The big box retailer builds a store and they’ve recouped their capital costs in a decade. They are then free and clear to move on leaving us with a dead site.
Their zealous obligation is to their shareholders. I can respect that, but our obligation to our taxpayers – today’s and tomorrow’s – needs to be equally zealous

http://www.strongtowns.org/journal/2016/7/18/big-box-week

 

[Clonehomer]

I agree that big box stores are horrible for our economy as a whole. They push out competition, offer such low wages that the taxpayers make up the rest, and end up making products so cheap that our landfills are full of products that are cheaper to replace rather than repair.

But, on a micro level, they are wonderful for the individual consumer. And that's why they're going to continue to succeed. Everyone understands the issues these places cause, but no one is going to be willing to pay more to avoid them.

 

[3GenClone]

Just look at Ottumwa: Target and KMart closed their stores there this year, leaving Wal-Mart as the lone mega store for one of the states largest cities.

 

[kingcy]

Amazon is going to put a big hurt on even the biggest box stores.

It is all cyclical. After sometime of having the big box stores there are mom and pops that make it. There are also new stores that pop up because people are tired of the box stores. Cities love the big box stores because of the other stores and business they bring.

The way we shop changes over time. Stores come and go. One store is popular for many years only to have its popularity go away for the next big thing. Sears, Penny's, Younkers, Montgomery Wards, KMart at one time were huge now are struggling. I can remember as a kid Payless Cashways being the lumber yard of choice. There always has been that big national store in the marketplace, just before people valued the local stores, now it is about saving a dollar.

 

[SoapyCy]

It kills me we subsidize our own destruction by not only allowing this but actively contributing tax dollars to their construction. They are nearly impossible to redevelop and do nothing to create or sustain a community.

 

[HFCS]

Big box stores are pretty worthless to me. I shop local or online small business when I want quality/niche items and exclusively online when I want to save money.

I go to Target about 4-5 times a year because there are times I need household things I haven't planned ahead for. Other than that big box physical stores seem like the most useless thing to me.

- If physical big box stores didn't exist I'd probably spend about $20 more a year because those 4-5 times I'd be buying household items at a grocery, drug or corner store.

-If online shopping didn't exist I'd spend $100s if not $1000s more a year. I'd also lose maybe a day or two of my life per year running from place to place since I do not enjoy shopping.

- If small local vendors didn't exist I'd probably spend less money but miss out on some excellent products and service I really enjoy.

Big box is last by a mile. Craigslist and eBay can save people a lot more money than Wal Mart and Target if people care about money. I get a year's supply of the same razors on eBay for 20% of what they cost on Wal-Mart and Wal-Mart advocates act like people need Wal-Mart to buy cheap crap. Wal-Mart is often a huge ripoff to a savvy online shopper.

 

[alarson]

It kills me we subsidize our own destruction by not only allowing this but actively contributing tax dollars to their construction. They are nearly impossible to redevelop and do nothing to create or sustain a community.

Ultimately theyre more efficient. It hurts some but is overall best for the people by providing lower costs (thus increasing the things they are able to buy).

 

[Cycsk]

Amazon is going to put a big hurt on even the biggest box stores.

Amazon is an equal opportunity killer that puts the hurt on any and all types of retail stores!

 

[kingcy]

It kills me we subsidize our own destruction by not only allowing this but actively contributing tax dollars to their construction. They are nearly impossible to redevelop and do nothing to create or sustain a community.

You have to remember in a lot of places when a big box store goes in other business follow.

 

[SoapyCy]

Ultimately theyre more efficient. It hurts some but is overall best for the people by providing lower costs (thus increasing the things they are able to buy).

You have to remember in a lot of places when a big box store goes in other business follow.

I know. But these areas are generally tough to get to without a car, in rural/suburban areas with little public transportation, have a site design/layout that makes it impossible for it to be redeveloped, and costs taxpayers money in the long run by low wages and infrastructure subsides. Main streets can be easily repurposed because mom and pop can get a loan to buy and renovate a small building. No one local can buy, renovate, and market vacant big box stores.

They have their place and my concern is more of a "built environment" concern than anything else. It's easier to keep valley junction sustainable than mills civic parkway if that area ever turns the corner negatively.

 

[capitalcityguy]

Ultimately theyre more efficient. It hurts some but is overall best for the people by providing lower costs (thus increasing the things they are able to buy).

That is standard argument, but not the point of the thread. This isn't about the consumer savings, this is about the financial obligation put upon cities that we don't normally think about or realize.

The point is that the big box stores' extremely large footprint and all the expensive infrastructure put in place to support them....topped off often times with help by local tax subsidies...ends up being a big financial hole that is helping to contribute to the financial issues found in our cities and towns.

Here's a blog post one guy did comparing the per acre efficiency of a little dive restaurant to his neighborhood Target.

http://www.aroundfourcorners.com/2015/03/antifragility-in-four-corners-part-2.html

The reason I find this argument so powerful, is that it is number's driven and takes some of the normally emotionally charged points/counter-points off the table. Either the big box stores contribute long term to the viability of a place, or they end up being a burden.

 

[NATEizKING]

Give me a Fareway and a Kwik Star and I'm covered.

 

[capitalcityguy]

Here's a great 5 minute video that illustrations this issue perfectly. This time, Mill Fleet Farm is the big box store:

https://vimeo.com/148298900?from=outro-embed

 

[Cyclonepride]

It's not the fault of the big box stores though. It's the city managers that give away the farm.

 

[Acylum]

It's not the fault of the big box stores though. It's the city managers that give away the farm.

I'd like to read up on the history of giving tax/utilities breaks to attract businesses. Whomever came up with the idea should be shot.

 

[chuckd4735]

I know. But these areas are generally tough to get to without a car, in rural/suburban areas with little public transportation, have a site design/layout that makes it impossible for it to be redeveloped, and costs taxpayers money in the long run by low wages and infrastructure subsides. Main streets can be easily repurposed because mom and pop can get a loan to buy and renovate a small building. No one local can buy, renovate, and market vacant big box stores.

They have their place and my concern is more of a "built environment" concern than anything else. It's easier to keep valley junction sustainable than mills civic parkway if that area ever turns the corner negatively.

Although Elwell did it in Ankeny with the old Dahl's, I will agree, for the most part, it's hard to repurpose a big box. Malls are another example of this. Most are on their death beds, and you have cities who are bending over backwards to keep them alive.

 

[Cyclonepride]

I'd like to read up on the history of giving tax/utilities breaks to attract businesses. Whomever came up with the idea should be shot.

I don't mind the idea of tax breaks to attract businesses, but targeting smaller businesses with more temporary tax breaks seems like it could be a good plan.

 

[jbhtexas]

They are nearly impossible to redevelop

That depends where you live. Arlington has seen one generation of the big box stores close down. Walmart, Sam's Club, Home Depot, and Kmart all closed down their east-central Arlington locations. The first three moved south to I-20 and Kmart just moved out of the area. The Asian community set up businesses in the first three locations, and a big flooring warehouse took over the Kmart facility. All are thriving.

IMO, far worse to redevelop are gas station sites, because of the mess of dealing with the underground tanks. When I first moved here, there were small mom-and-pop gas stations everywhere. Then QuickTrip and RaceTrack came in and went to war, and now the city is littered with closed up gas stations, and many of those have been sitting for over 10 years in active areas of the city. In fact QT and RT over-developed so that even a couple of those had to close down within 5 years of being built.

 

[Cyclones_R_GR8]

Although Elwell did it in Ankeny with the old Dahl's, I will agree, for the most part, it's hard to repurpose a big box. Malls are another example of this. Most are on their death beds, and you have cities who are bending over backwards to keep them alive.

I don't quite understand why the malls are dying. They build outdoor malls like Village Point in Omaha or Jordan Creek in WDSM and people seem to flock to them.

 

[SCNCY]

I don't quite understand why the malls are dying. They build outdoor malls like Village Point in Omaha or Jordan Creek in WDSM and people seem to flock to them.

There are still a lot of indoor malls that are closing because outdoor malls are the thing now. The indoor malls are the ones struggling and closing down.