Friday, July 2, 2010

Wal-Mart vs Chicago ...

Wal-Mart recently won a fight to build new Super Centers in urban neighborhoods of Chicago.  So, here's a glimpse of what's to come Houston ...

On Prepping the Site (Houston Equivalent: New Exit, Feeder Road at Yale) - 

Proponents of the Walmart stores here argue that not a dime of city money will be used to build the stores, but what they don't say is that a lot of city money will end up being used to prep the site and for infrastructure such as sidewalks and sewer lines.
There's a report from 2005 or 2006 where they go through hundreds and hundreds of examples of Walmart, both distribution centers and stores, where they try to gain some tax advantage, or they use this TIFs thing—tax increment financing. There are various ways of getting what are basically subsidies for these stores. And the bludgeon that Walmart has is, "Well, if we don't build it here, we'll build it three or four miles away, and then you'll lose everything. And then we'll be draining your town of sales tax revenue.

On The Type of Neighborhood/Area that Wal-Mart Will Target (West End) - 
One thing you write about early in the book is how Sam Walton, in pioneering the Walmart stores in the 1960s and 70s, took advantage of the rural isolation of these small towns in Arkansas and Missouri. I was wondering if you saw any parallels to what they're trying to do now, getting into these urban markets. A lot of these neighborhoods, particularly on the south and west sides of Chicago, suffer from similar kinds of economic isolation.
There are two similarities between the very early Walmart and their recent effort to move into urban areas. One is that in rural Arkansas, in effect, the population was underserved. There were all these small stores which were kind of monopolies and had poor distribution and high prices. Walton took a look at that and saw there was a big opportunity there. Secondly, in both situations you have a large underemployed population of potential clerks, or workers in the stores, so really the wages in the stores can be quite low.
You write that opening stores in areas where a lot of people are living on the edge is actually part of their corporate strategy: their business model basically can't exist without a churning underclass.
I would add: Walmart would've been a success in any event, but it became a particularly big success because its years of great growth were, whether by luck or by planning, the same years of the Reagan, Bush, even Clinton-era transformation of the minimum wage and the decline of the unions. It took advantage of that. Walmart's always prided itself that 25,000 people apply for 400 jobs when a Supercenter opens up. But this has been the case in America in general for the last 30 years. It's not attributable to the fine job Walmart does. Whenever you have an employer of any size in any kind of urban area you'll get 25,000 applicants. Walmart often uses that as a kind of argument that "Well, we're doing great."


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