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Big Box Swindle:
True Cost of Mega-Retailers and the Fight for America’s Independent Businesses
By Stacy Mitchell
Three new Wal-Marts recently opened in the Bluegrass to much fanfare,
while small-business owners continue to mourn the loss of the consumer landscape
to mega-corporations. In this excerpt from her new book, Big-Box Swindle, Stacy
Mitchell relates the painful experiences of those whose livelihoods have been wiped
out by mega-malls.
[The following excerpt is reprinted with the permission of the author,
Stacy Mitchell, and Beacon Press.]
Bitter Pills
For Mike Castles, the hardest part of closing his family’s seventy-two-year old
hardware store was letting down the employees. “We had great people:
Jake, who’d been with us for forty years; Kent, my shop man, another
forty years; Doris, the bookkeeper. She was here forty years, too,” he said. “They
all started with my grandfather.” In 1932 Mike’s grandfather opened Castles Ace
Hardware in the town of Carlisle in the south-central part of Pennsylvania. It was
a sizable store: twenty-eight thousand square feet with about two-thirds devoted
to hardware and the other third to a large lumberyard and millwork shop, where
employees would custom cut and plane boards to any size and thickness at no extra
cost. In the late 1950s, Mike’s uncle Lee dropped out of college and came to work at
the store, eventually inheriting it in 1974. He asked Mike to take over the day-to-day
management a few years ago, but continued to make any big decisions about the
business. The final decision to close was his. The store had been hard hit by the opening,
in rapid succession, of three massive superstores in Carlisle. Sales dropped when
Wal-Mart arrived in 2002 and then again when Lowe’s opened just a few blocks away
in early 2004. Home Depot announced that it would build its own store and open by
the fall of that year. In July, Lee Castles decided to liquidate his family’s business. “It
was a bitter pill for him,” said Mike.
Twenty people lost their jobs when the store closed. Most had made thirteen to sixteen
dollars an hour with benefits, according to Mike Castles, but those who had been
there the longest earned close to fifty thousand dollars a year. There were other losses as
well. Local contractors, most of whom had remained fiercely loyal after the superstores
opened, could no longer get certain specialty items locally. “When I run into them on the
street now, they all bend my ear for fifteen or twenty minutes about how much they miss
me,” said Mike. All of the spending that Castles had done with other local businesses in town
disappeared when the store closed. “If it was available through someone in the community,
we bought it in the community,” Mike recounted. Gone from the local economy were
the dollars the store spent on advertising, repairs, supplies, inventory, remodeling, and various
professional services. Castles had also been a longtime contributor to local charities and
nonprofits. “Very few of them were turned away,” said Mike, who serves on two nonprofit
boards himself and contends that it is much harder to secure a donation from the chains,
where decisions are made far from Carlisle. Today, Mike Castles often finds himself replaying
those final months in his mind, wondering what he could have done differently to save his
family’s business. “It was such an emotional time,” he said.
Many other local stores also lost sales or closed after the superstores arrived. With a population
of just eighteen thousand, plus another thirty thousand in the surrounding area,
Carlisle’s market proved too small to absorb all of that new retail without losses to existing
businesses. Margins are thin in retail and only a modest drop in revenue can be enough to
plunge a business into the red. Two other local hardware stores—Handy Hardware and
Cochran & Allen—also folded. Shopping at an independent hardware store is no longer an
option in Carlisle. The community’s 250-year-old downtown operates on the economic margins;
it’s quiet, with more than a few vacancies. Driving along the highway, what now marks
Carlisle’s existence is the giant Wal-Mart supercenter. It is one of four in a row, spaced about
every nine miles on the way to Harrisburg. These stores loom large on the landscape and local
economy, but somewhere at Wal-Mart headquarters, one can imagine that they are just four
little pins on a map.
Definining “Progress”
This is progress—or so we are told. “Progress” is a favorite word among big-box
retailers and their boosters. Typical of its use was a full-page newspaper ad that Wal-Mart
ran in the town of Westbrook, Maine, in the summer of 2005, as the city was considering
new zoning rules that would interfere with the company’s plans to build a two-hundredthousand
square- foot supercenter. The ads opposed the rules and urged residents to “let
the City Council know that you support progress.” This idea of progress is powerful and
pervasive. It suggests that, while we may regret the loss of our hometown grocer or the
neighborhood pharmacy, these are necessary casualties on the path to economic advancement
and prosperity. And indeed, the big chains seem to deliver exactly what most communities
want most: economic growth, lower prices, new jobs, and tax revenue. But the
megachains contribute far less to our local economies than they take away. For all of the
new jobs that the chains have created, they have destroyed many thousands more-at small
businesses and American factories especially, but also, as we will see, at enterprises as
diverse as family farms and local newspapers. Many of these jobs came with good paychecks,
and their loss is shrinking the middle class. The poor have fared even worse, as
global retailers have used their immense market power to drive down wages for those at
the bottom, while simultaneously closing off avenues—like starting a small business or
getting a good manufacturing job-that generations of Americans have used to pull themselves
out of poverty. What poor families are saving at the big-box till is no match for what
they have given up in income. Nor are the tax benefits any less of a mirage; these sprawling
stores place a major burden on roads and other pubic infrastructure and many of their
employees must rely on pubic assistance to get by.
Perhaps the greatest economic danger of all is that, as local businesses disappear, our
communities are becoming ever more dependent on a handful of corporations that have no
allegiance to the places where they do business. None of this really looks much like progress.
It certainly is not an economic model designed to foster broad prosperity.
Excerpted from Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s
Independent Businesses by Stacy Mitchell Copyright (c) 2006 by Stacy Mitchell By permission of Beacon Press, Boston.
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