The rapid expansion of discount stores such as Kmart, Target and Wal-Mart, along with their sector specific counterparts like Home Depot, Office Max and Toys "R" Us, has dramatically altered the structure of retail markets across the nation. Anecdotal evidence suggests that the expansion of these stores has forced some local retailers to close and many others to change their ways of doing business. Other evidence suggests that some local merchants benefit greatly from the increased customer traffic generated by these stores. However, few academic studies have examined the impact of mass merchandisers on retail markets. What previous research does exist provides mixed results.

This research documented and analyzed changes in retail market structure resulting from the growth of mass merchandising in Maine. It quantified, for the first time, a net redistribution effect of sales from existing business to Wal-Mart in host towns. Regional variation in the impact of Wal-Mart was explored and assessed in light of economic base characteristics. Secondly, this research surveyed retail merchants in one Maine host town to assess changes in the retail market before and after the arrival of Wal-Mart and to collect data on local merchants' perceptions of Wal-Mart's impact on their businesses and the community.

The findings of this research reveal that significant changes in retail market structure have occurred since the opening of Wal-Mart in nineteen towns across Maine. On average, Wal-Mart host towns in Maine experienced greatly increased rates of growth in their general merchandise sector after the mass merchandiser opened, but further analysis revealed that Wal-Mart captured $7.8 million in existing and new general merchandise spending in the host town during the first year of operation.

Overall consumer sales and trade area size grew faster in the average Maine Wal-Mart host town than in the average Maine town without a Wal-Mart. About half of the host towns experienced a net gain in consumer sales after the mass merchandiser opened in town while the other half of host towns experienced a net loss in consumer sales.

The impact of Wal-Mart on retail sales varied across host towns in Maine. This may be due to differences in economic base characteristics across towns, or may be the result of other events not observed in this research. This study found that town population, access to an interstate, population density within seventy-miles of the host town and manufacturing employment were all moderately correlated with the estimated net redistribution effect for consumer sales.

The results of the case study provided a more in-depth understanding of the effect of Wal-Mart on existing retailers in one Maine host town. The impact of Wal-Mart on the small, rural community of Lincoln, Maine was viewed both positively and negatively. While some merchants reported a boost to sales and employment resulting from Wal-Mart's presence, others attributed sales declines to the mass merchandiser. Many merchants made changes in their business in response to Wal-Mart; in particular, changes in product mix, pricing, and building improvements were reported.