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Archive for Sunday, May 2, 2004

Wal-Mart’s strategies unwelcome in cities

Retailer uses campaign-style tactics to urge growth

May 2, 2004

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— Wal-Mart Stores Inc. has gotten more headlines lately for aggressive electioneering rather than discount retailing.

The company has championed a series of voter initiatives in hopes of overturning local ordinances that block its expansion. In the San Francisco Bay area county of Contra Costa, Wal-Mart spent more than a half-million dollars to gather enough signatures to put a county ban on big-box stores before voters. They ultimately defeated it.

A Wal-Mart lawsuit was enough to prompt officials in nearby Alameda County to repeal a similar ban. And, most notably, voters in the Los Angeles suburb of Inglewood earlier this month rejected a Wal-Mart ballot initiative that would have bypassed local government and allowed a Wal-Mart-anchored shopping center to be built.

Even with such defeats, Wal-Mart's more assertive tactics might become commonplace as the Bentonville, Ark.-based retailer moves to open or expand scores of stores nationwide during the next 10 months, particularly in metropolitan areas. That includes plans for up to 240 of its 200,000-square-foot Supercenters -- discount store-supermarket hybrids which many communities have sought to block.

"People support and want Wal-Mart Supercenters," Wal-Mart spokesman Peter Kanelos said. "We're going to do everything in our power to make certain that Wal-Mart customers are heard."

But Kanelos also said the company devised its strategy on a case-by-case basis, depending on the reaction it gets in a given locale.

Other big-box retailers such as Target and Costco typically do not run into the kind of opposition that Wal-Mart does, so they don't have to employ the same tactics, said Carl Steidtmann, chief economist for Deloitte Research in N.Y.

"They're basically dealing with planning commissions and the people in charge of land use, or they're dealing with developers," Steidtmann said. "They're not having to address what's really a political issue, which Wal-Mart, in some instances, does have to deal with."

Unwelcome mat put out

Wal-Mart's detractors contend the company's stores drive down wages and benefits, worsen traffic and sprawl and force neighborhood businesses under.

As its recent loss in Inglewood indicates, Wal-Mart's campaigns can be as unwelcome as its stores.

"I have not witnessed the kind of bullying that I saw in Inglewood by any other corporation or business that wanted to come in," said the Rev. Norman Johnson, executive director of the Southern Christian Leadership Conference in Los Angeles.

John W. Mack, president of the Los Angeles Urban League, said Wal-Mart asked him for his support in the Inglewood vote, but he opted not to get involved.

"I just didn't feel comfortable with the strategy in Inglewood of going the initiative route in a way that it would bypass the city government's policies," Mack said.

Opposition to Wal-Mart has been more pointed in recent months as the company has sought to expand into its last major arena, large U.S. cities such as Los Angeles and Chicago that also have established labor unions. The unions have put manpower and money behind efforts to keep Wal-Mart out.

Wal-Mart currently is trying to overcome opposition in Lawrence to build a new store at Sixth Street and Wakarusa Drive. City commissioners have denied the company's building plans, but the retailer is fighting the decision in Douglas County District Court.

A recent strike and lockout involving three national supermarket chains and 70,000 grocery workers in Southern California centered on threatened competition from Wal-Mart, which has lower labor costs than the union grocery stores.

Kanelos said there was periodic opposition to planned Wal-Marts, "but the vast majority of the opposition is coordinated by organized labor."

Aggressive approach

Wal-Mart has responded to opponents by aggressively selling itself to communities.

In Hood River, Ore., the company recruited employees to speak at city meetings and collected signatures of supporters even before any public hearings took place on its proposed store, said Stu Watson, one of the residents who fought against the retailer's expansion plans.

"They approached it as if there was a political fight to be won," Watson said.

The company has chosen ballot initiatives instead of enduring lengthy local planning debates that can kill or restrict its plans.

And it is spending in hopes of winning those votes. Since 2002, Wal-Mart spent more than $1.1 million in contributions to political action committees to promote its stores or combat ballot initiatives designed to block massive retail warehouses, according to state records.

In Calexico along the California-Mexico border, the company spent more than $340,000 to mobilize residents' support against a local ordinance to block big-box stores.

Wal-Mart also spends money in other ways. In Los Angeles, the company has donated $65,000 during the past two years to the Urban League, Mack said.

But the money doesn't guarantee victory. Wal-Mart lost the public opinion fight in Inglewood despite spending hundreds of thousands for a ballot initiative to bypass local government opposition.

By some estimates, the retailer spent more than $1 million in Inglewood when you add in television commercials and other ad spending. But voters, many worried that the company would drive out local merchants and offer only low-wage, low-benefit jobs, ultimately were not swayed.

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