Big chains vs. Small Local businesses

If big chains keep on moving into little towns and neighborhoods, there won't be any more variety of stores. Imagine walking down the main strip in your neighborhood, and all you see is KFC in place of Golden Fried Chicken, and Home Depot instead of Jay's Hardware. There aren't any more Brooklyn's Finest only Dominoes, and no variety on any street because these big monster chains are taking over. Little do most know, that every dollar spent at Wal-Mart on film processing is taking away from the little photo hut across the street, which slowly taking away jobs and options of where we can shop for photo processing. Should we let these monsters take over the town? Are better prices, better than variety? One would find pros and cons in both independent shops, and big chains. One would think that its good to have both independent businesses and big chains, or is one truly better then another?

For the purposes of this, I'm focusing on stores and shops like pizza shops, or cloths stores. Although there are many more types of businesses out there, like lawyer offices, banks publishing companies, and such.

"Conventional government notions suggest that a small company is any firm with one-hundred or fewer employees." (Heath, pg.10) That definition is much too broad. "In 1991, according to Reid Gearhart, a Dun & Bradstreet analyst, 85 to 90 percent of all businesses in the United States had fewer then twenty employees." According to Unemployment Insurance data, in 1991 there were 5.8 million businesses with employees in the United States. Only 7000 of these were larger than 500 employees.

The Self-Employment Learning Project (SELP) has different definitions for tracking down small businesses. "The term self-employment refers to the working status of a business owner who works for himself or herself for more than ten hours per week. A self-employed person may own and operate a microenterprise of very few employees. Although these two terms are used interchangeably, self-employment refers to the working status of the business owner while microenterprise refers to a very small business." (Heath, pg.11) Other terms are about the "age and growth" of a business. "Emerging business denotes a young but strong company adding jobs, usually in excess of five employees." (Heath, pg.11) "Bankable small business generally recognizes a firm with at least a three-year track record, depending on cash flow and reasonable access to traditional financing." (Heath, pg.11) With these terms, researchers can more easily create data about how different kinds of businesses will do in the future.

Technically, a big business is a business with one hundred employees or more. But for this argument, when I say "big business" I'm talking more about big chain stores like Wal-Mart, Home Depot, McDonalds and such. There are many local big businesses such as supermarkets and drug stores like Price Chopper and CVS, that are just in an area such as the Capital Region, or even a place that is only in New York state, but they are still a chain, just a local one. Yes, many of them do take money away from little grocery shops and corner stores. But all the money still stays in the community, so I don't qualify them when I say big business. Also, since these stores have more money then the other local stores, they give a lot of money to local things such as plays, concerts and various local charities. The same time people get a big selection, and good prices of the stuff being sold at these stores. So in a way they have the good part of a local store, and the good of a large chain. But one can't hide the fact that they do take money away from the very small local grocery stores and drug stores and such, so they aren't perfect, it's just the way the world works.

It takes lots of work to open up a business for most people. There are two types of people who open up there own businesses. There are Entrepreneur's, and there are propreneur's. Entrepreneurs are the more common business owners. They open a business for a profit. This is not to say they don't like what they are opening, but whatever they are opening is more for a profit then a hobby they decided to turn into a business. A propreneur is someone who opens up a business because he or she generally likes the work. A propreneur isn't opening up the business because he thinks he'll make a good profit, it's because they like whatever the work might be. That's not to say they don't care about a profit. It just means that if a propreneur is a good hair cutter and at the same time he's a good pizza maker, and that he has the option of opening up a barbershop or a pizza parlor. He's going to go with his passion even if other options pay more money. A propreneur could also open up a business because he or she thinks it's a good cause. Let's say there are gang problems in a certain neighborhood, and someone thinks it's a good idea to get as many kids out of trouble as possible, so they wont be exposed to or join in the violence. So they get grants from the government to open up a rec. center. Or if someone likes kids a lot they might open up an arcade or a candy store.

Everyone starts a business differently, depending on how much money they start out with. But most people have to take some kind of loan or another. Remember that all businesses start small, and take out a loan of some kind. There are a few types of ways businesses get money to open up.

There are grants; grants are funds given to you. Most of the time grants are given to nonprofit organizations, but on some occasions they are given to self-employed individuals and small businesses. Grants fund lots of programs such as education, agricultural, different things in the performing arts and such.

Loans are the most common way businesses that are just starting get their money to start. A loan is money being given to you that you must pay back under certain terms and conditions that are stated in the loan agreement. Most of the time if you fail to pay back your loan they take something of yours away that was stated in the loan agreement. Almost in all loans you have to pay back the money little by little, but it ends up being a certain percent of money over how much the loan was, so you would pay back the loan, plus seven percent for instance. Not all loans are done with a bank, but unless you have a very wealthy friend your going to need a good relationship with a bank. An average sized loan is about $100,000 and up. Most small borrowers however, don't need and can't qualify for those loans, but most banks have deals for small businesses that are just starting up.

"Many municipalities and states offer tax credits to business that are willing to locate in specified areas" (Heath, pg.25) such as communities the government is trying to bring businesses to because they are trying to fix it up, or an area they are trying to bring jobs to. "Tax credits lowers the amount of tax you must pay based on job training, provided and/or the number of jobs you create in that geographical location." (Heath, pg.25) Not all credits are done with the government though; some can be done with other businesses. This can get products or help from other businesses in exchange for your goods and services.

Investments are when other people or businesses invest in your business because they believe your idea or product will be extremely successful. If your business does do well and they helped out by investing they anticipate a solid return on their money through your businesses profitability.

The way businesses expand is they get franchises. Franchises are when people by the rights to a store and put it somewhere. People get lots of money by owning franchises because the company does all of the advertising for you. All you have to do is pay for the rights to the franchise and a yearly percent of what you get from owning your franchise. Franchising is a whole big business people get into. Buying franchises, selling them, expanding them, there is a lot of money to be made in franchises. If you buy a McDonalds franchise you get their advertising and their good name. Most franchisers have specific pre-determined goals and most of them do it for money and they are all trying to outdo each other.

Now that you have a little background on what a big or local business is, it is time to compare the two. After all of this one might ask what the benefit of doing business locally is instead to doing your business at Wal- Mart.

Think of a city, any city. Now think of your favorite commercial street in a neighborhood in that city. I'm guessing that the street you picked has lots of little shops and restaurants in it, which makes it very unique. There most likely isn't a McDonalds; there most likely isn't a Wal-Mart neither.

It is good to have lots of little shops in areas. It adds a lot of variety. Big chains have their place, but it is defiantly good to have a choice between Taco Pronto, Bombers Borito Bar, and eleven other Mexican restaurants, instead of only having a choice between Gracias and Taco Bell.

These are places like Lark Street in Albany. The Lark Street neighborhood used to be a "slum". People started opening up businesses all over the street and it started turning around. To this day the Lark Street neighborhood is a very desirable place because of its diversity in all the shops. People who opened the businesses in the Lark Street neighborhood turned it completely around. Lark Street has been compared to Boston's Beacon Hill and Washington's Georgetown. They put more money into the neighborhood, and they brought people to the neighborhood. Lots of the buildings were abandoned before the neighborhood got better, and it is a destination for people just having a fun time. People come from different neighborhoods in Albany or even different towns in the Albany area to just have a fun day on the town.

One could argue that small local stores make up a community, or at least help. You most likely know someone who owns some kind of shop or another, because most of the people who own these shops, are your neighbors. The small local shops have personality, and they serve the community. Since they are part of the community, they are more likely to give back to the community. "Local owners typically having invested much of their life in their business, have a general interest in the long-term health of the community. Yes there are some corporate chains that give back to towns in which they do business, and not all local businesses are models to follow. However, the overall impact is clear: local businesses play a vital role in our community that corporate chains rarely do, while chains often even undermine community interests." (

If a girl is selling candy bars door to door in order to raise money for her class trip and she comes to a little book house then a Barns and Nobles. The little girl has a better chance getting a donation from the little book house then Barnes and Noble because, the little book house will probably have more of a genuine interest in the cause than Barns and Nobles. Even if they don't have any care in the girls school, they don't want to look like they don't care, and since they don't have a big name to hide behind such as Barns and Nobles does, they will probably donate so they wont look bad.

Also since local businesses don't have a big name, and the same advertising advantages as big places do, they are always fighting over you. They don't want to lose a customer, in most cases every customer is valuable. If you are trying out clothes in some local clothing shop, one will find that in most cases the customer service is much better then in a big store like J.C. Penny's. Also, they can do things for you that big places can not do. If you're nice to them or you know someone working at some local shop. They can do something for you: like give you a free cup of coffee, or free toppings on your slice of pizza. Most people know someone who owns a little store, people go to little pizza shops, and coffee shops just to talk with their friends or find out what's new with the neighborhood. To many kids little dinners, pizza shops and such are the local hangout.

Small businesses generally employ a wide array of supporting services. "They hire architects, designers, cabinet shops, sign makers and contractors for construction. Opportunities grow for local accountants, insurance brokers, computer consultants, attorneys, advertising agencies and others to help run it. Local retailers and distributors also carry a higher percentage of locally made goods than the chains, creating more jobs for local producers." (

As for most of the big chains. They just put in place "a clone of other units" getting rid of the need for local planning, and use as little as possible of local goods and services.

However, local businesses do have a down side for the "consumer". For one they can't offer the same types of deals the big corporations can. They just do not have enough money to compete with the big franchise chains for the most part. So if one dos not care a lot about where their money goes, big chains are a great thing for consumers. Also, if a town needs an electronics store, you can't count on someone opening up an electronics store. But you can count on Best Buy, or Radio Shack coming into your town.

Now big chains are not bad, they have many appealing things about them. As we all know the way chains expand is franchises. So it isn't fare to say they don't give any money to the community, it's just instead of all the profits going into the community, there is a percent of the profit that the franchiser has to pay to the store for letting him/her franchise the store. So if there is a Taco Bell across the street from a Leo's Mexican, which is going to bring more money to the community? One would think it would be Leo's Mexican because all the profits stay in the town. However, if Taco Bell is making a significantly larger profit then Leo's Mexican, the money that is not being sent to Taco Bell's main head quarters is a bigger amount then all of the money that Leo's Mexican is bringing into the community. So it might be better for the area to have Taco Bell instead of Leo's Mexican in this scenario. But all this is not considering the overall effect of Taco Bell being there in place of Leo's Mexican. Leo's Mexican employs local insurance brokers, attorneys, and advertising agencies, Where Taco Bell most likely just uses what ever the main head quarters uses.

Another thing is how many jobs these huge chains create. Some have created hundreds of thousands of jobs around the world. Wal-Mart alone has over one million employees. If one is having trouble finding a job, I can almost guarantee that that person will be able to find a job at some chain or another. It might not be the most enjoyable job in the world, or a high paying one, but it is a job non-the less. There will always be a job at one of these places because there is always more and more need for them.

For the consumer these chain stores are great because of the prices. The big places can afford to put down prices to compete with the competition. If they see that there is a ten-percent decreases at Home Depot and a ten- percent increase at Jay's Hardware across the street. Home Depot needs to get those customers back. So they find out what is selling so well over there, let us say that it is wrenches and gravel. They find out how much money Jay's hardware is selling it for, and make the prices on Home Depot's wrenches and gravel go down to half of what Jay's hardware was selling them for. One of the reasons they can afford to put down their prices so far besides the obvious fact that they are much larger than the other stores, is the fact that they get stuff for cheaper then a regular store. Most stores can not buy lots and lots of one thing because they do not have the money to do it, and they do not have the need. So Jay's Hardware might buy one hundred wrenches for ten dollars a piece, where Home Depot, since they need so many wrenches can buy one thousand wrenches for eight dollars a piece. This is because they get special deals when they buy a certain amount of their products.

All over the country in little towns and city's, there are people who do not want big chains like Wal-Mart and such moving into their town. Many towns rejected Wal-Mart when they wanted to come into their towns, the same thing happened with McDonalds among other huge national chains. There must be some reason why these towns rejected these stores coming into their communities.

The first reason that comes into most people's minds is the fact that because of these store's discounts, people want to shop at them in place of the local store. Therefor, pushing some of the local stores out of business because they can't compete with the prices.

This all leads to a large number of people losing jobs. One could argue that they create so many jobs that it makes up for the jobs it takes away. But most of the jobs they create are ether part-time jobs or lower-wage jobs. Family businesses that have been around for generations can go bankrupt after only a year of when a large chain that sells the same product moves across the street.

Fast food restaurants do very well because they are cheap, you know what you are getting when you go, and they are everywhere. These places are not the healthiest places to eat. McDonalds burgers are filled with cholesterol. It seems like less and less people are eating at these chains. Major pizza chains Dominoes, Pizza Hut, and Papa Johns sales all went down one percent since 2000, while independent pizza shop sales all went up four percent. This is even after Dominoes and Pizza Hut noticed the sales difference. They started trying new things like selling calzones, and put down the prices on pies. Why? The food is not as good quality as the local places.

A big reason why people do not like these chains is a reason that has been brought up a few times already. Towns and neighborhoods across the country are being taken over by these big chains. Go to a hand full of towns, and you will most likely notice that more than half of them have more chain stores then independent businesses, and they probably were not like that always. Throughout the last ten years or so there has been a huge increase in large businesses moving into towns all around the country. In Michigan, in 1990 they had one Wal-Mart, in 1995 they had fifty-four Wal-Marts in Michigan. That is a huge increase. They are not the only chain store that has increased in the last ten or so years. In fact these kinds of stores have been taking over since the sixties. But there has been another big growth spurt for these chains. One who cares about their town would most likely want there down towns to get original like Lark Street as I was mentioning before.

Wal-Mart is one of the newer chains, but they have taken the country by storm. They are the top sellers in the country for groceries, jewelry, and photo processing. And now the largest employer in the nation (with about 1.3 million workers and around three thousand stores). "It employs one of every 123 U.S. workers." (Hopkins, pg.2) As I said before, in just five years Michigan went from only having one Wal-Mart to having fifty-four, and they are not the only state that has had Wal-Mart come in and completely take over.

Many towns are convinced that they should let Wal-Mart come into their towns. Because of the promise of more jobs (most of which are part time or lower-wage jobs), that the town and school district will gain revenue, and that consumers will have lower prices and more choices. They do consider the local businesses that would be effected by them moving in, but they think it will just even its self out because Wal-Mart makes so many jobs that one wouldn't even need the jobs that were lost in the stores that close. In fact according to an extensive study of new Wal-Marts by Iowa State University professor Ken Stone, eighty-four percent of Wal-Mart's sales are simply shifted dollars away from existing local (including chain) merchants. They say that local merchandizes can expect losses between ten percent and thirty-three percent. Other stores would loss around two to four percent of sales which does not seem like a lot but four percent is a lot for these small struggling businesses. We are taking about their margin for existing. That's what makes the towns think it might be a good decision to bring in Wal-Mart into the town.

Another issue is that they do not put enough thought into is how tourism might be effected when this big monster comes into town. People come to places because of their uniqueness. They come to see the little cool streets such as Lark Street. If it is a town filled with beautiful scenery such as waterfalls and trees, they don't want to see that surrounding a Wal- Mart.

When the town thinks about the good prices Wal-Mart brings to the community, they do not put much thought into the fact that Wal-Mart is typically not a fair enterprise. They cut prices long enough to cut the competition, then raise them. This is not to say that they don't offer fair prices, but nevertheless, they still work this way.

While Wal-Mart is not more evil than most corporations, they are big enough to have power over many lives. So when they are bad, they are very bad. They sell goods made by Asian children (NBC Dateline, 12/92), and they prohibit dating between employees (NYT 7/14/93). Although the USA's wealthiest retail employer, they oppose health care reform (Atlanta Const. 11/1/93). They have been targeted by AIDS activists (Publisher's Weekly 6/29/92), and by unions (National picket by UF&CW: NYT 5/3/93). They had to be forced by a federal court to declare themselves as an equal employment opportunity and affirmative action employer (NYT 4/20/93). A federal jury in Portland, Oregon found Wal-Mart guilty of making employees work overtime without pay from 1994-1999. That was just the first of nearly forty lawsuits across the country.

While Wal-Mart is not the same as all the other chain giants, one could easily relate these facts with other big chain giants. Now in order to really see how big giants effect small businesses one would have to ask them. I asked six different people at six different places different questions about their relationships with big businesses, from Mexican places to clothing shops. Here is what they thought.

Elissa Halloran Designs, Lark Street Books, Daily grind, Bombers Burrito Bar, The Downtube, and Webs of Threads Boutique were asked different questions. When asked if they shop or eat at chains, they ether said they try not to, they rarely do, or they have to. Most of the people said they don't like big places like Wal-Mart and McDonalds, because they are killing small businesses. Some said they are cool with them because they have to exist. Some said "Not yet, but if one were to open up across the street they defiantly would loss some business." Some said they have lost businesses because of the chains. Others said they don't really know, but they probably have. The restaurants said they don't do extra things to compete, but the other places all said they do extra things. The bookstore said they have readings, some advertise, one place said to compete they throw fashion shows. They all thought that local businesses add a lot to the community and that in a way they are the community. They said that local businesses add personality, good customer service, and they said they are good because they put money into the community and hire people from the community. They also give people a choice to shop in their neighborhood instead of only doing they're shopping at the malls and such. When asked why someone should shop/eat at their business instead of at a chain, they basically all said because the stuff is better there or they will have much better customer service.

After all this one might think that these chains are horrible and should not exist. While they do do bad things, I think the world would be the best with an even amount of both chains and small businesses. However big chains should be contained because they are ruining many small businesses, and killing little towns and neighborhoods across America. But if the world could only have one, small businesses would be the way to go because they keep personality in neighborhoods, and I can not imagine what it would be like to never see a new pizza shop. But it's impossible to only have one anyway because in order to have big businesses they need to start out as small ones, and if there were only small businesses, some would expand. Unless there were to be a law about expanding your business it is impossible to control every business from growing.

So while small businesses should be protected from existing, large chains are a reality in a capitalist system.