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Joining the PAC: Wal-Mart Opens for Business In a Tough
Market:
Washington --- Famously Apolitical Retailer Plunges Into Lobbying
And Becomes Top Donor --- A Big Defeat On Banking
By Jeanne Cummings - The Wall Street Journal
[back to top]
March 24, 2004
WASHINGTON -- China's entry into the World Trade Organization was
essentially a done deal in the late 1990s when Wal-Mart Stores Inc.
executives discovered a problem: U.S. negotiators had agreed to a
30-store limit on foreign retailers operating in China, an
insufficient figure for the ambitious Arkansas retailer.
Worse, executives at Wal-Mart headquarters in Bentonville, Ark.,
realized they couldn't do anything about it because they didn't know
the right people in Washington. The company spent literally nothing
on lobbying. "We weren't there," says Wal-Mart Senior Vice President
Jay Allen, throwing up his hands.
The incident brought home a lesson that had been nagging at
Wal-Mart for years. After decades of explosive growth, the retailer
couldn't continue to expand its empire without abandoning founder
Sam Walton's policy of shunning politics. So, in 1998, the retailer
hired its first lobbyist -- a retired Air Force lieutenant general
-- and set out to transform itself from a company without a
Washington presence to one that could bend public policy to suit its
business needs.
As it tried to flex its political muscles, Wal-Mart got a painful
education in the ways of Washington. It has endured setbacks, most
recently at the hands of community bankers who dashed Wal-Mart's
plans to expand into lending. Still, the retailer is beginning to
notch significant wins on global-trade issues and shows signs it may
emerge as a political powerhouse. Since the WTO deal was struck,
Wal-Mart has negotiated with Chinese government officials to
increase its store count there to 35, with plans for more. It is
also building up a state and local government lobbying shop in the
U.S. assigned to clear any roadblocks to new domestic store
openings.
In Washington, Wal-Mart has five lobbyists on its payroll, and a
bench of hired guns led by Thomas Hale Boggs Jr., one of Capitol
Hill's best-known lawyer-lobbyists. The company's political action
committee was the biggest corporate donor to federal parties and
candidates in 2003, with more than $1 million in contributions -- up
from $182,000 during the 1997-98 election cycle, according to
Federal Election Commission disclosure reports. Wal-Mart's PAC ranks
as the second-largest in Washington, according to the Center for
Responsive Politics, a nonpartisan organization that tracks
political giving.
"It's hard to go to a fund-raiser in Washington for a member of
the [House] Financial Services Committee without running into one or
two or three Wal-Mart lobbyists," says Ron Ence, a lobbyist for
community bankers.
Unlike most corporations, which contribute to both parties in
rough proportion to Congress's partisan split, about 85% of
Wal-Mart's checks go to Republicans. And recently Mr. Allen was
named a "Pioneer" by the Bush campaign, meaning he has raised at
least $100,000 by getting friends and colleagues to make
contributions of up to $2,000 each.
The partisan giving is a nod to Wal-Mart's hostile relationship
with organized labor and its dependence on free-trade agreements.
Wal-Mart defends its lopsided support, saying it's supporting
pro-business candidates. But sometimes it can get personal. Several
Democratic presidential candidates -- including presumed nominee
Sen. John Kerry -- have criticized Wal-Mart's labor practices. At
the company's managers meeting in Kansas City in January, Wal-Mart
executives showed footage of former Democratic presidential
candidates Howard Dean and Richard Gephardt criticizing the
company's health benefits. Managers booed and hissed.
The footage, says Mr. Allen, shows that Wal-Mart "had become an
issue in the presidential campaign, and we needed to engage at this
level" by donating to candidates who share the company's priorities.
Wal-Mart's pivot toward politics coincided with its rise to
become the nation's largest retailer, one with enough market clout
to drive down consumer prices, bust through trade barriers and force
competitors to demand cost-saving concessions from labor unions.
But its growth introduced challenges that couldn't be solved
without government help. The company, once celebrated as an
entrepreneurial success story, typified by the late Mr. Walton's
down-home style, found itself fighting off legal challenges from
unions, workers' lawyers and federal investigators.
Throughout the same period, friendly lawmakers warned Wal-Mart
executives to guard against the fate that had befallen Microsoft
Corp. The technology giant's courtship of Washington didn't start
until the Justice Department had filed an antitrust lawsuit --
leading to years of costly litigation and damage control. So
Wal-Mart executives directed Mr. Allen to hire the company's first
full-time lobbyist. The trick: finding someone who would remain true
to Wal-Mart's practical, no-frills culture, says Mr. Allen.
Norm Lezy was an Air Force lieutenant general with Pentagon
lobbying experience when he got a call from Wal-Mart. An old Air
Force buddy working for the retailer recommended him. Headed for
retirement, Mr. Lezy says he wasn't interested but agreed to be
interviewed to spare his friend embarrassment.
"What's the first thing you'd do if you got the job?" Mr. Allen
asked him. Mr. Lezy replied: "I'd like to drive around with a
Wal-Mart truck driver." Bentonville executives were sold. They put
on a hard press, and Mr. Lezy was won over.
Not long after, a man with silvery, shoulder-length hair and a
striking resemblance to Buffalo Bill showed up at Mr. Lezy's cubicle
in Bentonville. "I wanted you to see me before you got into my rig,"
said Carl Mayes, then a 17-year Wal-Mart truck driver, according to
Mr. Lezy.
The next morning, the two climbed into Mr. Mayes's rig to deliver
80,000 pounds of Wal Mart's Ol' Roy Dog Food to six stores in four
states. Over the miles, Mr. Lezy learned about the company's rise,
old timers' reverence for Mr. Walton -- known as "Mr. Sam" -- and
how drivers serve as executives' eyes and ears by talking to
customers.
Mr. Lezy headed to Washington in March 1999, and set up shop in a
small borrowed office at the Retail Industry Leaders Association. At
the time, lawmakers were hammering out a complex bill on banking, a
business Wal-Mart was keen to explore. Customers wanted the
convenience of in-store banks, and company officials figured
Wal-Mart could save millions of dollars in credit-card transaction
fees alone. Three months after Mr. Lezy arrived, Bentonville
executives asked federal regulators for permission to buy a small
thrift in Broken Arrow, Okla. They saw it as the first step in
creating a national banking chain in their stores.
Small bankers pleaded with Congress to spare them the fate of
mom-and-pop hardware and variety stores, which, they said, were
strangled by Wal-Mart. "It totally moved the ball into our court,"
recalls Bill McQuillan, president and chief executive of City
National Bank of Greeley, Neb., who testified on behalf of the
community bankers.
Lawmakers inserted a clause in the banking bill barring retailers
from buying thrifts. It was retroactive to May 4, 1999, and killed
Wal-Mart's thrift application. (Another blow came this month, when
the House passed a bill that would make it hard for a retailer to
expand into banking through the purchase of an industrial-loan
company.)
Mr. Lezy figured he was about to be fired when he got a call from
David Glass, then Wal-Mart's chief executive. But Mr. Glass gave Mr.
Lezy a pep talk and said he was committed to Wal-Mart's Washington
experiment.
Congressional allies rushed to offer advice, including Trent
Lott, then Senate majority leader. Mr. Lott arrived in Bentonville
in late 1999 with a simple message, according to a congressman who
attended the meeting: Increase your profile and open your wallet.
So Wal-Mart executives set out to beef up their political action
committee -- an account made up of voluntary employee contributions
that executives use to make political donations. (Federal law
prohibits direct corporate contributions to party committees and
candidates.) At an August 2000 meeting attended by thousands of
Wal-Mart managers, buckets were passed around for donations, as well
as forms authorizing automatic paycheck deductions for the PAC.
For some employees, the pressure to contribute became a point of
contention. "With my district manager sitting 3 inches over my
shoulder, you think I didn't sign up?" recalls Jon Lehman, a
Wal-Mart manager who quit in November 2001 and is now working with
union organizers to enlist Wal-Mart workers. Current Wal-Mart
employees, who asked not to be named, also report feeling pressured
to give to the PAC.
Mr. Allen says Wal-Mart doesn't force workers to give to a PAC;
such an action would be illegal. "I regret" that employees felt
pressured, says Mr. Allen. "That is not the intent at all."
Wal-Mart managers boosted PAC contributions to $703,500 in the
1999-2000 election cycle from $230,800 in 1997-98. When Sen. Lott
issued a call for help for Republican candidates in the late summer
of 2002, Wal-Mart's PAC donated $50,000 in September and $101,000 a
month later -- mostly to Republicans. "They came through, and people
knew it," recalls a former Republican senatorial aide.
The support brought its own rewards -- including free publicity.
In November 2002 the Bush administration proposed the removal of all
tariffs on manufactured goods imported to the U.S. by 2015. U.S.
Trade Representative Robert Zoellick stood on a stage before the
news media with two identical baskets of baby goods, prominently
marked as having come from Wal-Mart. The one without tariffs was $32
cheaper.
Wal-Mart's PAC today has swelled to nearly $1.5 million,
according to its March 2004 report. Nearly 19% of the company's more
than 60,000 domestic managers contribute, most through payroll
deductions that average $8.60 a month, says Mr. Allen.
Labor problems have deepened Wal-Mart's involvement in politics.
In the late 1990s, the United Food and Commercial Workers
International Union stepped up efforts to organize Wal-Mart workers.
It helped employees file a series of complaints about the company's
overtime, health-care and other policies with the National Labor
Relations Board. Dozens of class-action lawsuits were filed on
behalf of workers.
Wal-Mart responded by pouring millions of dollars into the U.S.
Chamber of Commerce's Institute for Legal Reform, which presses for
limits on awards in class-action suits. It also backed then-Sen. Tim
Hutchinson, an Arkansas Republican, when he introduced legislation
to bar unions from soliciting outside retail stores. Wal-Mart says
the legislation was intended to clear room for charitable groups
making solicitations, not to restrict labor activity. But labor's
congressional allies decried the "Wal-Mart" bill, which was soundly
defeated. In the fall of 2002, labor-backed Democrat Mark L. Pryor
defeated Mr. Hutchinson.
The company's labor problems reached a peak late last year, when
Immigration and Customs Enforcement agents raided several stores,
rounding up more than 200 undocumented workers hired by Wal-Mart
subcontractors to clean the stores. Wal-Mart hired Martin J.
Weinstein, a former federal prosecutor, to conduct an internal
audit. Mr. Lezy took advantage of Wal-Mart's improved access in
Washington, dispatching a lobbyist to Congress and the White House
to describe Mr. Weinstein's conclusions, which laid the blame on the
subcontractors. Wal-Mart also urged policy makers to make
immigration reform a bigger part of the national debate.
A grand jury is still investigating the immigration case.
In 2003, Mr. Lezy began paving the way for his retirement. His
heir apparent: Erik Winborn, a former Air Force colonel he'd met at
the Pentagon and hired at Wal-Mart in 2000. At Mr. Lezy's urging,
Mr. Winborn took his own trip with a Wal-Mart driver -- and wound up
stuck on the highway in a blizzard.
Mr. Winborn's emergence as Wal-Mart's chief lobbyist wasn't much
easier then Mr. Lezy's. During last year's debate over legislation
to add a prescription-drug benefit to Medicare, Congress wanted to
encourage seniors to use mail-order prescriptions to control costs.
Wal-Mart saw mail orders as a threat to its in-store pharmacy
business, and mobilized thousands of pharmacists to deluge Capitol
Hill with letters and telephone calls urging Congress to restrict
mail-order prescriptions for Medicare patients.
Lawmakers rejected Wal-Mart's appeal and passed the bill. But
they also offered Wal-Mart an olive branch, directing the Federal
Trade Commission to study potential conflicts of interest within
mail-order companies.
At the same time, Wal-Mart was winning some big global battles.
In 2002, the retailer hired Angela Marshall Hofmann, a Democratic
trade expert, who promptly used her connections to get Wal-Mart a
seat on a Department of Commerce advisory committee on the retail
industry.
As a committee member, Ms. Hofmann last September traveled to
Cancun, Mexico, to track talks on the Central American Free Trade
Agreement, which is designed to boost trade by eliminating tariffs
between the U.S. and Guatemala, El Salvador, Costa Rica, Nicaragua
and Honduras. Many jeans, polo shirts, and other clothing sold in
the U.S. are stitched together in the region.
In the CAFTA agreement, Ms. Hofmann and her allies won language
allowing Central American manufacturers to use some less-expensive
cloth, including denim, from Mexico. That means those manufacturers
can send duty-free products into the U.S. market even though they
are produced in part with Mexican materials, which would otherwise
have been excluded from the pact. U.S. textile mills will lose
business, and retailers such as Wal-Mart will get cheaper wholesale
products to sell.
Over lunch in a cafeteria-style restaurant a good distance from
Washington's K Street lobbying corridor, Mr. Allen feels Wal-Mart is
making progress but still sees room for improvement. He'd like to
extend the company's network in Washington's political and
regulatory circles, including leveling out its lopsided campaign
contributions, so the next time its "enemies and critics" come
calling, the company has even more allies.
[back to top]
Knoxville Wal-Mart, Pepsi feud over pricing
By HAL HATFIELD -Knoxville, IA, Journal-Express
[back to top]
March 22, 2004
Mountain Dew lovers in Knoxville will have to go somewhere other
than Wal-Mart to find their favorite drink. A sign in the soft-drink
aisle at the Knoxville Wal-Mart Super Center announces: "We are
sorry. Pepsi products are not available at this location."
But Wal-Mart is not saying why Pepsi products are not available
in its Knoxville or Newton stores, but can be bought at Wal-Mart
stores in Pella, Oskaloosa, Indianola, Des Moines and other Iowa
locations.
A representative of the Mahaska Bottling Co. in Oskaloosa, which
distributes Pepsi products in several south-central Iowa counties,
including Marion County, said the dispute with some Wal-Mart stores
began when Wal-Mart demanded that Pepsi lower its wholesale prices
for Wal-Mart only.
"We are not going to going to sell any cheaper to Wal-Mart than
to others," he said. "We are not going to give them any special
preference over our other customers."
Angie Hobbs, one of the Knoxville Wal-Mart's managers, would not
comment Monday on the nature of the dispute, other than to confirm
than it was about pricing. She said that the decision to pull
Pepsi-Cola, Mountain Dew, Code Red and other Pepsi products from
Knoxville Wal-Mart's shelves had nothing to do with quality of Pepsi
products or service from the Oskaloosa distributor.
"We want to carry Pepsi products," she said, and indicated that
negotiations with Pepsi were underway. The Oskaloosa Pepsi official
said he was not aware of any negotiations.
When told of the Pepsi representative's assertion that Wal-Mart
wanted special pricing, Hobbs said, "Just remember that you don't
have the whole story." She would not say what the "whole story" is -
"I wish I could but I can't," she said - and referred further
questions to Wal-Mart's corporate headquarters in Bentonville, Ark.
She added that it was not a local decision to pull Pepsi products.
"Customers trust us to provide them products at everyday low
prices," Karen Burke of Wal-Mart's public relations office in
Bentonville said Monday in a prepared statement. She could not
explain why "everyday low prices" could differ from community to
community and why it could lead to pulling Pepsi from one store and
not another.
"We don't discuss our relationship with our suppliers," she
repeated several times.
Another spokeswoman from the Knoxville Wal-Mart called on Tuesday
to ask the Journal-Express for a copy of this story before it was
published. The newspaper refused, but said it would give the
spokeswoman the same opportunity to respond to questions as Hobbs
and Burke had had.
The woman said she just wanted to give the reporter the chance to
stop the story before he "sawed the limb off " behind himself.
Burke called again late Wednesday with a further statement:
"Wal-Mart has had a long and successfull relationship with Pepsi as
one of our valued suppliers, and we respect and appreciate their
right to privacy and know that our customers will understand our
decision not to publically discuss our business relatiionaship with
them."
She would not comment further.
Although Wal-Mart representatives will not talk, other Knoxville
grocery and convenience stores are delighted about the dispute.
They say that it is the result of Wal-Mart's aggressive marketing
activities and attempts to obtain lower wholesale costs than those
charged other retailers.
Knoxville's Hy-Vee supermarket is capitalizing on Wal-Mart's
refusal to carry Pepsi products with a special on 24-packs and
12-packs. The Hy-Vee sign along Highway 14 carries a Pepsi banner,
and Hy-Vee customers are greeted with a large display of Pepsi
products just inside the front door. There are two more Pepsi
displays in the store, one just across from the check-out counters.
Hy-Vee stores in Pella and Oskaloosa also have prominent displays
of Pepsi products, and Fareway in Knoxville is advertising Pepsi.
Convenience stores also have Pepsi products out front.
"Absolutely. I'm not stupid," said Knoxville Hy-Vee store
director Jeff Killam when asked if he was capitalizing on the
Pepsi-Wal-Mart dispute. He said that the packaging in his displays
was designed for Wal-Mart, and that when the battle erupted he told
Pepsi to bring the package to him.
"Hy-Vee is always sensitive to what the consumer wants," Killam
said.
Managers of Fareway and Casey's, Kum & Go and Our Town
Convenience Stores were unanimous in their praise for Pepsi's
performance. Fareway also has a banner along Highway 14 advertising
Pepsi and the Knoxville Pamida Discount Center has a Pepsi display
just inside its entrance. "Pepsi treats us awful, awful good," said
Jim Darnell, owner of the Our Town Convenience Store on Highway 14
North. "I'm so glad they stood up to the big boys. I'm so glad they
put their foot down."
Darnell said he switched from Coca-Cola to Pepsi-Cola for his
personal soft drink when he heard of Pepsi's stand against Wal-Mart.
[back to top]
Wal-Mart going urban - Retailer sets its sights on urban
areas
eager for retail
BY HEATHER LANDY - Fort Worth (Texas) Star-Telegram [back to top]
March 22,
2004
FORT WORTH - After conquering rural America, then making itself a
familiar anchor in suburban shopping districts, Wal-Mart has reached
the final frontier of its domestic expansion: the urban market. From
Baltimore to Milwaukee to Los Angeles, the Arkansas-based retailing
giant is courting city dwellers, bringing low prices and an
unmatched breadth of merchandise to neighborhoods long ignored by
big-box chains.
In Fort Worth, the company is making its boldest move yet toward
the downtown area, with plans for a Wal-Mart Supercenter at Texas
121 and Beach Street.
When Wal-Mart knocks on a city's door, it often brings the
promise of revitalization, hundreds of jobs, a big source of
sales-tax revenue and savings for shoppers. But Wal-Mart also is
frequently seen as a threat to local merchants and to the character
of established neighborhoods.
Regardless of the perception, the expansion path of the world's
largest retailer indicates that businesses are finding opportunities
in urban settings. Among the other signals locally is a proposal to
redevelop the former Montgomery Ward store and warehouse on West
Seventh Street with a mix of offices, apartments and stores,
including Home Depot and SuperTarget.
The phenomenon is a twist on the revolution that Sam Walton
ignited in the 1960s when he opened the first Wal-Mart and began
branching out to under-served communities, which at that time mostly
meant rural areas.
"Wal-Mart started out with a format that was very much about
inexpensive land on the periphery of metro areas, with huge parking
lots," said former Milwaukee Mayor John Norquist, who helped
Wal-Mart settle into several blighted neighborhoods in that city
during his term. "That worked up to a point, but there are a lot of
people that don't live out there."
Expansion is crucial to Wal-Mart's ability to give investors the
sales and earnings growth they demand, a task that seems nearly
impossible for a company with more than 4,900 stores worldwide and
annual sales of $256 billion. But the law of large numbers has yet
to change the company's long-term financial outlook. What has
changed is the way that Wal-Mart goes about gaining entry to the
shrinking number of new markets available.
Space constraints, along with public opposition to cookie-cutter
stores with drab exteriors and enormous asphalt lots, have forced
Wal-Mart to design new store layouts and make other concessions to
blend in with local tastes.
In South Los Angeles, the company opened a three-level store in
an enclosed mall, utilizing a former department store space left
vacant for several years. At the redeveloped Capital Court mall in
Milwaukee, city streets were extended to run through the shopping
area, and the entrance to the Wal-Mart is flush with the sidewalk,
instead of set back behind a large parking lot.
"We've learned that there is not just one approach to an urban
market," Wal-Mart spokeswoman Daphne Moore said. "What that has
meant to us is finding different ways to become a part of each
different community."
'Pact with the devil'
Wal-Mart still faces significant obstacles in its quest for a
bigger urban store base. Inadequate parking and strict zoning
regulations may keep the chain out of some city neighborhoods. There
is also a groundswell of opposition to Wal-Mart's labor and trade
practices.
Critics of the chain say Wal-Mart keeps many employees below the
poverty line, with low hourly wages that drag down the pay scale at
rival businesses as they try to keep up with Wal-Mart's focus on
costs. The company has also been accused of forcing suppliers to
find cheaper labor overseas at the expense of American jobs as they
try to meet Wal-Mart's demands for low-price goods. Wal-Mart Chief
Executive Officer Lee Scott has said that the company uses American
suppliers when possible, and that tight expense controls help the
chain keep prices low.
Cities must consider all of the consequences, positive and
negative, of a Wal-Mart development, especially in blighted areas
where the arrival of Wal-Mart could be a springboard for additional
redevelopment, said Mark Muro, a senior analyst with the Center on
Urban and Metropolitan Policy at the Brookings Institution think
tank in Washington.
"You may be making a pact with the devil to sign on with
something that is probably going to lower the price point and wage
and benefit structure of a large zone of your potential retail
environment," Muro said.
Weighing these issues -- a process that has divided communities
of all sizes across the country -- has been especially difficult in
urban areas.
In New Orleans, a proposal to build a Wal-Mart store in the
historic Lower Garden District sparked an emotional battle over land
use and architectural preservation policies.
City officials approved the construction, which will be part of a
shopping and mixed-income residential development at a former public
housing site. But Wal-Mart had to agree to build the store in the
style of the district's old warehouses. There is another unique
aspect to this Wal-Mart location: The city sales tax generated at
the store will be used to plug a gap in financing needed for the
redevelopment project.
Metroplex trends
In some cities, public sentiment about Wal-Mart's arrival has
been drawn along class or racial lines.
In 2002, the Dallas City Council blocked a proposed Wal-Mart near
Dallas Love Field, ending a debate that pitted many of the black,
working-class residents nearest the airport against white residents
of more affluent areas nearby.
Weeks later, the council approved construction of a Wal-Mart at
Interstate 30 and Cockrell Hill Road, near the retail-starved
neighborhoods of north Oak Cliff and West Dallas.
Wal-Mart got a warm reception west of downtown Dallas, just as it
has in the equally retail-deprived Carter-Riverside area of Fort
Worth. Neighborhood associations organized a ceremony for last
month's groundbreaking along Texas 121, where a Wal-Mart Supercenter
will open this year with 450 jobs and special departments for
groceries, portraits, gardening needs, vision care, and tire and
lube services.
"It's going to be a convenience for people who live in this
community," Fort Worth Mayor Mike Moncrief said on the day of the
groundbreaking. "It's one of the older neighborhoods in our city;
there's not a lot of young blood here. That's why I think this
project is so important."
Migration to the suburbs has chipped away at America's urban
retail base over the course of several decades as merchants chased
after shoppers.
Fort Worth, Dallas, San Antonio and Houston, which accounted for
more than 34 percent of retail sales in Texas in 1972, generated
less than 27 percent of the state's total in 1997, according to
Census Bureau data.
Meanwhile, the suburbs have boomed. By 1997, Arlington, Bedford,
Euless, Grapevine, Hurst, Keller and North Richland Hills generated
a combined $6.7 billion in retail sales. The 1972 data did not
provide figures for those cities, with the exception of Arlington
and Hurst, because the statistical abstracts did not break out sales
for areas with fewer than 25,000 residents.
For city neighborhoods such as Carter-Riverside, the shift to
suburban living meant fewer shopping options for the residents who
stayed behind. The same holds for those who moved back to the
downtown area as new urban residences were built.
Janice Michel, an Oakhurst Neighborhood Association member who
sits on the Fort Worth Board of Adjustment and lives near Wal-Mart's
new site in the Riverside area, said she welcomes the chain's
forthcoming arrival.
"Right now we either drive 10 miles to the North East Mall area
or to the Wal-Mart and Home Depot in North Richland Hills -- and we
hate spending our tax dollars there -- or we get in our cars and
drive all the way across town to the Hulen area," Michel said. "It
is a commute just to get basics."
The Carter-Riverside store should address some of those needs, as
would a proposed SuperTarget at the old Montgomery Ward property
about 1.5 miles west of downtown. Supercenters and SuperTargets sell
groceries along with general discount merchandise, in stores often
larger than 200,000 square feet.
Target, which built stores in urban areas years ahead of
Wal-Mart, has also had to reconfigure its stores in some markets.
The Minneapolis-based company has 27 multi-level stores in 19
states. Two sets of escalators, one for people and the other for
shopping carts, help customers move from floor to floor.
Urban retail challenges
Moving suburban retail into urban spaces requires more than just
a store layout change. Apparel sizes, clothing tastes and grocery
needs can vary significantly depending on the ethnic makeup of a
neighborhood, said retail consultant Britt Beemer, chairman of
America's Research Group. Theft-prevention measures may also need to
be beefed up or tweaked, he noted.
"Urban merchandising is a much more difficult strategy to
implement, as Kmart can tell you," Beemer said. Kmart, which has a
higher concentration of urban locations than Wal-Mart or Target,
filed for bankruptcy protection in 2002.
Other challenges in urban markets are tougher to predict, as
Wal-Mart learned at the Baldwin Hills Crenshaw Plaza mall in South
Los Angeles. For several weeks in late 2003, a bus strike took away
the primary mode of transportation for many of the mall's shoppers
and employees.
But under more normal circumstances, Wal-Mart has had few
problems drawing customers to the property, which also houses a
Sears, an Albertson's, a movie theater and specialty retailers.
Since Wal-Mart's opening in January 2003 in a three-level space
formerly occupied by a department store, the mix of customers has
broadened dramatically, with Asian and Hispanic shoppers joining the
mall's existing base of mainly black shoppers.
"It has changed the demographics for the property," said Jeanne
Mesh, vice president of retail real estate at Hager Pacific
Properties, which owns Baldwin Hills Crenshaw Plaza. "It's drawing
from quite a distance away, since there is no other Wal-Mart within
a certain radius."
Supporters of urban expansion by big-box chains argue that
Wal-Mart and other large retailers can help cities by revitalizing
old buildings or even entire blocks that have seen better days.
Capital Court in Milwaukee was "a dead mall" before it was
redeveloped with Wal-Mart as an anchor, said Norquist, the former
mayor, who now leads a nonprofit group that works with architects,
developers and planners involved in the restoration of urban areas.
Wal-Mart's effect on cities resembles the impact that the company
had on rural areas in the early 1960s. The chain opened its first
stores in rural areas because it did not have the financing for a
big-city expansion. It stayed because it found a niche not yet
tapped by other retailers.
"It turned out that the first big lesson we learned was that
there was much, much more business out there in small-town America
than anybody, including me, had ever dreamed," Walton wrote in his
1992 autobiography.
Forty years after Wal-Mart's start, America's cities may hold a
similar promise.
[back to top]
Mediation Settles Workers Compensation Suit Against Wal-Mart
Associated Press
[back to top]
March 22, 2004
A Raceland woman has settled a lawsuit that alleged a Wal-Mart
subsidiary hired a private investigator to break into her home in an
attempt to discredit her worker's compensation claim.
Mediation between 37-year-old Tina Hall and Claims Management
Incorporated of Bentonville, Arkanas, began January 29th.
It ended in a settlement Friday.
Hall's attorney would not discuss the terms of the settlement,
saying they were confidential.
Hall first filed suit in 2000 against Claims Management, a wholly
owned subsidiary of Wal-Mart.
Claims Management handles the corporate giant's workers
compensation insurance.
The suit says Claims Management had refused to pay all of her
medical costs involved in a 1993 work-related injury at the Wal-Mart
store in Ashland.
Hall underwent back surgery in 2000 and 2003.
[back to top]
From the homeland... California communities, labor
union go to
battle against influx of grocery-selling Wal-Mart stores. : Super
fight on supercenters
BY ALEX DANIELS - ARKANSAS DEMOCRAT-GAZETTE [back to top]
Sunday, March 14,
2004
MARTINEZ, Calif. Fierce battles pitting Wal-Mart Stores Inc.
against California unions, competitors and elected leaders probably
won't stop the retail giant from gaining market share in the state,
the company's opponents said. But local resistance to the retailer
could slow Wal-Mart's growth and sully its image beyond California?s
borders.
Though the company has butted heads with foes in other areas of
the country as it tries to build new supercenters, opposition in
California termed a "hostile environment" by Wal-Mart executives, is
especially vocal.
Wal-Mart Stores Inc. scored two key victories this month in the
state.
On March 3, Wal-Mart opened a supercenter in La Quinta, a desert
community of 24,000 about two hours east of Los Angeles. The same
week, the company garnered enough voter support to reverse a ban on
the stores in Contra Costa County, in the San Francisco Bay area.
Supercenters have played a huge part in generating profits for
the Bentonville, Ark.-based chain. The stores offer both groceries
and general merchandise items. By placing more than 100,000 kinds of
products in one location, the company can attract people to make
frequent trips to buy groceries, which provide low margins, and
score a profit on other goods, such as electronic devices or apparel
that shoppers buy on impulse.
Over the past few years, several city and county governments in
California have blocked the construction of the megastores. Voicing
the fear the discount chain will price competing grocery stores out
of business, local leaders, backed in many cases by union money,
have sought to keep Wal-Mart from offering groceries.
In the next four years, the company plans to open 40 stores in
the Golden State. That?s a small share of the 1,000 stores planned
nationally during the same time.
But some observers said fights on supercenters could not only
cost the chain money but also could damage the global company's
image elsewhere. Moves to block Wal-Mart in California could
embolden communities in other states to take similar action,
predicted Harley Shaiken, a professor at the University of
California-Berkeley.
"What happens in California tends to be highly visible and if
often sets trends," he said.
Wal-Mart, which organized and funded a petition drive for the
election in Contra Costa County, is suing adjoining Alameda County
for enacting a similar ordinance. And lawsuits are pending in the
city of Turlock, about 100 miles inland, where officials voted to
ban supercenters in January.
Wal-Mart promised more legal action, if necessary. The cities of
Gilroy, Los Angeles and San Diego are considering proposals to block
the megastores.
Since opening its first supercenter in 1988, Wal-Mart has avoided
putting the giant stores in California. Part of the reason is
simple, according to analysts: The company is still building its
network of distribution centers that are equipped to warehouse
perishable goods.
But the chain has also found it difficult to p | 
