AddThis

Unlikely source provides Walmart more ammo for urban expansion

Walmart was never made to feel welcome in its Southern California expansion efforts, so it was interesting this week to see researchers at the University of Southern California release a study that could come in handy next time Walmart seeks approval for a new store.

The study by researchers at USC’s Price School of Public Policy, which appeared in the January issue of Regional Science and Urban Economics, determined that many poor urban neighborhoods have high concentrations of grocery and other retail food outlets, but are lacking in larger chain stores. The study’s authors found impoverished neighborhoods lacked larger chain stores across a range of services including supermarkets, drugstores, food service and the retail sector overall.

“'Retail deserts’ is not an accurate label for many poor neighborhoods,” said Jenny Schuetz, the study’s lead author and a professor at the Price School of Public Policy. “It’s not a matter of how many there are – there are lots of small ‘mom-and-pop’ stores - but not many larger chain stores or supermarkets. Having access to bigger stores could mean a larger range of produce and lower prices.”

Hello! That’s what Walmart has been saying all along. And in another statement of the obvious related to the lack of chain stores she said, “Low-income households presumably have the most to gain from lower prices made possible by economies of scale, yet are less likely to benefit from them.”

A quick drive down any urban street reveals the absence of a meaningful number of brand name retailers, so the study’s findings aren’t exactly groundbreaking, especially to anyone in the retail. Even so, more research on the topic could be forthcoming. 

According to Schuetz, additional research could help determine why chain stores are still so scarce in poor neighborhoods and drive effective policy solutions to fill the void.

The full report is available by clicking here, although there is fee of $31.50. 

© 2014 Retailing Today. All Rights Reserved.