Wal-Mart Dances around Store Size Limit

Yesterday I wrote about Monroe, Wisconsin’s upcoming vote on the expansion of the state’s first Wal-Mart in the town to a new location. I’ve seen other communities and states try to thwart innovative companies like Wal-Mart. In the end, they all end up losing and are much worse off for the battle. Rather than mounting emotionally and financially costly campaigns against companies like Wal-Mart, they should be spending their time and effort on more productive, positive things for their towns.

Trying to pass laws to prevent expansion by certain businesses is usually counter productive. Virtually every time laws like this have passed, I’ve seen the “Law of Unintended Consequences” kick in. In happened in Vermont where the state passed laws to essentially ban Big Boxes. Wal-Mart built on both sides of the state, just over the state line, driving retail dollars and sales tax out of the state. Vermont saw the economic impact and quickly revoked their new laws. Other cities have tried to pass laws to keep companies like Wal-Mart out and, if successful, usually see the company build in the next city. Again, retail and sales taxes are sucked out of the original town.

Here is the latest example. Last August Dunkirk, MD, an upscale but older demographic town (population 2,363) thirty miles outside of Washington DC, passed an ordinance limiting the size of commercial retail buildings to 75,000 sf. Wal-Mart normally builds from 100,000 to 200,000 sf. Wal-Mart is proceeding with plans to build a 74,998 sf store next to a 22,689 sf garden center, also owned by the company. Both stores would have their own entrances, utilities, bathrooms and cash registers.

Kenneth E. Stone, professor emeritus of economics at Iowa State University, who has studied Wal-Mart for the past 30 years, said of the move in Dunkirk, “It almost points out the futility of municipalities developing ordinances and laws that restrict the size of stores. There’s always a way around them and an outfit as big and smart as Wal-Mart will think of a way.”