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WAL-MART WINS ROUND IN CALIFORNIA

BY DONNA MITCHELL

The city of Rosemead’s approval of a Wal-Mart Supercenter marks a welcome reversal of fortune for the embattled discounter in California — and also an opportunity, say retail industry observers.

Recently, Wal-Mart found its path to expansion blocked by a series of referenda and ordinances in cities in that state and in others. But on Sept. 8 Rosemead approved the construction of a 137,000-square-foot Supercenter.

“It will benefit the city, no doubt about it,” City Councilman Gary Taylor told the Los Angeles Times, referring to the jobs and sales taxes that the store will generate. “By and large, the majority of people were in favor of Wal-Mart even though they knew it was a tough decision.”

Beyond the significant victory, the opportunity this presents is that the discount chain can demonstrate to the state’s other municipalities the economic advantages its stores can bestow, says C. Britt Beemer, chairman and founder of America’s Research Group, a Charleston, S.C.-based consumer behavior and strategic marketing firm.

“When they go to the city of Los Angeles, they can give an example of their positive impact,” Beemer said. Rosemead is just 11 miles east of Los Angeles, which in August adopted an ordinance requiring big-box retailers to conduct community-impact studies before building stores in any of its Economic Impact Zones, which account for about 40 percent of the city.

Developing a good name is an increasing priority for Wal-Mart. Coincidentally, the same day the company won approvals for the Rosemead store, CEO H. Lee Scott Jr. said at an analyst conference in New York City that Wal-Mart needs to develop more-sophisticated public relations and repair a reputation tarnished by discrimination cases and accusations of worker mistreatment. No longer can the company rely simply on the charm of its lower prices and broad selections to win over communities, he says.

“For all these years, people could hardly wait until [Wal-Mart] got to town,” said Beemer, recalling the not-so-long-ago good old days.

For all of the recent conflict, though, the retailer still maintains the support of a silent majority, says Beemer. America’s Research surveyed several communities where Wal-Mart has considered building stores to ask residents if they would reject the retailer. Less than 18 percent of respondents typically say no to Wal-Mart, suggesting that most residents want the company there.

“I think that [small] percent may be screaming so loud, the local politicians believe the minority is a majority, but it is not,” said Beemer.

Wal-Mart is battling several California jurisdictions trying to bar its stores. The city of Turlock passed an ordinance last September banning discount stores greater than 150,000 square feet that devoted more than 5 percent of their space to groceries and other nontaxable items.

At press time a Superior Court in Stanislaus County, where the city is located, was to hear arguments on that case. The city of Oakland has put a moratorium on such centers, as have cities in other states, including Austin, Texas; and Winston-Salem, N.C. In early September Wal-Mart stalled plans for a store in Chicago’s South Side after the City Council proposed an ordinance to set minimum wages and benefits at big-box stores, and said the issue could affect a store on the North Side.

The wage issue is misunderstood, says Beemer. Older workers make up a sizable portion of Wal-Mart’s employees, who use the wages to supplement retirement income. These older employees thrive on the camaraderie that a workplace offers and welcome the fact that their skills are still in demand, he says.

“You’re going to see [Wal-Mart] be more proactive now,” Beemer said, “where they have stores and in markets where they want to open up stores, to minimize consumers’ concerns about them entering the marketplace.”