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Retail Report

Retail development is a significant component of a community’s economic development strategy. Without question, healthy retail districts generate property tax revenue, draw people to a community, and paint a picture of economic vitality. New retail development may provide competition for existing retailers, but it may also attract more shoppers to an area, thereby providing support for neighboring businesses.

Yet, many economists would argue that retail has very limited economic development potential. Retail is a nonbasic industry, which means that it primarily serves the local population. [1] It does not bring new money into a region by exporting products or attracting outside dollars. In addition, most economists will argue that economic development can only occur at a regional level because economies function on a regional level, not a municipal level.[2] Shifting spending from one community to another only redistributes wealth within a region; it does not generate wealth for the region as a whole.

Despite this, retail development is not likely to lose its place among local economic development strategies. A mismatch of economic versus political geography leads local leaders to pursue investment for their jurisdictions.[3] Political leaders must consider how their decisions impact their constituents, and therefore, may give less weight to how they affect the region as a whole. Barnes and Ledebur write, “Local governments pursue economic development strategies for their jurisdictions that reflect the assumption that they are coherent economies with economically meaningful borders.”[4] The microscopic view of each locale has effects on the region as a whole. To a local political leader, shifting spending to their community is economic development, even when that spending is drawn from within the region. Local leaders operate in a highly competitive environment where the ability to attract new investment is an important measure of their individual success and important to the economic health of their community.

This report discusses the relationship between retail development and sustainable economic development and then examines the economic impact of retail development. Specifically, it addresses the way in which location decisions affect economic impact, the impact created in terms of employment and wages, and the impact of big box retail on local retail.

[1] Emil E. Malizia and Edward J. Feser. (1990). Understanding Local Economic Development, Rutgers , NJ : State University of New Jersey, p.52.

[2] William R. Barnes Larry C. Ledebur. (1998). The New Regional Economies: The U.S. Common Market and the Global Economies. Thousand Oaks , CA : SAGE Publications, Inc., 1998, p.40.

[3] Ibid., p.67.

[4] Ibid, p.75.



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Built Environment Municipal Finance Economic Development Transportation Riparian Systems Mailing Address Cleveland State University Maxine Goodman College of Urban Affairs 2121 Euclid Avenue Building, UR 335 Cleveland, OH 44115-2214 Campus Location Urban Building, Room 335 1717 Euclid Avenue Cleveland, Ohio 44115-2214 Phone: 216.387.2135 wendy@urban.csuohio.edu Web Content Contact ustweb@csuohio.edu		Retail Report Economic Development (0.16 mb) Retail development is a significant component of a community’s economic development strategy. Without question, healthy retail districts generate property tax revenue, draw people to a community, and paint a picture of economic vitality. New retail development may provide competition for existing retailers, but it may also attract more shoppers to an area, thereby providing support for neighboring businesses. Yet, many economists would argue that retail has very limited economic development potential. Retail is a nonbasic industry, which means that it primarily serves the local population. [1] It does not bring new money into a region by exporting products or attracting outside dollars. In addition, most economists will argue that economic development can only occur at a regional level because economies function on a regional level, not a municipal level.[2] Shifting spending from one community to another only redistributes wealth within a region; it does not generate wealth for the region as a whole. Despite this, retail development is not likely to lose its place among local economic development strategies. A mismatch of economic versus political geography leads local leaders to pursue investment for their jurisdictions.[3] Political leaders must consider how their decisions impact their constituents, and therefore, may give less weight to how they affect the region as a whole. Barnes and Ledebur write, “Local governments pursue economic development strategies for their jurisdictions that reflect the assumption that they are coherent economies with economically meaningful borders.”[4] The microscopic view of each locale has effects on the region as a whole. To a local political leader, shifting spending to their community is economic development, even when that spending is drawn from within the region. Local leaders operate in a highly competitive environment where the ability to attract new investment is an important measure of their individual success and important to the economic health of their community. This report discusses the relationship between retail development and sustainable economic development and then examines the economic impact of retail development. Specifically, it addresses the way in which location decisions affect economic impact, the impact created in terms of employment and wages, and the impact of big box retail on local retail. [1] Emil E. Malizia and Edward J. Feser. (1990). Understanding Local Economic Development, Rutgers , NJ : State University of New Jersey, p.52. [2] William R. Barnes Larry C. Ledebur. (1998). The New Regional Economies: The U.S. Common Market and the Global Economies. Thousand Oaks , CA : SAGE Publications, Inc., 1998, p.40. [3] Ibid., p.67. [4] Ibid, p.75.
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