Big-box retail is not economic development

Last week, I linked to a story on the declining fortunes of retail nationwide. More pertinent to the discussion is how this impacts the economic development fortunes of communities and states. Chuck Marohn at Strong Towns writes:

The big box development model -- build on cheap land on the edge of the community with taxpayers subsidizing your hard infrastructure/transportation costs, tilting the competitive landscape in your favor in the process -- is designed to be transitory. These buildings are, unlike the miles of public pipe and asphalt that serve them, quite disposable.

And dispose of them is what Wall Street analysts are now expecting.

The big-box discounter is in need of a bricks-and-mortar makeover, analysts said. To resonate with today's shopper, Wal-Mart needs to move its stores closer to major population centers, shrink the square footage of its superstores and shutter about 100 underperforming U.S. locations, they suggest.

"High sustained transportation costs and broader consumables distribution appear to be reshaping consumer shopping behavior," Credit Suisse analyst Michael Exstein said in a research note on Wednesday. "Wal-Mart and Target have been slow to react thus far, but we think the broader trend will call for the rollout of smaller 'big boxes.' "

For years, communities of all sizes have looked to big-box stores as a shot in the arm for their economies. This, despite the fact that retailing is a secondary activity, not a primary creator of wealth or jobs. Retailing can only thrive if there's an underlying economy to begin with. Of course this is only exacerbated when those dollars are shipped out to overseas manufacturers of goods and the corporate headquarters of a few, large retailers. 

The trends we have shaping commerce today are actually quite exciting, despite what may seem like bad news on the face of it. The combination of big-box retailers struggling, a rising interest in local economies, smart phones & technology that make location less important and even the "maker" movement portends quite a few changes for the coming years. I'm excited to see us have a discussion about actually creates wealth and opportunity, and not what shifts dollars around for the lowest-common denominator.