When Walmart pulls out of town, the stores next door don’t pick up its shoppers — their sales are down 20% a year later
Among critics of the big-box behemoth, a long-held assumption is that once a Walmart disappears, shoppers seeking groceries, household goods, meals and services will flow to businesses down the road.
Key points
- Other researchers have found that Walmart’s entry into a shopping area causes sales in nearby existing stores to drop.
- For each closed Walmart, we identified nearby non-Walmart businesses and compared their post-closure performance with that of businesses near Walmarts that stayed open.
- Stores that competed more directly with Walmart had better post-closure sales than noncompeting stores.
We found that nearby stores saw a slump in both monthly shopper traffic and sales revenue by roughly a quarter in contrast to comparable stores near Walmart locations that remained open.
Additional details
- Specifically, following a Walmart’s closure, nearby stores experienced a roughly 5% drop in the following month and 6% in the month thereafter.
- That is what we would expect if competitive relief is real: Grocery stores and other close substitutes are better positioned to capture some of the displaced consumer demand.
- If nearby stores were simply selling less to the same number of shoppers, we would expect spending per visit to fall.
- Economists call this kind of benefit an agglomeration effect: Businesses can gain from being near other businesses because the location itself attracts shoppers.
- What has not been studied until now is what happens when a Walmart store – or any other anchor store – closes.
How this summary was made: extractive summary — built from the sources' own reporting. It is drawn only from the reporting of the sources listed below — read the originals for full detail. How we summarize →
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