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It's Customers Last at Wal-Mart
Published on Tuesday, April 27, 2004 by Newsday / Long Island, New York
It's Customers Last at Wal-Mart
by David Karjanen

Wal-Mart has gained a reputation for destroying small-town main streets by putting other retailers out of business, and building sprawling stores that generate traffic and pollution. It is also challenging online retailers and, with its "supercenters," threatening supermarket chains.

But as the company has run out of small towns to invade, it has turned increasingly to urban and dense suburban areas to expand. And, at least in California, it has found how true it is that action generates reaction.

Though other strictures, either by Los Angeles, the city, and California, the state, are under consideration, it was citizens of the small Los Angeles County city of Inglewood who showed that the retailing Goliath can be defeated.

Wal-Mart, changing its usual tactics and attempting to outmaneuver elected Inglewood authorities, went the referendum route to win approval of a proposed development the size of 17 football fields. It spent over $1 million gathering signatures, advertising and engaging in other PR gambits to overturn a city council ruling and to exempt the project from any further review.

The effort backfired. On April 6, residents rejected Wal-Mart's initiative 7,049 to 4,575. But while this was a victory for the community, other municipalities should view it only with cautious optimism.

Wal-Mart is as aggressive as any when it comes to expansion. Battles with it will not subside as long as there is a conflict between residents' desire to balance jobs, housing and commercial development on a scale that supports their quality of life, and Wal-Mart's business model.

And that model demands huge commercial developments that ripple through local economies.

Why all the controversy? The main difference is scale: Wal-Mart dwarfs most competitors. But, it is often argued, Wal-Mart brings jobs and tax revenue. Right? Wrong.

The stores create jobs initially, but most studies show that the jobs generated are merely lower-paid replacements for ones lost due to the competition. Smart-growth advocates note that Wal-Mart's developments generate traffic, noise and further car-dependent land uses.

Cumulatively, these effects have ruined downtowns and undermined local economies. As a result, sales and property tax values can actually decline in a city as competing commercial space becomes vacant and blight develops.

Overall, research on the company and communities is demonstrating that the municipal revenue and job creation often touted by company officials fail to meet expectations. Over time many communities have felt more harm than help after Wal-Mart came to town. So, can anyone blame the people of Inglewood for not embracing the nation's largest retailer with open arms?

What Wal-Mart does not understand is that despite proposing a development that may meet or exceed environmental and land-use criteria, and touting jobs and municipal revenues, it may still face stiff community opposition.

There are several reasons for this, the least of which is Wal-Mart's typical retort "this is just labor making a fuss." In reality, many of the issues - traffic, the destruction of locally owned businesses, and low wages and benefits - are not fully addressed by existing development guidelines. And, increasingly, these are issues that all community residents care about - not just labor, smart-growth advocates and environmentalists.

There is no denying Wal-Mart's success at cost control and its extraordinary growth. What is often overlooked is how the company reflects the broader processes of globalization: Wal-Mart has immense capital, economies of scale and can source the cheapest goods from anywhere in the world.

No longer do American cities produce and sell and buy local goods with high-wage manufacturing jobs. Nowadays, we buy from overseas and replace our factories with Wal-Marts. The effect is that we undermine local economies while ostensibly growing them.

Rather than address these issues through collaboration with communities, Wal-Mart's strategy has been to bulldoze planning groups and elected officials, and hire public relations consultants.

Unfortunately, both the company and communities lose. The company spends a lot of money, communities do not get a project they hoped would meet their concerns, and transparency and civic democracy suffer.

One solution is to have Wal-Mart and communities actually sit down at the table and attempt to have an open discussion about the issues. But if events in Inglewood are any indication, the company seems to be more intent on having its own way - regardless.

David Karjanen is a visiting postdoctoral scholar at the University of California, San Diego

Copyright 2004, Newsday, Inc.


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