Study measures Wal-Mart’s effect on rural areas

When Wal-Mart closed its McPherson store in March and opened up a SuperCenter next door — complete with a new grocery store — business leaders in the central Kansas town decided to take a positive approach.

“We look at it as an opportunity, once we’ve got those shoppers, to remind them that we’ve got a downtown, too, where they can find other goods and services,” said Jennifer Birch, director of the McPherson Chamber of Commerce.

The news was received somewhat more grimly in Hillsboro, a smaller town across the county line a 25-minute drive east of McPherson.

“I think the convenience of Wal-Mart’s proximity to Hillsboro will be a detriment to some businesses,” said Meagan Kilgore, director of the Hillsboro Chamber of Commerce. “It’s going to hurt our grocery stores.”

Such contrasting views of Wal-Mart aren’t unusual, according to a study made public last week by Kansas State University. The research showed that Wal-Mart stores in rural Kansas communities increased the ability of host counties to attract shoppers — but often to the detriment of neighboring communities.

“I think the message is, it’s much more complex than people would like to believe,” said David Darling, a K-State community development economist who published the report on his Web site.

‘Pull factor’

The research was done as part of master’s degree work by Darling’s former student Manjula Boyina, who now works in Cleveland. She said the research showed rural Kansas communities should plan their economies regionally to balance the won-lost equation.

“I recommended that there be more regional planning so these towns could plan on retail that mutually benefits them rather than creating a competition,” Boyina said in an e-mail interview with the Journal-World.

Critics of Wal-Mart often contend the retailer hurts mom-and-pop businesses in the communities where it opens new stores. That criticism has been heard during Wal-Mart’s disputed efforts to build a new store in western Lawrence. In the area, Wal-Mart already has a store on south Iowa Street, and another in Ottawa.

Boyina’s research didn’t address that criticism.

Instead, she looked at the “pull factor” — the ability to attract shopping dollars — of rural Kansas counties that host Wal-Mart stores. Those counties generally increased their pull factors after the opening of Wal-Mart stores; neighboring counties, however, saw their pull factor ratings drop.

“Wal-Mart is a positive addition to the nonmetro counties of Kansas that were included in the study,” Boyina reported.

Looking forward

A look at the “pull factor” in rural Kansas counties where Wal-Mart has built stores:

County, Year Host CountyPull Factor Neighboring CountyPull Factor
Atchison, 1987 Increase Increase, Stable
McPherson, 1987 Increase Decrease
Allen, 1988 Increase Decrease
Barton, 1985 Decrease Decrease
Cloud, 1989 Increase Decrease
Seward, 1985 Decrease Decrease
Sherman, 1997 Increase Increase
Thomas, 1988 Increase Decrease

— Source: An Examination of Pull Factor Change in Non-metro Counties in Kansas: A Study of Economic Impact of Wal-Mart Construction

Keith Morris, a spokesman at Wal-Mart headquarters in Bentonville, Ark., said Boyina’s research confirmed the retailer’s own findings.

“It sounds fairly in line with what we’ve experienced,” Morris said. “Repeatedly what we hear, regardless of whether it’s an urban or rural community, is that there’s more business activity after a store is open.”

Birch is counting on it. She said she hoped Wal-Mart would attract out-of-county shoppers to town. And she hopes those shoppers head downtown to McPherson’s specialty shops.

“The downtown offers something that Wal-Mart doesn’t offer — we have special niches that we fill,” Birch said.

She added: “We have a very vital downtown area — I think the stores have been doing good. I’ve not heard any negatives.”

In Hillsboro, Kilgore won’t criticize Wal-Mart; the McPherson store donates money and goods to Hillsboro organizations and charities. But Kilgore said she was working on ways to keep local dollars in town — and to increase the city’s own pull factor by attracting shoppers and tourists from Wichita and Kansas City.

“We’ve identified that Hillsboro business is not going to thrive just on Hillsboro shoppers,” Kilgore said.