In January of 2016, Walmart announced that it would be closing 154 of its locations in the US. This included all 102 Walmart Express stores—the company’s smallest type of store—which were intended to compete with stores in rural areas. And Walmart wasn’t alone in shutting its doors. Between 2015 and 2016, Target announced 13 store closures, Kmart announced 68, Sears 10, Staples 50, Gap 175—the list goes on. As a result of online giants like Amazon and Alibaba disrupting a wide variety of markets, traditional companies are being forced to close stores and adjust their business models to keep up.
Walmart’s closures drew the most attention, and rightfully so. As the world’s largest retailer, Walmart provides the clearest window into what happens to communities when a corporate giant leaves town. And it’s not just any kind of town that Walmart is leaving. Though the company’s stores are distributed evenly across urban and rural areas and higher- and lower-income neighborhoods, the January closures disproportionately affected poor, rural areas.
Already struggling, rural communities that face Walmart’s abrupt departure have to deal with the immediate economic consequences of a major employer leaving, exacerbating long-standing economic malaise brought on by inadequate resources. Store closures compound the economic crisis and contribute to growing feelings of abandonment that currently afflict many in rural communities. But these prospects, while dark, present an opportunity for small business to re-emerge, igniting local economies and restoring a sense of autonomy in rural areas.
The most direct harm stemming from Walmart’s departure is the disappearance of many consumer goods. Walmart began to enter rural communities a few decades ago and quickly boxed out other suppliers with its signature low prices. In many communities, small businesses buckled under the pressure to compete, leaving Walmart as the only game in town. A 2008 study found that opening a Walmart caused, on average, the loss of 150 retail jobs and $1.4 million in county payroll. A 2012 study confirmed that negative impact, showing that 4.4 to 14.2 local retail stores closed within 15 months of a Walmart opening. And when a Walmart closes, those former competitors cannot quickly reappear, leaving customers many miles away from basic necessities.
The resulting scarcity can have critical impacts on standards of living. Walmart’s closures alone created new food deserts, and removed fresh produce and meat from 31 neighborhoods in 15 states. Access to healthful food is a matter of survival, not just convenience.
What’s more, the negative effects of the closures extend beyond retail and groceries to the local economy at large. When Walmart was in these small towns, it boosted local spending on hotels, gas, phone cards, and more. Additionally, the company contributed heavily to the local tax base, often acting as the primary revenue source for localities strapped for cash. Walmart is closures create a huge hole in funding, imperiling the provision of local government services and initiatives.
These closures hurt on a personal level, too. The company is known for its cheap goods and sprawling stores—not for its customer service and community relations. Unlike small businesses owned by community members, Walmart is an outsider in rural communities, a manifestation of a globalized economy continually growing in size and influence. Its takeover and abrupt departure from these communities made small towns feel like a commodity being pawned for profit. As William Broome, the owner of a small hardware shop in Winnsboro, South Carolina, put it, “You feel like they used what they could get out of you, and then just pulled out and left.”
It’s clear that Walmart closures inflict real harm on rural communities, economies, and individuals. This picture is understandably the most common narrative around these closures. But with every threat comes an opportunity, and the rural towns that Walmart left now have an opportunity—and incentive—for a real breakthrough.
On the economic side, the hole that Walmart’s departure creates can be an opening for new businesses to take its place. Walmart’s aggressive price-cutting strategy may work for its profit-margin and its shareholders, but not always for consumers and communities. A review of studies found that Walmart store openings cause 50 percent more job losses than they create and increase the risk that small businesses in surrounding areas fold. And Walmart leaves little room for local innovation and entrepreneurial developments. Despite positive press on voluntarily raising its minimum wage, Walmart still pays such low wages that its employees often have to use SNAP benefits when buying food in their own stores.
Walmart’s one-size-fits-all model harms communities indirectly, as well. A study from Economic Development Quarterly found that rural areas with a higher concentration of small, locally-owned businesses saw an increase in per capita income growth, while areas with large, non-locally owned businesses saw a decrease. Small businesses led by community members are more attuned to the values and preferences of the people in the areas where they operate, leading to a more efficient economy and happier customers.
Fortunately, there are ways to spur this local development. It’s true that it takes time to regain the businesses that Walmart drove out when it arrived, but with targeted investments, policymakers can speed along the process and help small towns hurt by Walmart’s departure transition to a more locally-oriented economy. One option is to prioritize the Small Business Administration’s grant-finding services in areas that have been hit hardest by big-box store closures and are in most desperate need of essential goods. Newly created food deserts and regions where Walmart had become the dominant pharmacy stand out as targets for aid. Helping secure grants for small businesses would not only make it easier for producers to fill in product gaps, but would also reinvigorate local consumer bases, presenting opportunities for more businesses to thrive.
A surprising but forward-looking solution is to work on expanding broadband access into rural areas. The small towns that Walmart left are usually not bustling technology hubs. Only 63 percent of rural adults report having a broadband connection at home, 10 percent less than US adults as a whole. Rural America also has slower internet, with 39 percent of rural areas lacking access to 25 megabits per second broadband speed, compared to only 4 percent in urban areas. While farm towns don’t have to turn into Silicon Valley to thrive, access to the internet is crucial for 21st-century economic success. Beyond towns affected by Walmart closures, boosting rural internet connectivity could bring greater prosperity to all rural areas. Small businesses whose customer bases are limited by the geography of rural areas could use the internet to expand their reach and solidify their profits. Rural communities that can receive vital goods and bring their products to the global marketplace via the internet are more likely to avoid dependence on a megastore as their economic hub.
Perhaps even more important than the economic opportunity presented, Walmart’s exit gives rural Americans a chance to feel more in command of their communities. Walmart stores in small towns tried to impose their values onto the communities, rather than listening to them. For a segment of America that’s been left behind by rapidly advancing technology and a globalizing economy, community-wide efforts to redefine, revitalize, and redevelop can be a breath of fresh air and a way to regain autonomy. Rural voters who were driven by alienation and economic stagnation to vote for Trump—who have thus far shown little interest in tangibly improving their lot—can find a more productive and perceivable outlet through local economic and community development.
Walmart’s departure from poor, rural areas is often seen as a problem, and in many cases it is. The loss of local tax revenue, lower accessibility for food and other goods, and feelings of abandonment for hard-working communities all cause real damage, and Walmart shouldn’t be given a pass for inflicting it. But even if Walmart is rightly seen as a villain, there is still hope for these rural communities. The opportunity for local growth and community-oriented empowerment that can come from rebuilding economies Walmart crippled might just be the spark rural America needs to jump into the modern economy with a sense of purpose and belonging.