Wal-Mart, the muscle-bound superstore that likes to bully its way into places it's not wanted, took a big hit last week. Its high-profile attempt to bribe its way into Inglewood, a working class, minority city in suburban Los Angeles, failed badly.
As democratic politics go, Wal-Mart's Inglewood bid was about as sleazy as it gets. Rejected by the City Council, Wal-Mart spent $1 million for a referendum that would have allowed it to build a "supercenter" – a combination retail and grocery outlet covering 17 football fields – by skirting normal hearing, planning and environmental procedures.
The company spent $100 per Inglewood voter in a blitz to persuade citizens to defy city government. As in other California cities where it has won admission through litigation or referendum, Wal-Mart expected an easy win in Inglewood.
Instead, for a campaign in which it outspent the opposition 10-1, Wal-Mart won less than 40 percent of the vote.
People are catching on to this company, to its tactics, business philosophy and impact on communities. As in Inglewood, most community reaction is directed at Wal-Mart's giant combination retail and grocery supercenters, with their potential to raze neighborhood businesses as thoroughly as a fire-bombing raid.
Since the recent grocery strike, Californians are paying more attention to Wal-Mart. That strike, which since has resulted in the closing of 15 Ralphs stores across Southern California, was the result of Wal-Mart's plans to open 40 supercenters in California (if communities let them in). Only one has been opened so far, in La Quinta. Nationwide, Wal-Mart plans 1,000 supercenters over the next five years.
But what works for Wal-Mart in rural or desert communities, where more space for big-box stores is available and fewer local businesses are affected, has found resistance in urban and suburban California.
With its deep pockets, Wal-Mart often defeats local government, but its methods and philosophy are making enemies. That was the case when San Marcos turned down a Wal-Mart store in a referendum last month, and that's the case in Inglewood, where citizens clearly objected to having local government bamboozled.
In Los Angeles, which surrounds Inglewood, the City Council is drafting an ordinance effectively prohibiting supercenters in the city. San Diego, where Wal-Mart as yet plans no supercenters, is considering a similar ordinance. Oakland already has banned them. In numerous other cities, litigation is under way.
Despite its low prices, something there is that doesn't love a Wal-Mart. The feeling of distaste grows as Wal-Mart's arrogance and strong-arm tactics build community opposition. Inglewood is Wal-Mart's biggest defeat because it was a naked attempt to show that a low-wage, high unemployment community could be bought at the right price; that, for enough coin, citizens would turn their backs on government and planners. Wal-Mart's win was supposed to be a slam-dunk.
If low prices were all that mattered, communities would be rolling out red carpets for this company. But many communities don't like the trade-off of community-centered and home-grown businesses for low prices. Some communities like their downtowns, Main Streets within walking distance, merchants whom they know and who pay employees enough not just to live on, but to live in communities where they work.
Wal-Mart, whose five Walton owners are among the world's richest people, pays low wages and offers minimum health coverage to employees. Its business philosophy is based on enriching its founding family rather than achieving an equitable sharing of profits among founders, shareholders and workers, the goal of most publicly held companies. The store's bullying ways are seen in its numerous lawsuits, with communities, employees, with the federal government over the use of illegal immigrant labor.
Last month, The Wall Street Journal compared Wal-Mart with Costco, another large retailer and grocer. It pointed out that Costco, in contrast to Wal-Mart, "is held up as a retailer that does it right, paying well and offering generous benefits" to employees.
Costco draws criticism from Wall Street for sharing its success with its employees, reported the Journal. "Public companies need to care for shareholders first," said a Wall Street analyst critical of Costco, noting that Costco stock traded at only 20 times earnings compared with Wal-Mart's 24 times. "Costco runs its business like it is a private company," sniffed this critic.
To that, Costco President and CEO Jim Sinegal replied, "I happen to believe that in order to reward the shareholder in the long term, you have to please your customers and workers."
Two different philosophies: One leads to the Waltons, the sheiks of Arkansas, by holding workers' salaries and benefits to bare minimums. The other allows workers to share in the profits of their company. Costco pays its workers about $5 an hour more compared to Wal-Mart and has about twice as many workers covered by company health care.
Oh, yes, and Costco has a store in Inglewood.
© Copyright 2004 Union-Tribune Publishing Co.