Walmart's Small Business Impact

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Walmarts Small Business Impact:

Georgia Avenue

Tesmony and Stories

from the Small Business Owners

Produced and compiled by:

Ward 4 Thrives

Respect DC

October 2014


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Walmarts Small Business Impact: Georgia Avenue

Tesmonies and Stories from the Small Business Owners

Published: October 2014

Authors:

Ward 4 Thrives www.wardfourthrives.blogspot.com/

Respect DC www.respectdc.org


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Walmarts Eect on Local Economies

Walmart Supercenters have long-standing history of shuering nearby neighborhood businesses and extracng reve-

nue from local economies. The subject of many economic studies, Walmart has consistently produced a loss of reve-

nue for local small businesses, resulng in less money being spent locally by community members, and less money cir-

culang in a neighborhoods economy as a whole. Aer a single Walmart Supercenter opened in Chicagos west side,

82 of 306 small businesses (27%) in the surrounding neighborhood closed within 18 months, according to a 2009 study

by Davis, Merriman, Samayoa, and Flanagan.1- Likelihood of closure was directly linked to proximity to Walmart 40%

of small businesses located within a mile radius of the Chicago Walmart closed.-1Davis, et al., found that the farther

away a small business was located from Walmart, the less likely it was to close, by a factor of about 6% per mile.1

Small businesses, specically supermarkets and variety discount stores, see a 10% to 40% decline in prots when

Walmart opens doors locally.2This decline in prots is also directly related to the type of small business placed in com-

peon with Walmart. According to Davis, et al., drugstores, home furniture stores, toy stores, general merchandise

stores, and hardware stores were more likely to be aected by Walmarts arrival.1

One widely cited study demonstrates that Walmart eliminates about three local jobs for every two it creates.3 Accord-

ing to this 2005 study conducted by Neumark, Zhang, and Ciccarella, every Walmart employee hired per county con-

tributes to the job loss of 1.4 retail workers employed by local small businesses. In turn, Walmart is accountable for a

2.7% decline in retail employment per county.3

Further, Walmart stores have been proven to lower local wages in compeng sectors, namely retail, general merchan-

dise, and grocery. A 2007 study conducted by Dube, Lester, and Eidlin showed that the arrival of a single Walmart store

decreased wages in the surrounding county by 0.5% to 0.9% for retail workers, 1.0% for general merchandise workers,

and 1.5% for grocery workers.4

_________________________________________________________________________________________________

1. Davis, Merriman, Samayoa, Flanagan. The Impact of an Urban Wal-Mart Store on Area Businesses: An Evaluaon of

One Chicago Neighborhoods Experience. Center for Urban Research and Learning, Loyola University Chicago. 2009.

2. Stone, Artz, Myles. The Economic Impact of Wal-Mart Supercenters on Exisng Businesses in Mississippi. Missis-

sippi University Extension Service. 2002.

3. Neumark, Zhang, Ciccarella. The Eect of Walmart on Local Labor Markets. Naonal Bureau of Economic Research.

2005.

4. Dube, Lester, Eidlin. A Downward Push: The Impact of Walmart Stores on Retail Wages and Benets. UC Berkeley

Center for Labor Research and Educaon. 2007.


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Changes along Georgia Avenue

Since opening its doors on December 3rd, 2013, Walmart has detrimentally impacted locally owned and operated small

businesses along Georgia Avenue. Owners and managers report signicant loss of revenue as once regular clientele

have been diverted to the big box giant.

Georgia Avenue serves as the Brightwood neighborhoods Main Street. Prior to Walmarts arrival at the interseconof Georgia and Missouri Avenues, customers enjoyed the convenience of pulling up to any storefront, parking on both

northbound and southbound lanes in order to shop at a number of local businesses.

However, on December 2, 2013, just one day before Walmart opened, all parking along Georgia Avenue was taken

away. The new Georgia Avenue has two northbound lanes running along the storefront of Walmart, with one lane

reserved for delivery trucks and other standing vehicles, but no parking. Two lanes travel southbound, along the side of

the street populated by locally owned small businesses, but parking is no longer permied anywhere in the outermost

lane.

In response to concerns about parking access, Walmart oered to allow customers of small businesses along Georgia

Avenue to park in its underground lot, the main outlet of which opens into Walmarts lobby. Likewise, City Council

members suggested that customers park at the McDonalds at the north end of the block despite each spot clearly

being labeled with a McDonalds Customers Parking ONLY designaon. Further, meters were added to what lile

street parking was available along Peabody Street, on the west side of Georgia Avenue. Business owners have observed

a two-ered system of enforcement of parking laws they allege that patrons of Walmart parked directly on the north-

bound side of Georgia Avenue are never cketed, whereas police rounely and swily enforce parking laws for cars

stopped on the southbound lane.

The stretch of small businesses on the west side of Georgia Avenue, between Missouri Avenue and Peabody Street,does have a small parking lot in the rear of the strip, but most of the stores are not equipped with backdoor access. For

the few stores that are accessible in some capacity through the rear parking lot, convenience and accessibility are sll

minimal.

Walmarts arrival has hurt locally owned small businesses along Georgia Avenue and franchises of naonal corpora-

ons alike. Several business owners along Georgia Avenue near the Walmart store report signicant drops in revenue

ranging anywhere from 20% to 85%. Some have been forced to decrease their workforce, and some business owners

who declined to be included in this report cited potenal pay cuts as well as scheduling changes to decrease worker

hours. Managers from businesses who declined to parcipate in the compiling of this report related similar reducons

in prot margins post-Walmarts entry in Brightwood.

Owners report that Walmarts opening has increased the number of customers shopping along Georgia Avenue but

that this customer tracs ows rst to Walmart. Some small businesses whose main sources of revenue used to stem

from products Walmart carries have either been unable to compete with the retail giants undercung prices or its

favorable posion with regard to parking and bus stop locaon.


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Rena, DC Medical Supply

5922 Georgia Avenue NW

Something has to be done I am losing clients.

DC Medical Supply owner, Rena, has served the Brightwood neighborhood

since 2006, providing specialty medical goods to consumers, specically

relang to mobility services. Before Walmart opened, Renas customers

could pull up to the storefront and enter at street level. Now, the only

available parking is in the rear of the store, and customers can enter only

by climbing a set of stairs inaccessible to senior customers, customers in

wheelchairs or customers seeking service for a scooter/mobility chair.

In December of 2012, a year before Walmart arrived, the stores aliates

told Rena that her business would thrive, not only because Walmart would

bring more customers to the Georgia Avenue corridor, but because

Walmart would not be selling compeng goods. Yet, Rena notes thatWalmart is, in fact, oering customers the very items DC Medical Supply sells, just at an inferior quality and a cheaper

price. While DC Medical Supply does not compete directly with Walmart on larger, more specialized items, such as

scooters or technical equipment, Renas monthly income depended more on sales aributed to smaller items, such

as bathroom safety equipment, braces, and test strips. With that main revenue source diminished, if not eliminated,

Rena struggles to even make rent and other basic expenses for the DC Medical Supply storefront.

Rena has lost an esmated 25% of revenue since December 2013. She has thought about relocang her store, de-

spite pleas from her regular customers to remain in the neighborhood. She is certain, however, that if she is to move,

her new storefront will not be located near a Walmart

store.

If the city were to take acon to support Renas once-

thriving small business, the city would build a wheelchair

-accessible elevator in the rear of the store, such that

customers would be able to park in the back lot and en-

ter the store easily. DC Medical Supply lost all accessibil-

ity for customers when the city prohibited any parking

along southbound Georgia Avenue. Rena hopes that the

city will take responsibility for the lost revenue it hascaused her store, and assist her in covering the cost of

creang an alternate, but fully accessible, entrance to DC

Medical Supply.


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Nate, Family Dollar


Walmarts killing sales Its just that simple.

Family Dollar store manager, Nate, was proud to rake in 3.5 million dollars in net prots,

ranking his Georgia Avenue store 16th

of Family Dollars more than 800 stores across the

United States. But since Walmart opened doors just two blocks down the street from

Family Dollar, Nate has seen an esmated 40% drop in sales. His parent company has

even decreased his budget to help minimize prot loss even sll, Nates store comes

up about 20 to 25% below esmated sales, losing approximately $2,000 dollars every

week.

With the loss of revenue, Nate was also forced to reduce his sta from 16 to 12 and to

cut 5 employee hours per week. Pressure to reduce payroll has also limited his ability to

hire an assistant manager at $11/hour. Nates cutbacks on payroll demonstrate evi-

dence of the ripple eect of downward pressure on wages and hours followingWalmarts entry into a retail market.

The pressure is on, Nate says, to ensure that the store prots despite Walmarts arrival. Yet, prot margins have

become dangerously slim for Nates store. Said Nate, We just have to connue to keep our store in good shape and

provide great customer service.

Nate and his employees, primarily DC residents, are adversely aected by Walmarts arrival. Walmart connues to

drive down wages for DC residents, reducing revenue ow in the local economy.

Kristy, Bella Beauty and Wireless


It was dead here in December No customers.

Bella Beauty and Wireless owner, Kristy, opened doors in July of 2013, just six months before Walmart arrived two

blocks south of her Georgia Avenue storefront. Kristy esmates a 20% loss in revenue since Walmart opened its

doors, recalling an empty store every day in the rst week Walmart was open.

Though customers know that Bella Beauty and Wireless has goods that Walmart cannot match prepaid phone plans,

wigs, and hair extensions much of Kristys general revenue from costume jewelry and other similar items has dimin-

ished due to Walmart.

Nearing a year of business in the Brightwood neighborhood, Kristy can already see the detrimental eects Walmart

has and will connue to have on her small business. Her business plan: to connue to search for what Walmart does

not sell, so she has something dierent to oer to customers. She added that a tax credit and technological support

like website development from the city would go a long way toward keeping her in business.


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Kamran, Dollar and Beyond


Theres no promise that were going to last.

Dollar and Beyond owner, Kamran, has been in business in Brightwood since 2000. Dollar and Beyond provides cus-

tomers with a variety of goods, from cellular devices to snack foods. Kamran reports that, since Walmarts arrival onGeorgia Avenue, his store has lost an esmate 25 to 30% of its prots. While Kamran is able to make ends meet to

pay rent and cover operang costs, his

prot margin has diminished drascally

since Walmart opened its doors.

Despite Walmarts notoriously low prices,

Kamran reports that some Walmart em-

ployees shop with him because he is able

to compete with Walmart and oer cheap-

er prices on certain products. Even sll,

only customers who are familiar with Dollar

and Beyond and Kamrans pricing structure

will come into Dollar and Beyond over

Walmart, especially with its highly adver-

sed prices.

Not everyone wants to go to Walmart, says Kamran. Yet, even for customers who prefer not to support the big

box giant, Kamrans store struggles to compete with Walmarts nearly twenty -four-hour accessibility. With only a

handful of sta members, small businesses like Dollar and Beyond cannot stay open from 6 AM to 12 AM every daylike Walmart can. Though Kamran recalls a me when a line regularly formed outside his store just before 9 AM,

early bird customers are now drawn to Walmart. But even for customers who prefer to shop at Dollar and Beyond,

Kamran cannot compete with Walmarts hours. Other smaller stores on Georgia Avenue have reported similar issues

not only are small businesses struggling to compete with Walmarts prices, but also with hours. For small stores,

such long hours are impossible to keep.

Kamran cites the lack of convenient, curbside parking as a key contributor to the drop in sales. He reports that the

police are constantly patrolling for cars parked along the southbound lanes of Georgia Avenue, and have cketed

customers of Dollar and Beyond for parking temporarily outside his store. Dollar and Beyonds convenience has been

curbed by the eliminaon of street parking along Georgia Avenue.

If the city were to take acon to help his store and to support locally owned and operated small businesses, Kamran

believes the rst step would be to bring back street parking along the southbound lanes of Georgia Avenue by re-

turning to the street lane paern that existed before Walmart arrived. The lane changes executed by the city were

obviously a clear favor to Walmart, says Kamran.


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Jose, Usulutn Grocery


My sons have two years le to nish their degree. I dont know how Im going to pay for them to nish.

The day Walmart opened was the last day I had good sales here.

Jose Chavez has been a small business owner in

Washington, DC since 1989. I know how to run abusiness, hes fond of saying. He opened Usulutn

Grocery at its current locaon in October of 2011 be-

cause he expected sales would be brisk, and he was

right he was running a successful business selling

groceries, home cooked food, and assorted retail

products. As construcon advanced on the Walmart

store, Jose heard reassurances from elected ocials

that Walmart would aract more customers for local

small business owners, not less. As he now sees, that

could not have been farther from the truth. The day Walmart opened was the last day I had good sales here, he

said. Jose esmates that he has lost 85% of his sales.

The citys relocaon of a northbound bus stop that used to sit right in front of his store was another crical blow to his

business. I have customers that tell me: I want to come to your store, but the bus drops me at Walmart. Theyre

red from work, they say, and just want to get home, so they just shop at Walmart, said Jose, poinng out how

workers coming from downtown used to get o directly in front of the shop.

Joses two sons, Jose Luis and Ricardo, both study accounng at Montgomery College and have two years le to nish

their masters degree program. Most concerning about his drop in sales for Jose is how hell connue to support hischildrens educaon. Im not in this just to make money I want to provide for my family, he said. If I dont help

with books, with housing, if I dont have the money, they worry they wont nish their courses.

Just as Family Dollar had to let employees go and cut hours, Jose had to part

with half his sta; now he has just one employee. In addion to downsizing

sta, some of Joses other investments sit idle in the store. He spent more

than $3,000 to install a rosserie oven to sell roasted chickens at $6/each, the

best deal he knew of. Yet when Walmart opened up, Jose was astonished to

see their rosserie chickens being sold at $4.98. Now, the oven collects dust in

the front of his store.

Asked what he would ask of elected ocials if he had the chance, Jose said

that he would ask for support in developing a new business in order to stay at

his current locaon. And if he couldnt stay on Georgia Avenue, then I would ask for support to open up somewhere

else, far away from any Walmart, he added. Above all, Jose says he is a business owner and he wants to remain as

one. I dont want to leave myself without a business, so Im going to ght to stay here however I can. For my kids

educaon.


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A Call to Acon

With two Walmart Supercenters already here in Washington, and at least three more slated to open in the

coming years, Walmarts eect on small business must be carefully measured against their benet to any

given neighborhood.

Small business owners along Georgia Avenue have seen a drasc decrease in sales since Walmart arrived in Decem-

ber 2013. The citys decision to remove parking along both southbound and northbound lanes on Georgia Avenue

severely impacted business owners directly across the street from Walmart. And the citys relocaon of a northbound

bus stop from its original locaon south of Missouri Avenue to right in front of Walmarts entrance has been a similar

blow to sales. Further, business owners are struggling to keep up with Walmarts hours 6 AM to 12 AM and un-

dercung prices.

Small business owners report disparies in parking enforcement only their customers are cketed for parking or

stalling along Georgia. Conversely, Walmart delivery trucks and customers are permied ample me to stall or park

along northbound Georgia Avenue, despite the big box giants underground parking garage located on Peabody

Street.

In gathering the stories of small business owners and managers, one thing is clear: if locally owned businesses on

Georgia Avenue are to survive compeon with big box giant, Walmart, our elected ocials must do more than talk

about supporng small businesses. Small business proprietors along Georgia Avenue called for concrete, tangible

support from the city: accessible parking for customers, tax abatement and relief to migate the loss of revenue

caused by Walmart, and strategic support in developing new business and delivering new products. Will the DC Coun-

cil and the Mayor answer their call?

Documents

Walmart's Small Business Impact