Tuesday, January 04, 2011

Wal-Mart Invasion Wears Thin

Women's Wear Daily had an interesting story last week (subsc.) on the Wal-Mart invasion into NYC: "The world’s largest retailer tried unsuccessfully in 2005 to open a store in New York — it searched for a site for a SuperCenter, but finding the necessary 185,000 square feet of space was, and still remains, difficult. Now, five years later, the Bentonville, Ark.-based company is adopting a new strategy armed with an arsenal of store formats, including some never-before-seen concepts and a rejigged SuperCenter — its size reduced to as little as 80,000 square feet and categories not crucial to urban areas, such as lawn and garden centers, eliminated. The redefined approach stems partly from necessity — the suburbs have become saturated and Wal-Mart needs to enter more urban markets if it is to grow in the U.S."

This, as we have said before, is the National Socialist philosophy of lebensraum adopted for the retail expansion environment. The Walmonster needs more "living room," or it will expire-it has an insatiable need to expand into ever more territory, To accomplish this, it will do so by any means necessary-and is even contemplating stores as small as superettes:

"We’re addressing size and being more flexible in our approach,” said Steven Restivo, Wal-Mart Stores Inc.’s director of community relations for the Northeast. “The way we’re bridging the gap between larger traditional stores and smaller, more efficient formats is our site-to-store multichannel experience option.”

The retailer’s latest format is a 3,500-square-foot store called Wal-Mart on Campus, which will open at the University of Arkansas next month, replacing a university-run pharmacy. “It’s probably the smallest-format store,” Restivo said. “It’s a [pharmacy] and campus merchandising store with licensed apparel.” Wal-Mart on Campus was developed at the university’s behest as a one-off to meet the university’s needs. While there are no similar stores in the works, lessons might be gleaned from the project and its size could be appealing in urban areas."

If this assault on the city isn't met with a determined opposition, it will be the final dagger in the heart for workers and small businesses in NYC. Some of this is brought out by our colleagues who are quoted in an Atlanta Post story on the giant retailer's expansionist philosophy: "Gotham Government Relations, a firm that represents small to medium sized grocery stores throughout New York City, is greatly opposed to Wal-Mart’s entry because not only will they “drive a dagger into the heart of the entrepreneurial spirit” of the neighborhood, but will also fail to provide worthwhile employment , according to David Schwartz, Esq., a representative of Gotham.
“Wal-Mart takes away good union jobs with full benefits and replaces [them] with minimum wage jobs, no benefits, no healthcare and an inability for employees to support their family and provide for children,” he says."

As one marketing expert puts it, the fact that the Walmonster is a predatory pricer is what makes its stores so dangerous: "
The retailer is a complex case study because all of the opposition they face falls on what initially sounds like the best thing going for them—low prices. “You can pretty much be guaranteed as a shopper that you’re getting the lowest price you can in the marketplace,” said Jim Joseph, marketing expert and author of The Experience Effect. “The problem is what Wal-Mart has is an infrastructure that is built around low prices so nobody can really compete, particularly in an urban area where there are a lot of small businesses.”

And it is the low prices that creates the kind of environmental impact that no other retailer does-something that, as we have said, demands an entire sui generis review. And marketing expert Joseph further underscores the world of difference between Big Wally and other box stores: "Retailers like CVS, Target or Best Buy don’t focus on low prices so they don’t necessarily knock out their competition, just offer an alternative so they don’t annihilate small business they way Wal-Mart does,” said Joseph. “If you look at Target, they talk about low prices but that’s not their emphasis. Their emphasis is on design and style so when they go into a market, people embrace that part of it. People don’t necessarily run away from the other businesses in the area.”

Part of the strong political opposition to Wal-Mart is embodied in the leadership of Council Speaker Quinn. As she tells WWD: "Nothing has changed about [Wal-Mart’s] corporate philosophy and behavior,” Quinn said in an interview. “Nothing has changed about whether I want them in New York City. I don’t. Wal-Mart is still the company with the worst record on gender discrimination lawsuits. Their labor practices are in no way near the standards we have in New York City. Supermarket workers get time-and-a-half here on Sunday. Wal-Mart used to pay an extra dollar an hour and then stopped doing that.”

And she is subtly pressuring the developer Related Companies to understand that discretion is the better part of valor: "In 2005, Wal-Mart could have moved into the Queens Center mall, but because it knew the city didn’t want it here, it retreated,” Quinn said. “We’re in touch with Related Companies [the developer of Gateway II, Related Retail Corporation is an affiliate of The Related Companies] on different projects and my staff has made very clear my opposition to Wal-Mart. Related is very clear on how I feel. What they do with an as-of-right site is up to them.”

She is joined in this by her erstwhile protagonist and colleague, CM Charles Barron-who tells WWD that Related reneged on its word to leave Big Wally out: "Charles Barron, a councilman representing the section of Brooklyn where the Gateway project is located, said, “We negotiated with Related and the city. We had an agreement with Related with regard to small stores [in Gateway II]. That was the plan. Related will have to come before the City Council again for other projects, and they don’t want to sever ties."

Let's hope he's right. So, we are preparing for the big hearing showdown next week-and it should be some show. What we believe everyone will find out, is that there are countless reasons to dislike the Walmonster. But to get a really good idea of what damage the retail giant could do, you need to see the "Walmart-osaurus Rex" video: "The latest video from Net news sensation NMA, entitled "Walmart threatens NYC merchant," features a fire-breathing T. Rex storming through the streets of Manhattan, laying waste to all retailers foolish enough to try and stop it—they roll up with a tank, which itself would be a site on New York's crowded streets. Guest-starring Walmart booster and recent NMA target Mayor Michael Bloomberg, who delivers a pat performance."

Stay tuned.