Local newspapers suffer a double blow when giant chains like Home Depot or Wal-Mart come to town. Not only do these companies rarely advertise in local newspapers, but they usually force dozens of independent retailers to close, eliminating significant sources of newspaper ad revenue.
In a recent article in Editor & Publisher, Mark Fitzgerald describes the deadly impact that the rise of corporate chains and decline of locally owned businesses has had on local newspapers.
In Kirksville, a town of 17,500 in northern Missouri, the arrival of a Wal-Mart supercenter a few years ago put four clothing stores, four grocery stores, a stationery store, a fabric store, and a lawn-and-garden center out of business. The Kirksville Daily Express has struggled ever since.
Wal-Mart generally relies on direct mail and national television ads. Only occasionally does the company run newspaper ads or inserts. Wal-Mart’s first generation of stores were bad enough for local newspapers, but its new supercenters are proving to be especially damaging. Supercenters are about twice the size of the earlier Wal-Mart stores and include a full-service supermarket. Wal-Mart’s entry into the grocery business in the mid-1990s caused a wave of mergers among existing supermarket chains and forced many chain outlets as well as independents to close.
Newspapers rely heavily on revenue derived from supermarket inserts. "These are $20,000 to $60,000 accounts," notes Scott Champion, executive vice president of Liberty Group Publishing, which owns several small town newspapers. "How do you make that up? It’s impossible."
Newspaper ad revenue from grocery stores fell 10 percent between 1995 and 2000, according to the trade magazine Presstime. The decline is expected to continue as Wal-Mart rolls out more supercenters and the sector further consolidates.
Consolidation in other sectors is also taking a toll. Home Depot usually heralds the death of eight or nine small-but-reliable accounts, John W. Kelly, advertising director of The News Tribune in Tacoma, Washington told Presstime. Home Depot does buy some advertising, he says, but those dollars "don’t offset what you lose" when lumberyards and hardware stores close.