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The Walmart Effect Now Reaching Beyond the Retail Sector

By | 10.02.14

The Walmart Effect Now Reaching Beyond the Retail Sector

For most of us who are familiar with the term “the Walmart Effect”, certain images come to mind – the mom and pop grocer on the corner shutting down, the independent bookstore having a “going out of business” sale, and other smaller shops being forced out by big box retailers. These scenarios describe what has become the “new normal” over the past 35 years — an increasing share of new business and, in turn,  jobs at those businesses, going to large companies opening up new locations versus small local businesses and new companies setting up shop.

A recent examination of the Business Dynamics Statistics database by several scholars shows that the “Walmart Effect” extends far beyond just the retail sector and in some cases, is even more widespread.

The study looked at new establishments set up by both net-new and already existing firms across 9 industry sectors between 1978 and 2011. They found that there were more new establishments set up by existing firms in 2011 than there were back in 1978. Plus, the growth in the existing business share of new establishments was larger in other industries than it was in retail.

The same was true for new job creation during that time span. In fact, the retail sector had the smallest amount of growth in new establishment job creation.

Reference:

Shane, Scott. “The Walmart Effect Exists Even Outside of Retail”. Smallbiztrends.com. 09/29/2014.

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