Walmart closures: Small businesses, not big box stores, are better bet in struggling neighborhoods

Business experts designed a project that helped hundreds of small Mexico City businesses thrive. A similar effort to help mom-and-pop businesses in Chicago’s low-income Black and Latino neighborhoods might well have the same impact.

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The Chatham Supercenter, the Walmart Health center, and the Walmart Academy, located at 84th Street and South Stewart Avenue in the Chatham neighborhood, is one of 4 Walmart locations closing by April 16.

The Chatham Supercenter, the Walmart Health center, and the Walmart Academy, located at 84th Street and South Stewart Avenue in the Chatham neighborhood, is one of 4 Walmart locations closing by April 16.

Tyler Pasciak LaRiviere/Sun-Time

Just before the reopening of several Walmart stores that were damaged in the unrest following George Floyd’s murder in 2020, President and CEO Doug McMillon vowed “Walmart’s commitment to Chicago remains strong. We are not going anywhere.”

That promise was broken last week when the retailer, saying Walmart’s Chicago stores have been unprofitable since the mega-retailer fought to get its foothold in town, announced the unexpected, virtually immediate closure of four stores in Chatham, Kenwood, Little Village and Lake View.

When shopping options close, people in wealthier neighborhoods can weather the storm. But shutdowns in lower-income Black and Latino neighborhoods sting, as shown before by the exodus of other grocery stores in food, pharmacy and job deserts on the South and West sides. Residents are rightfully upset, and they showed up to protest the Chatham Walmart closure on Thursday and the Little Village closure on Friday.

Editorial

Editorial

Those neighborhoods would have been better off today with locally-owned, independent, smaller businesses that really are in it for the long haul yet are at high risk of being driven out of a market by big-box stores with clout.

Not long after Whole Foods announced last year that it would close its store in Englewood, the City Council OK’d a plan to give millions in subsidies to the Ohio-based firm Yellow Banana to re-open shuttered Sav A Lot grocery stores in Black neighborhoods. Chatham, Kenwood and Little Village could perhaps use a similar plan here. And the city as a whole could use some fresh ideas on how to help mom-and-pop neighborhood businesses thrive where they’re needed most.

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For that, consider the impact of a joint project among Stanford University, the University of Texas, Penn State and the World Bank in 2017-2018 that aimed to help hundreds of small businesses in Mexico City called “tienditas,” neighborhood stores that are a major part of that city’s retail economy.

Like mom-and-pop businesses elsewhere, tienditas faced stiff competition from big-box stores and e-commerce. But intensive help with marketing and management made a huge difference. The businesses that got help increased their sales from 15% to 19% compared to a control group that didn’t receive assistance.

What’s relevant here is that, according to the researchers, at least some of the findings and practices could benefit smaller businesses in more developed economies like the U.S.

Chicago is a city of neighborhoods. If we want our neighborhood small businesses to thrive, intensive help from experts here is worth a shot.

A heads-up, or not?

When stores are in danger of closing because of poor sales and lack of profit, communities with the fewest options deserve an advance heads up. Walmart says its continuous attempts to remedy the challenges, with the help of the city and community, were unsuccessful.

Ever since the first Walmart opened in Chicago nearly 20 years ago, the stores have been losing “tens of millions of dollars a year, and their annual losses nearly doubled in just the last five years,” the company said in a statement.

But there’s a disconnect here that helps make the case for shoring up local businesses that have a more vested interest in serving our city.

Nedra Sims Fears, executive director of the Greater Chatham Initiative, said she isn’t sure who Walmart spoke to in her neighborhood — but neither she nor her friends or acquaintances were contacted.

“I don’t know of anyone who knew of anything,” she told us.

Many shoppers at the Chatham Walmart were also unaware of the potential for store closings until being alerted by reporters on Tuesday.

“It’s like they didn’t even give a thought to the people in these communities,” 38-year-old Regina Dickey told the Sun-Times when visiting the Walmart Health center, part of the Chatham supercenter.

Pledging $100 million to address systemic racism, as McMillon did in 2021, is noble. But food, pharmacy and job deserts are a big part of systemic inequity. Walmart is uniquely positioned to attack the problem by providing access to food, medicine and jobs in neighborhoods that sorely need all three.

That pledge is surely ringing hollow with folks in Chatham, Kenwood and Little Village right now.

Meanwhile, the remaining four Chicago Walmarts — in Belmont Cragin, Austin, Pullman and Gresham — are still open but continue to face the same “business difficulties,” the company said in its statement.

We can only hope they don’t suffer the same fate.

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