Harlem Wal-Mart Could Put Local Stores out of Business, Say Critics

01 Jimmy Dean Sausages at Wal-MartA new Wal-Mart potentially opening in Harlem could cause many locally-owned stores that sell fresh food to go out of business, according to critics of the giant retailer. Manhattan borough president Scott Stringer conducted a survey of the area around a site at 125th Street and Lenox Avenue and issued a report predicting that between 30 and 41 small businesses in the area selling fresh produce could go under within a year. This accounts for twenty-five percent of food businesses in the area and includes green grocers, bodegas, and supermarkets. An additional 18 to 25 businesses could close after one year, the study suggests.

Wal-Mart has not disclosed a specific site for a Harlem location, but the site on W. 125th Street fits the profile for a Wal-Mart location, according to researchers. The site is in a low-income neighborhood, has the appropriate zoning, and is large enough to fit a Wal-Mart store. Although Wal-Mart promotes itself as bringing fresh produce and other food to what it calls “food deserts,” where fresh food was not previously so readily available, Stringer disputes this claim as it pertains to Harlem. He predicts that the overall amount of retail space available for fresh food would actually decrease in the Harlem area if a Wal-Mart opened there, making it even more difficult for residents to obtain fresh food.

Stringer’s report based its predictions in part on a 2010 study by Loyola University that analyzed the impact on Chicago’s Austin neighborhood after a Wal-Mart opened there in 2006. It found that, within one year of the store’s opening, twenty-five percent of the competing businesses within a one-mile radius had gone out of business. That number increased to forty percent after two years. The study’s findings suggested that, in terms of job creation, the introduction of a Wal-Mart to the area added as many jobs as were lost due to business closures.

Wal-Mart’s critics contend that, because it offers low prices with which local businesses cannot compete, Wal-Mart stores inevitably put area stores out of business by drawing away their customers. The prospect of competition with a store like Wal-Mart in Manhattan causes concerns for business owners and entrepreneurs who might want to locate a business nearby. A Quinnipiac University poll conducted this past summer found that a majority of New Yorkers would shop at a Wal-Mart if one were located nearby.

Wal-Mart’s supporters point out that lower prices can benefit residents of an area. Bronx Senator Ruben Diaz, Sr. offered wholehearted support of Wal-Mart’s intention to place a store in Manhattan, noting that it would benefit lower-income residents of both boroughs by making a wide array of products available at lower prices. Wal-Mart itself responded to Stringer’s report by pointing out flaws in the Loyola study and noting that Manhattan already hosted “big box” retailers like Target and Costco.

The New York business attorneys at Samuel C. Berger, PC offer fixed-fee legal services to businesses and investors who want to do business in New York and northern New Jersey. To speak to a member of our skilled legal team, contact us today online or at (212) 380-8117.

Web Resources:

Food for Thought: A Case Study of Wal-Mart’s Impact on Harlem’s Healthy Food Retail Landscape (PDF), Office of the Manhattan Borough President, November 2011
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Photo credit: 01 Jimmy Dean Sausages at Wal-Mart by jasonlam, on Flickr.