Cabela’s: A Case Study on the Failures of Big Boxes

The Atlantic Cities this morning published a lengthy and fairly damning piece on the failures of big box retailers Cabela’s and Bass Pro Shops. The piece comes from an investigation done by the Franklin Center for Government and Public Integrity, and basically seeks to temper the idea that big boxes are beneficial to local economies:

The stores are billed as job generators by both companies when they are fishing for development dollars. But the firms’ economic benefits are minimal and costs to taxpayers are great.

From there, the article’s thesis can basically be split down into two parts, each with various implications for Provo:

A) Big Box retailers receive millions upon millions of dollars in public funds.

B) These big box retailers are undeserving of those funds because they fail to live up to their claims about local economic benefits.

This obviously applies to Utah County because Lehi has a Cabela’s, which like other locations has been subsidized:

Stuffed animals have been purchased with millions of dollars in public funds to adorn numerous Cabela’s stores in communities ranging from Lehi, Utah, to Buda, Texas, to Hamburg, Pennsylvania.

But the piece also shows why big box retailers in general can be a losing bet. As it points out, big box retailers often claim to be destinations that will draw people from one community to the next. However in reality, the author points out, people won’t drive to a neighboring community when their own city is already filled with stores selling more or less the same thing.

Reading this piece, I immediately thought of Provo’s chances of getting a big box retailer like Target, Walmart, or Costco. Because the surrounding cities already have one or all of those retailers, a future potential big box would target a small consumer base and likely wouldn’t have much extra-municipal draw.

The piece also criticizes the claims that big box retailers benefit local economies.

“Retail is not economic development. People don’t suddenly have more money to spend on hip waders because a new Bass Pro or Cabela’s comes to town,” says Greg Leroy, executive director of Good Jobs First, a non-partisan economic development watchdog group based in Washington, D.C. “All that happens is that money spent at local mom and pop retailers shifts to these big box retailers. When government gives these big box stores tax dollars, they are effectively picking who the winners and losers are going to be.”

In other words, big box retailers drive local stores out of business and funnel away community money. Giving these retailers any form of financial help or subsidy means communities are actually choosing to do that.

As the piece points out, this process has happened in Lehi where a Cabela’s already exists. But Utah County communities are doing the same thing for other big box retailers. Less than a year ago, for example, Spanish Fork offered Costco a very sweet deal to come to town:

To bring Costco to town, Spanish Fork is offering the wholesale giant incentives totalling millions of dollars. The incentives include waiving all city-related building, impact and connection fees, giving the store sales tax rebates for the first 18 months, paying the store’s utilities for four years, and reimbursing the company $225,000 for the grading and fill work done by the city and paid for by Costco.

Those are exactly the sorts of subsidies that The Atlantic Cities article criticizes.

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1 Comment

Filed under buy local, economics

One response to “Cabela’s: A Case Study on the Failures of Big Boxes

  1. drew

    In a slightly different domain (private corporation procuring its principal from ostensibly volunteer donations) City Creek Mall offering Apple five years’ free rent seems to be another case of this peculiar phenomenon — in truth, wealth always seems to trickle *up*.

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