Homeowners, local chambers of commerce, and town planners alike all have some assumptions about Walmart. It’s often assumed that when a new Walmart opens in town, it’ll kill small businesses and may even hurt the local real estate market. But researchers say the effects of Walmart on a surrounding town are sometimes surprising: The numbers indicate that the presence of the big-box retailer may actually be good for home values and some small businesses—though not so good for waistlines.
In a new paper published by the National Bureau of Economic Research, Devin Pope and Jaren Pope, economists from the University of Chicago and Brigham Young University, respectively, investigated what the introduction of a Walmart store did to nearby home values in communities around the U.S. After analyzing 600,000 home purchases between 2001 and 2006 in the vicinity of 159 new Walmarts, they found that homes located within half a mile of the Walmart rose in value 2% to 3% more relative to homes that weren’t close to the mammoth retailer. Homes located between .5-mile and one mile from Walmart also saw a boost in value, though it tended to be slightly smaller, with prices increasing 1% to 2%.
The price increases were measured two and a half years after the new Walmart was built. The researchers say that values of homes close to Walmart began rising basically at the time construction started. Courtesy of CNN Money:
“It was not until after the announcement and during the building process that we see homes close to the Walmart start to increase in value relative to homes that are slightly further away,” the authors said. “This suggests that it was the building of the Walmart itself that caused the change in housing values that we find, and that our results are not simply explained by Walmart building in areas that are experiencing housing price increases.”
Previously, researchers have tried to get to the heart of the effects of Walmart’s presence on local business. A 2009 study confirmed something most consumers probably knew: The retailers hit the hardest by a Walmart entering the local marketplace are the businesses that compete directly and sell mostly the same things as Walmart—mom-and-pop supermarkets and toy stores anywhere nearby, as a couple of examples.
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But the study also revealed that many other businesses were given a boost by the presence of Walmart. A CBS News story about the research noted:
Those selling products and, especially, services that Walmart doesn’t will tend to do well. Again, because shoppers arrive near Walmart ready to spend, they tend to leave their money with whomever nearby is selling what they want.
Researchers noted that over time—often, a LONG period of time—the storefronts shuttered as a result of an inability to compete with Walmart tend to eventually be occupied by restaurants, boutique retailers, professional offices, and other services and businesses that do not try to compete with Walmart. So, to some degree, the presence of a Walmart may actually help local entrepreneurs and certain (but certainly not all) small business owners.
In yet another academic study about Walmart—the world’s largest retailer obviously fascinates researchers—a team of economists correlated the proliferation of Walmart Supercenters with higher obesity rates in U.S. communities. The authors explain in the study’s abstract:
An additional Supercenter per 100,000 residents increases average BMI by 0.24 units and the obesity rate by 2.3% points. These results imply that the proliferation of Walmart Supercenters explains 10.5% of the rise in obesity since the late 1980s, but the resulting increase in medical expenditures offsets only a small portion of consumers’ savings from shopping at Supercenters.