American Independent Business Alliance

Independent Business, Chain and “Big Box” Retail Studies

Below are three frequently-updated libraries maintained by other entities. We suggest you look there for most recent studies. We archive summaries of several earlier studies here because some are not included in the collections linked below. Our own site is the first stop if you’re researching the local multiplier effect.
The Institute for Local Self-Reliance summarizes a wide range of related studies and reports.

Regulation of Large Retail Establishments. The Municipal Research and Services Center guide includes citations and links to many relevant studies.

Study overviews and links

  • Wal-Mart and County-Wide Poverty [PDF]
    A study from Pennsylvania State University from October 18, 2004 that indicates counties with one or more Wal-Mart stores experience smaller decreases in family poverty than counties without.  Possible causes include the decrease in civic capacity due to local entrepreneurs being driven out of business–people who also tend to be community leaders.
  • “Is it fair to give taxpayers’ money to big corporations that will then use it to help put existing firms out of business?” ask Dr. Kenneth Stone and Georgeanne Artz in their study of big box home improvement centers and their effect on host towns and surrounding communities [PDF]. Published in 2001. Findings: sales of hardware and building supplies grow in the host communities, but at the expense of sales in smaller towns nearby. Moreover, after a few years, many host communities experienced a sharp decline in hardware and building supplies sales, often dropping below their initial levels, as more big box stores opened in the surrounding region and saturated the market.
  • Fiscal impact analysis (pdf) in Barnstable, Massachusetts (2002) that compares the tax revenue generated by different kinds of residential and commercial development with the actual cost of providing public services for each land use. Revenue gainers are community-based businesses. Revenue losers are big boxes, fast food chains and strip malls.
  • Released in October 2003, 10 Reasons Why Vermont’s Homegrown Economy Matters: And 50 Proven Ways to Revive It (pdf) is the result of two years of collaborative research by the Institute for Local Self Reliance and the Preservation Trust of Vermont on reasons why locally owned businesses matter and practical ways to plan for a homegrown economy. Useful no matter where you live.
  • The Shils Report (1997), entitled “Measuring the Economic and Sociological Impact of the Mega-Retail Discount Chains on Small Enterprise in Urban, Suburban and Rural Communities,” was groundbreaking research by Edward B. Shils, Director Emeritus of the Wharton Entrepreneurial Center at the University of Pennsylvania. The report details the effect of chains and big boxes on small businesses due to economies of scale and governmental failure to enforce antitrust laws. Other studies have built on Shils’ work. Follow the link to the 250-page downloadable report.
  • Dr. Kenneth Stone’s (Iowa State University, 1977) landmark study on Wal-Mart’s effect on Iowa’s rural communities 10 years after the corporation’s arrival, Impact of the Wal-Mart Phenomenon on Rural Communities [PDF], provides strong evidence of how this big box displaces locally owned independent businesses in the community and the surrounding area. It also provides Dr. Stone’s advice to locals on competing with chains.

Studies on the Economic Impact of Local Independent Business

If you’re looking for an overview of the multiplier effect, along with the most current studies, visuals and language to use in outreach materials, we suggest starting on our Multiplier Effect page.

  • Thinking Outside the Box: A Report on Independent Merchants and the New Orleans Economy 
    A 2009 Civic Economics study compares local independents and leading chain competitors and finds the independent New Orleans retailers generate twice the annual sales, recirculate revenues within the local economy at twice the rate, and have four times the economic impact per square foot while consuming a fraction of the land.
  • Local Works: Examining the Impact of Local Business on the West Michigan Economy
    This 2008 study demonstrates the major economic impact of even a 10% shift in total per capita spending from chains to locally owned independent businesses — creation of almost $140 million in new economic activity and 1,600 new jobs for the region. The included examination of the economic impact of independent and chain businesses per-square-foot points to independent businesses as the recommended tenants for available commercial properties.
  • San Francisco Retail Diversity StudyThis three-part study, released in May 2007, calculates the market share of independents and chains in several categories: book, sporting goods, and toy stores, and casual dining restaurants. The study’s second section analyzes the impact on San Francisco’s economy of shopping at locally owned businesses versus chains. The final part examines the impact on the city’s economy of a 10% shift in resident spending between chains and local businesses and vice versa.
  • Andersonville Study of Retail Economics
    This report, released on October 20, 2004, extends the study done in Austin, Texas in 2003.  The study compares 10 independent businesses and 10 chains in retail, restaurant and service sectors.  The results further corroborate the local economic benefit of independent businesses, demonstrating that independents generate about 3 times the local economic activity as chains.  Further, the researchers make the case for community governments to create policy to protect their independent businesses.
  • The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine (pdf)
    by the Institute for Local Self-Reliance and Friends of Midcoast Maine, September 2003. Findings of this study indicate that three times as much money stays in the local economy when you buy goods and services from locally owned businesses as with chains. This study tracked the revenue and expenditures of eight locally owned businesses in Midcoast Maine.
  • Economic Impact Study (pdf) in Austin, Texas (2002) substantiating the economic multiplier–of over three times–of two independent businesses, Waterloo Records and Book People, as compared to a Borders Books & Music Corp. store (planned for inclusion in a nearby — and publicly subsidized — development at the time of the study).

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