ISU Economists Ken Stone and Georgeanne Artz have studied the economic impact of the Wal-Mart stores dotting the Iowa landscape since 1988. They found that communities without Wal-Mart stores didn’t match the retail sales growth of communities with the stores. The study,“Revisiting Wal-Mart’s Impact on Iowa Small Town Retail: Twenty-Five Years Later,” will be published in a future issue of Economic Development Quarterly.

“This is a much longer-term study and it shows that among the Wal-Mart host towns, their total sales went up and stabilized, and they became more of the regional trade centers,” Stone said. “But one has to keep in mind that most of that gain was by Wal-Mart stores, and they did have negative impacts on a lot of other businesses in town — mainly any store that was selling essentially the same thing they were selling.”

Stone said towns without Wal-Marts fared better than he originally expected, adding that he believes it’s because nearly all of those towns had a regional chain store of some kind and a grocery store. 

The smallest towns in the state experienced substantial retail losses during the period, according to the study. For example, Stone reports retail sales in towns below 2,500 population declined 30 percent during the post-Wal-Mart era, or about $1.5 billion in current dollars.

The ISU researchers used data obtained from the Iowa Retail Sales and Use Tax Reports, published annually by the Iowa Department of Revenue, in their analysis of 28 Wal-Mart host towns and 22 control (non-Wal-Mart) towns.

The study also reports that host town stores that sold niche merchandise — such as specialty retailers, service firms and apparel shops — showed some positive sales increases in the post-Wal-Mart era. Conversely, host town stores that sold merchandise similar to Wal-Mart’s experienced a sales decline, at least initially.

The researchers point out that Wal-Mart’s entry into Iowa coincided with significant geographic shifts in the location of retail trade toward larger cities and regional trade centers within the state.

“I think in almost every case, sales were declining in these smaller towns before Wal-Mart came in — primarily because the bigger cities in Iowa had just built new shopping malls,” Stone said. “So they were trending downward, but once Wal-Mart came in, they turned that around and sort of stabilized their sales.”