Dear Source:
They are called "big boxes" – Wal-Mart, Home Depot, Target, Walgreen's. As many of you know, Home Depot has been working behind the scenes to get approval to build a massive store in Donoe. At first, the thought of a big chain store coming to a small community seems like a good idea. They need a lot of employees to run it; they have a larger variety of products for sale; and they seem to offer lower prices. Yet, despite all this, the growing body of evidence says that welcoming a "big box" into your community may be one of the worst things you can do if you want to build or sustain your economic base.
Have you considered what the impact would be, in these islands, with the arrival of a Home Depot, or any other "big box"? We have obtained a copy of their application to build. Nowhere was the impact on traffic mentioned, however this store will generate an extra 2,500 to 3,000 cars per day at the intersection going into the Cost-U-Less complex. Clearly, this may cause "traffic". According to the Metropolitan Chapter of the American Planning Association, a 150,000-square foot store will directly increase congestion costs by $5 million per year, hence the secrecy for the past year and a half.
If an independent study proves that Home Depot will create more net jobs rather than displace them, add more money to the tax base and keep more money in the territory, than the businesses that will inevitably close, then they should be welcomed. Unfortunately, "big boxes" fear these independent impact studies because they expose a side that they would rather not have revealed.
In New Paltz, N.Y., four economic impact statements were prepared in March 1996, when a "big box" attempted to build there. The Planning Board reported that the project would cause "substantial job losses, closed businesses, requests for property abatements, increased vacancies and would result in far less dollars in the local economy as a big box retailer consolidates its gains and expands." Imagine what one Home Depot would do to this small, fragile market. The lesson is obvious – oversupplying an area with retail glut does not create jobs, it destroys them.
Consumers are best served when there are numerous competitors in the market, however the big retail corporations, like Home Depot, Toys R Us and Best Buy, are known in the industry as "category killers". This name is significant because these businesses do not intend to compete with local stores; they aim to be the only game in town.
Typically, a chain store will enter a new market with deep discounts. This sets up a battle that local merchants cannot win. Once the local competition is eliminated, prices tend to rise. In Virginia, a statewide survey of several Wal-Mart stores found that prices varied by as much as 25 percent. The researchers concluded that prices rose in markets where the retailer faced little competition. A similar conclusion was reached in a survey of Home Depot.
Chain stores contribute far less to the local economy than independent businesses. Local stores keep profits circulating within the local economy. They also support a variety of other local businesses including accounting firms, insurance companies and printers – to name a few. They advertise through independent radio stations and local newspapers. They purchase goods from local distributors. In this way, a dollar spent in a locally owned business sends a ripple of economic benefits throughout the community.
By contrast, chain stores typically centralize these functions at their head offices. They keep local investments and spending to a minimum. They bypass local radio stations in favor of national advertising. Much of a dollar spent at a chain store leaves the community immediately.
It is our understanding that Home Depot is currently training management and staff in Puerto Rico for their St. Thomas store. Of the approximately 200 people needed to run the St. Thomas store, half of them will be part-time employees. That leaves 100 full time jobs to people we believe will be substantially non-Virgin Islanders. Approximately 350 full time Virgin Islander jobs will be affected.
We believe an independent economic impact study will show what most other communities have seen, that is, significant competitor losses, net job losses, tax revenue losses, and the creation of a glut of empty retail space when a "big box" retailer comes to a small community.
Let us leave you with this final thought. The president of the local First National Bank in the small town of Nowata, Okla., said this about a "big box". "They were not playing fair. They came in and ravaged all the small businesses." The mayor of that same town who welcomes the mega store to town, now says they have proven it. "They're big and they're greedy. They have no compassion for the community or the individual."
A new big box can only be successful at the expense of existing businesses.
If you have any questions or comments, please e-mail the Independent Retailers Group at independentretailersgroup@hotmail.com.
The Independent Retailers Group provided the following list of businesses as members supporting this letter: Allied Tool, The Paint Depot, Doctor's Choice, Caribbean Herbals, MSI Building Supplies, Steel Plus, Paint Master, Lock It Please, Plaza Extra, Time Center True Value, Appliance Plus, Sea Chest, Silk Greenery, Flair Magazine, St. John Hardware, Stormking, Bryan's Plants and Dockside Bookshop.
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