Impact of WalMart on Michigan Downtowns

In the past few years, the downtowns of cities across Michigan have been impacted by the opening of new WalMart discount stores. These all-inclusive discount stores have found relatively easy market opportunities near smaller cities, where they specifically targeted the first new stores. Using a "down-home" retailing approach, WalMart has appealed primarily to lower and middle-class households (40 percent of its customers have household incomes of $20,000 or less1). With this market strategy, WalMart has been so successful it has become the nation's leading retailer in just a few years. In 1994, it outdistanced KMart in sales volume with fewer stores--KMart, with just over 3,800 stores, had a total sales volume of $34 billion, while WalMart's 2,500 stores had an annual volume of $83 billion.2

The advantages for WalMart of small town locations have been numerous--there has been virtually no competition from small local retailers; municipalities have had few regulations over land development and were generally very receptive to the increased tax base created by a large retailer; and access from surrounding communities has been relatively convenient via the interstate highway system, which now criss-crosses much of the rural countryside.

History of WalMart in Michigan

Initially located in larger urban areas, discount department stores recently have found relatively easy market opportunities in smaller urban areas. The discount chain that has taken most advantage of the more rural market is WalMart, whose founder, Sam Walton, specifically targeted small cities for his store locations. WalMart has been able to locate its stores in cities with populations of 20,000 or less and thrive. In fact, these locations often have become retail battlegrounds for discounters competing for this new and largely untapped market. Maps indicating the locations of large discount department stores in Michigan show that in 1987 there were no WalMart stores in the state.3 KMart and Meijers were the two largest discount retailers, and both companies targeted larger urban centers, such as Detroit and Grand Rapids, for their store locations.

WalMart Locations, 1990

Five years later, the first twelve WalMart stores were opened in Michigan. They were located in smaller cities, including Alma, Bad Axe, and Coldwater. These locations didn't have direct competition from Meijers and KMart, and WalMart could easily establish retail dominance in those regions.


WalMart Locations, 1992

By 1995, a total of 53 WalMart stores have been opened in the state. They now include a large number in the larger metropolitan areas, where they were able to compete head to head with Meijers and KMart. This is especially significant growth over such a short time span, especially because both Meijers and KMart have a distinct advantage with their national headquarters located in Michigan, (Meijers in Grand Rapids and KMart in Troy), while WalMart's headquarters are located in distant Bentonville, Arkansas.


WalMart Locations, 1995
1 John Gruidl and Steven Kline. "What Happens When a Large Discount Store Comes to Town?" Small Town. March-April 1992. pp. 20-23.
2 Source: 1995 Chain Store Directory.
3 Store locations taken from Directory of Discount Stores, published by Business Guides, Inc.; maps drawn by Norman Tyler.
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