Lessons From the WalMart Wars

Chief Executive has a feature article about why CEOs should not support programs for businesses that can't compete.

Here's the key lesson. Do not support national or state regulation of real estate markets because these regulations will send businesses packing, taking their customers in tow. For example, after Wal-Mart was spurned in Chicago, it set up shop in nearby suburban Evergreen Park, got 25,000 applications for 325 jobs, and paid $1 million in local property taxes. And its low prices draw lots of Chicago shoppers. Repeated studies have shown that Wal-Mart cuts retail prices by somewhere between 7 and 13 percent whenever it enters a new market.

The New England Consulting Group puts the consumers' savings at about $100 billion per year, or more than one-third of Wal-Mart's gross receipts. The city of Chicago may have kept Wal-Mart out, but it also lost new retail jobs, tax revenues, lower prices and consumer dollars from its own citizens.

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