Wal-Mart is pushing forward with plans to open its first Neighborhood Market in Massachusetts in Assembly Square amid mixed reviews in Somerville.
While Wal-Mart is typically known for its super-sized department stores, the proposed Wal-Mart Neighborhood Market will be 34,000 square feet as a part of the company's recent market strategy to enter New England cities, according to a July 22 article in The Boston Globe.
"We think a Wal-Mart Neighborhood Market store can be part of the solution for customers in Somerville who want more affordable grocery options in their own neighborhood," Wal-Mart Senior Director of Community Affairs Steven Restivo told the Daily in an email. "Wal-Mart neighborhood markets provide a broad assortment of grocery, pharmacy, and consumable products at an everyday low price."
But many remain skeptical about Wal-Mart's potential impact on Somerville's economy.
Somerville Mayor Joseph Curtatone in July publicly voiced his concerns about Wal-Mart's labor practices in interviews with the Boston Globe and Boston Herald, adding that he was withholding support until the issues had been addressed.
Local group Somerville Local First is opposed to the proposed Neighborhood Market, claiming that the chain's business model will harm the local economy, according to the group's website.
Professor of Economics Dan Richards said that Wal-Mart's entry into Somerville's economy may have the potential to harm other retail establishments.
"The general sense is that a lot of retail establishments would suffer [and] would probably go out of business … or ones that would form won't come in," he said.
In response to these concerns, Restivo said that Wal-Mart stores create jobs, generate tax revenue and contribute to local non-profit organizations.
Statistics on Wal-Mart's website show that Wal-Mart stores, Sam's Club branches and the Wal-Mart Foundation donated more than $12 million to Massachusetts' local organizations in 2010. The stores also collected more than $91.7 million in sales taxes for the state in the fiscal year ending in 2011.
Restivo added that small businesses located near Wal-Mart stores can compete with the chain because they usually offer products and services that Wal-Mart does not.
The effect of large businesses such as Wal-Mart on local economies has been a national concern for the past few decades.
The appearance of a chain store in a market renders approximately 50 percent of the discount stores unprofitable, according to a Nov. 2008 study by MIT Associate Professor of Economics PanleJia. Her study further found that Wal-Mart's growth from the late 1980s to the late 1990s altered the number of small discount stores by 40-50 percent.
But Senior Lecturer of Economics Anna Hardman warned that Wal-Mart's impact on Somerville's economy will depend on a variety of factors.
Wal-Mart is most likely to impact cities where people drive to stores, Hardman said, but Somerville residents usually do much of their shopping on foot, only running specific errands by car.
She believes that Wal-Mart's arrival may negatively impact stores that sell discounted grocery products similar to Wal-Mart products, such as K-Mart or Johnnie's Foodmaster.
"I think that putting a light on [these issues] is really important," Hardman said. "But it's also important not to have a knee-jerk reaction, an automatic reaction that this is a big company coming into a market [and] they're only going to do harm."
