Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Friday, July 19, 2013

Piling on City Council for Walmart

DC recently passed legislation forcing large big box retailers to pay higher wages. The bill is focused on Walmart, which has plans for 6 stores in the city, but the legislation applies to other stores as well. Three of the stores are underway and the stores not currently being built would not be, according to Walmart, if the law is upheld.

Now I wasn't in favor of the law because it was misdirected. I prefer to see the city pass a comprehensive big box review ordinance that would focus on urban form, development, and other elements.

Left: Walmart was a sponsor of last September's H Street Festival and at their booth they were gathering names of supporters for their entry into the city.

What gets me about the campaign by Walmart, and now I understand why they have been organizing continuously since they began the process (see "If you don't know urban political theory, it's likely that you don't understand local land use: St. Louis: DC; etc."), in order to be able to ward off efforts such as this, is that "the other side" hasn't been articulate about Walmart's two biggest weaknesses.

1. In virtually every consumer satisfaction study, on every element except price*, they are ranked very low (see "Who's right about Wal-Mart's customer satisfaction?" from MSN Money).

2. The way that Walmart treats non-managerial staff is horrid, horrid, horrid, at least according to this series of articles from Gawker (e.g., "Life at Wal-mart, Vol. 3: Welcome to Hell").  Also see "Wal-Mart Relies On Taxpayers To Subsidize Low Wages" from Business Insider.

3.  Related to both customer satisfaction and labor treatment-management, Wal-mart's primary priority is managing for stock price, and in the face of sales drops they have been continuing to cut labor, about 50 people per store.  This has resulted in highly significant levels of "out-of-stocks" on the weekends ("Customers Flee Wal-Mart Empty Shelves for Target, Costco" from Bloomberg).

Why would we want to roll out a red carpet for such a company's entry into DC?

Anyway, Walmart continues to gather support, according to this article, "Major retailers urge Gray veto of living wage bill, threaten to table expansion plans," from the Washington Business Journal. From the article:

A half-dozen major retailers have signed a letter to D.C. Mayor Vincent Gray urging him to veto the large retailer living wage bill, threatening to "revisit" expansion plans if the legislation is enacted.

Here's the irony about this statement. Walgreen's and Autozone stores are small, they will never be subject to the legislation. Macy's is not likely to ever open a second store in DC, maybe a Bloomingdales, but probably not. Neither Target nor Home Depot is likely to open a second store in DC. Lowe's has been listed as coming to the city, probably, to a development on New York Avenue.

And the companies are not in the business of wanting to ever help Walmart.

But the companies must be so against local regulations concerning labor relations and wages that they would join forces, with concern that such regulations could end up being extended to other types of businesses.

I even saw an on-air broadcast editorial in favor of Walmart on the wage bill issue, on Fox5 (WTTG-TV).  I've never seen them do an on-air broadcast editorial--maybe they do them all the time and I just am never watching at the right time? 

Walmart plays very hard ball, as I wrote about last year, about how they successfully got a big box review ordinance overturned in San Diego, and I expect they are likely to win on this issue in DC.

* There is a report from Zenith Management Consulting, How To Exploit Wal-Mart's Weaknesses, that makes the point that the reality is that only 20% of the products that Walmart sells are significantly less than the prices at other retailers.

But they use these products as a way to shape a consumer's overall impression about Walmart as always being the lowest priced store.  From the piece:

• Wal-Mart’s business model is not really low-price, it is creating perceptions that
prices are lower than they really are.
• All retail customers have five core needs that must be met.
• Low prices matter more to consumers because they think Wal-Mart’s are so much lower.
• Consumers forgive Wal-Mart’s poor quality, service, and convenience because they think Wal-Mart’s prices are so low.
Consumers who shop at Wal-Mart become caught in a self-reinforcing loop that makes them keep shopping there.
• Wal-Mart’s buying practices injure its vendors.
• Wal-Mart actually serves well only one stakeholder group: shareholders.
• Wal-Mart’s great weakness is that it serves poorly four out of five stakeholders.
• Wal-Mart is so successful nonetheless because it creates perceptions that it is actually serving all its stakeholders well.
• The only way to recapture market share from Wal-Mart is to interfere with the
• This cannot be done by individual organizations, but must involve groups of
organizations acting together.
Walmart's total sales include 55% grocery sales ("Walmart's Grocery Segment Accounts for 55% of U.S. Sales" from Retail Leader; "Wal-Mart Fattens Up On Poor America With 25% Of U.S. Grocery Sales" from Forbes).  And because people eat every day, food purchases drive a lot of store traffic.

One of the company's campaigns is price comparisons ("Walmart Gets a Boost From Local Price-Comparison Ads" from Advertising Age), which they have been running in this market.  The ads typically cherry pick products for the comparison and they go head-to-head with the company that they are most likely to compete with--in this case, Giant Supermarkets.

In some other markets, supermarkets like Publix ("Publix swats back in Walmart price war" from the Tampa Tribune) and HEB ("H-E-B beats Wal-Mart on advertised claim of big savings" from the Houston Chronicle) have successfully run counter-advertising ("interfering with the mis-perceptions") that has led Walmart to back off on the campaign in those markets, because these companies can successfully compete.

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At 12:20 PM, Anonymous charlie said...

What I am struggling with is why we even want walmart.

Walmart=poor people. Not a good thing. And not good for the city.

As I said before, bizarrely now Walmart (and other jobs like that) make the DC small business exchange work better as it would increase a pool of people buying individual

(Another factor is jobs like this are the only ones poor people in dc are qualified for. There are resaons why they can't hold down low end civil servant jobs)

The calculation I've seen is it would increase walmart's cost by 1%; or 46 cents per shopping trip.

At 12:39 PM, Blogger Richard Layman said...

The sad thing is that most of DC's structurally impoverished would have a hard time even holding down one of these jobs.

I had a conversation with Alex Baca ex-City Paper, now WABA, and she told me that when the Giant opened in Congress Heights, that WC Smith had "caseworkers" (not her word) on staff to train the people not to "just take food" from the shelves, and they had to work hard with Giant to get them to take some time with the employees and not just fire them for doing this (which is the normal case with supermarkets).

It reminds me of my piece about people thinking that the community and the businesses are supposed to be operating on kind of a communal basis.

2. and again, your subtle point about Walmart and the insurance pool is interesting.

At 1:13 PM, Anonymous charlie said...

The problem with "obamacare" it is rarely does what it supporters or detractors claim. IN this case, moves the burden on insuring part time workers from the goverment/health care system onto everyone.

And yes, I agree about the observations on giant although lets be clear this isn't a positive. I think you need a re-entry program at age 30 for black men after their testosterone goes down to where they can become worker bees. (bascially GED+ social skill training).

Of course they real issue is unions and you don't hear safeway/giant making a peep. don't know about ALDI. Save a lot isn't either.

At 2:40 PM, Blogger Richard Layman said...

Interestingly, before he turned on me and the public, in October, after the primary but before the general election, I had a very interesting conversation with Harry Thomas and the then director of the Brookland Main Street program (whom I succeeded) about exactly what you mention in terms of a age 30+ re-entry program. He said it almost like you did.

The thing is that they've had 15 years of being very very disconnected, and GED+ social skill training isn't enough. It's like physical therapy for seriously injured people. Many many hours/day for many many months, sometimes years, to get them reconnected.

3. Of course, Giant/Safeway aren't complaining, yes, because they are unionized they aren't covered by the bill, plus they are the big losers vis-a-vis an un-unionized walmart. Then again, they've long since moved to a two-tier wage scale too.

I can't imagine Aldi is unionized. It seems like they run their stores with fewer than 10 people. I've never seen more than 5 at the DC store, and that includes the guard.

At 11:15 AM, Anonymous Anonymous said...

Don't know if you saw this but it does seem that the chickens are coming home to roost, albeit slowly.



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