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Big Boxers have big expansion plans

Top discounters see no reason to stop expanding now. They are creating new formats that fit into suburban infill and inner-city spaces (see page 31) while simultaneously pushing new supercenter concepts. Wal-Mart Stores Inc. plans to open 200 to 210 new Supercenters in its fiscal year beginning on February 1, 2003. Approximately 140 of the new Supercenters will relocate or expand existing Wal-Mart discount stores.

But, in the two decades during which Wal-Mart perfected its expansion formula, its opponents have also honed their skills. Anti-Wal-Mart campaigns have been successful in Inver Grove Heights, Minn. (July 2002) and Kalamazoo, Mich. (June 2002), according to And the United Food and Commercial Workers International Union (UFCW) has spent years attempting to convince Wal-Mart to use union workers and pay union wages, often siding with local merchants and leaders who oppose Wal-Mart developments.

In October, the city council of Inglewood, Calif., passed a measure that prohibits stores larger than 155,000 sq. ft. and devotes more than 20,000 sq. ft. to nontaxable goods, within municipal bounds. Without naming Wal-Mart, the legislation sought to preclude it — and, in particular, Wal-Mart Supercenters, whose huge grocery stores are the obvious target of the measure's tax-free sales clause.

The measure was adopted after heavy campaigning by UFCW Local 770, which represents 20,000 supermarket workers in the Los Angeles area. “We tried to tailor it,” Ricardo Icaza, the local's president, told the Los Angeles Times, “so that it wouldn't impact someone like Costco. We're really aiming at the super centers. A Wal-Mart comes in and uses the grocery items as loss leaders to get the people to come in.” The group has raised $3 million to fight Wal-Mart's expansion in California, and with the Inglewood victory behind it, the organization is seeking a similar ordinance in the city of Los Angeles.

What's a big-boxer and its developer to do? Repeal the measure, of course. Wal-Mart successfully overturned a similar ordinance in Calexico, Calif., through a referendum in March, and also recently lobbied city officials in Las Vegas to repeal a 1999 anti-supercenter law.

Meanwhile, grassroots resistance to Wal-Mart has been effective in halting other expansions. Early this year, the company announced plans to introduce a new Supercenter into a low-income neighborhood of West Denver. The Denver Urban Renewal Authority (DURA), which had been trying to foster redevelopment of the 35-acre site for years, welcomed Wal-Mart, believing that the retailer's deep pockets would overcome past redevelopment hurdles.

DURA cemented the business deal with a tax-increment financing (TIF) plan, under which the higher sales and property taxes that would flow from the completed project could be used to defray Wal-Mart's acquisition costs. But as the business plan was maneuvered into place, says Tracy Huggins, executive director of DURA, an anti-Wal-Mart coalition emerged, made up of people from communities inside and outside of Denver. “Their arguments were that Wal-Mart didn't pay good wages, treat employees fairly, or support union activities.”

Delay fostered new opposition. The site originally comprised three parcels, one of which included 20 small tenants, all Asian business owners, enlisted by the parcel's Asian owner. These tenants began to rethink their position, ultimately rescinding their approval of the sale. When DURA broached the possibility of the city's claiming eminent domain of the site, Denver's Asian community rose in support of the tenants.

The issue then morphed into a question of whether the Wal-Mart development was, in effect, anti-Asian. Finally, the landlord gave in and the project died. “We never even had a chance to talk to the tenants to help them understand that the process would include relocation,” says Huggins.

Wal-Mart may be the most obvious target of anti-development activists. But it's not the only big-box retailer facing greater hurdles to expansion. Ikea, for example, barely made it into East Palo Alto, Calif. in March, and the Swedish furniture retailer has been frustrated by NIMBY campaigns against proposed sites in the New York metro area.

According to Ben Viloski, an attorney with the Pittsburgh-based Shopping Center Law Associates PC, retailers and their developers must occasionally look beyond the committees of concerned citizens to discover the true source of opposition. “If a group of retail competitors get together to oppose a big box development in their community, they probably wouldn't win an argument about low wages, because all retailers pay low wages,” he says. “So they would find another issue. Perhaps a development at this intersection will cause traffic congestion. In Pennsylvania, environmental arguments often succeed in blocking projects. Do they make these arguments themselves? No. They fan community opposition. This has been going on for years, as long as there has been development.”

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