With new formats, its success in food and a buffed-up image, Wal-Mart appears to be making a renewed effort to open stores in major urban markets. Although labor unions remain a huge obstacle, the hunt for savings in the recession may quell some local opposition.
An article last week in the Washington Business Journal indicated Wal-Mart is looking for enough land to accommodate an 80,000- to 100,000-square-foot store in Southeast D.C. for its first in the district. A separate article in Crain's New York in early August found that the retailer was searching for its first store in New York City's five boroughs.
Meanwhile, Wal-Mart was said to be looking to open a half-dozen or more stores in coming years in Chicago after getting rebuffed by city leaders, according to an article earlier this year in The Wall Street Journal. The Chicago stores, according to the article, are expected to serve as an urban model that it could help open up access to other tough-to-crack markets, including New York and Los Angeles.
The moves are apparently part of a longstanding, albeit highly frustrating, strategy to open stores in low-income, urban areas.
When Wal-Mart's first store in the West Side of Chicago was being built in 2006, then CEO Lee Scott announced plans to open 50 stores in areas heavily populated by minorities and in need of jobs and tax revenue. That led to some stores on the outskirts of cities but also many frustrated attempts to land inner city locations. After getting continually rebuffed in New York City, Mr. Scott said in 2007, "I don't care if we are ever here." It still operates only one store in Chicago.
But Crain's New York implied that Wal-Mart may benefit from its efforts in recent years to improve its image around the environment and employee health care.
The discount formula and broader food offerings is also said to make it more appealing in today's climate. Wal-Mart has also been opening multi-story stores to fit into more congested areas as well as smaller supercenters to bring food savings to tighter markets. Conventional discount stores in Bloomington, IN, and White Plains, NY, are adding fresh food to their mix.
"We're working toward a format that's more efficient and a smaller prototype," Wal-Mart spokesperson Amy Wyatt-Moore, told the Minneapolis/St. Paul Business Journal. "It's about utilizing and reusing our existing footprint to be able to deliver a Supercenter experience for customers in urban markets without adding any square footage."
Nonetheless, Wal-Mart will face fierce opposition from organized labor.
"While Wal-Mart claims to have improved corporate practices, these efforts appear to be little more than window dressing," said New York City Council Speaker Christine Quinn in a statement released to Crain's. "Until they make actual changes, providing a living wage and ending the practice of preying on small businesses, I will block any attempt to locate in the five boroughs."
Discussions Questions: What's the likelihood that the recession and Wal-Mart's success in food will help it enter significantly more major urban markets in the U.S.? Has urban opposition has lessened? What do you think of the potential of smaller supercenters for urban markets?