Big Box Protests Can Be a Big Deal
Community activists have a lot of potential influence on whether large retailers enter a local market.
We may live in an era of the superstore, but ordinary people have a fair amount of leverage over whether and how bigbox retailers expand into new territory.
As it turns out, superstore chains such as Wal-Mart Stores Inc. and Target Corp. pay close attention to community reaction after they file a proposal to open a store in a specific location. And the presence or absence of protest activity can affect whether a company decides to open a new store. “When you have activists who pursue causes, entry into a market becomes a political project, not simply a seamless process of expansion,” says Hayagreeva Rao, professor of organizational behavior and human resources at Stanford Graduate School of Business. “In some cases, activists check and constrain what corporations can do.” Rao and his fellow researchers studied Walmart store-opening efforts from 1998 to 2005. Over that period, anti-Walmart protests arose on 563 occasions, and in two-thirds of those cases, Walmart opted not to go through with its plan to open a store at a proposed site.
The researchers examined the rhetoric used by protest groups, as well as the social origin of those groups. They found that the type of protest group—and not other factors, such as the frequency or scale of protests—generally had the largest impact on whether Walmart decided to proceed with a store opening. Walmart, for example, responded very differently to protests organized by national trade unions compared to similar actions led by community activists. Rao and his colleagues suggest that, from Walmart’s perspective, a union-organized protest merely expresses the view of a vocal minority and does not reflect local sentiment.
For would-be protesters, the implications of this research are clear. “You don’t have to be a resource-heavy group of professionals to have an impact through activism,” says Brayden King, an associate professor of management and organizations at the Kellogg School of Management at Northwestern University. King, whose own research deals with how social movements affect corporate behavior, adds, “You can be a mom-and-pop backyard movement and still influence what large businesses do.”
Protesters affect big-box retailers in other ways, too. When a first entrant to an area (such as Walmart) encounters resistance to a planned opening, a “second entrant” (such as Target) will use information from that encounter to shape its own approach to opening a store in the same area. Rao and his co-authors use the term “information spillover” to describe this phenomenon. The spillover process, the researchers discovered, strongly affects the way that Target makes store-opening decisions. That company’s leaders pay close attention to the dynamics of anti-Walmart protest: If it’s a union-led effort, then Target is apt to disregard it. If local activists are leading the protest, Target might conclude that people in the community are averse to big-box stores in general, and that information will make the company less likely to open a store in that community. But the likelihood that Target will open a store there goes up if community members appear to be protesting Walmart specifically.
“Target can then go in as the un-Walmart,” Rao says. As a second entrant, he explains, it’s able to play “a chicer, more socially responsive role.”
Lori Qingyuan Yue, Hayagreeva Rao, and Paul Ingram, “Information Spillovers from Protests Against Corporations: A Tale of Walmart and Target,” Administrative Science Quarterly, 58, December 2013.