Walmart opens two DC stores tomorrow

I try to save money when I shop for food.  It means that I buy some groceries at deep discounter Aldi, go to ethnic supermarkets like Mexican Fruit in the Union Market District and Pan-Am International Market in Columbia Heights, clip coupons and avidly scan the weekly supermarket circulars, and I  hesitate when buying food at farmers markets in DC--at least certain markets--because the prices can be significantly higher compared to smart grocery shopping.

Walmart on Georgia Avenue NW in Washington, DC.  Under construction on November 25th, 2013.

So the fact that Walmart is opening in DC tomorrow--they being the source of "everyday low pricing" according to their advertising--ought to be something I'm looking forward to.

I'm not, for various reasons (see the report I co-authored about the Georgia Avenue location here, ANC4B Large Tract Review Report on Walmart, 5/2011).  Also see the past blog entry, "Piling on City Council for Walmart" and the WBJ op-ed, "Temper Walmart Glee with Planning."

The report for our neighborhood's "advisory commission" is mostly focused on urban design--how the building fits within its context--and transportation issues raised by the project.

For the most part, the report didn't focus on whether or not Walmart is "appropriate" or not as a company.  Unfortunately, many people focus on that question, the discussion gets very heated--and cannot ever be resolved because there is no "illegality" concerning their business model--and in my opinion the company and the developers that work for them use this "noise" to avoid dealing with other more substantive problems.  That was definitely the case in DC.

I do regret that the report didn't address customer service questions and to some extent labor treatment issues.

So on the eve of Walmart opening their first two stores in DC, here's some stuff to think about.  Some of which has already been written up in:

- Lessons from Walmart's foray into Washington, DC
- DC pols are so easy to buy: Walmart edition
- I hope for Aspen Hills' sake that Montgomery County is smart enough to learn from DC's planning errors with regard to Walmart's entry
- More research on the economic impact of Walmart
 
Urban design issues.  The biggest misconception about Walmart's new focus on "city" locations is that their entry necessarily means "urban-appropriate" and/or mixed use development choices.  The experience in DC is that Walmart is agnostic about "urban design" and mixed use questions.  If a developer comes to them with a project that is urban and mixed use, and it is in a location that they want to be in, they will say yes.  But at the same time, if a developer comes to them with a site they are interested in, but a project that isn't particularly urban-appropriate, they are fine with that too.

The new mixed use building, including a Walmart, at 1st and New Jersey Avenue NW.

So in DC, two of the five projects that Walmart is involved in are definitely urban-mixed use projects, where the store is on the ground floor or second story of a multistory mixed use development--at New Jersey Avenue NW, which is one of the stores opening tomorrow, and at Fort Totten, a couple blocks from a Metro Station, to be located on Riggs Road NE.  The other stores are not.

Two are part of site plans that have other elements, so could be considered to be "horizontal" mixed use.  But the Georgia Avenue store, opening tomorrow, was designed to not take advantage of the ability to develop vertically.  Sure it will have underground parking and a zero foot setback from the sidewalk, but that's as urban as it gets.  Which is a great disappointment.

Similarly, in Baltimore, a proposal for a Walmart "anchored" project is still generating a great deal of opposition, in large part to the suburban-ness of the site plan and design.  See "Contentious Walmart plan pits Remington groups against each other" from the Baltimore Business Journal.

Interestingly, the proposed design of the Baltimore store appears to be very similar to the DC Georgia Avenue store.  The big difference is that in Baltimore, it will be fronted by a parking lot, while in DC the parking is underground and the building is placed at the sidewalk.





Rendering of the Georgia Avenue DC Walmart


The lesson to other cities is to take nothing for granted about urban design when it comes to Walmart or other big box stores.

Transportation issues.  I do regret that DC did not try to get Walmart to develop a delivery system.  Knowing that you can get your purchases delivered means that you don't feel obligated to drive to the store, which can reduce motor vehicle trips.  The company is doing some transportation demand management measures, installing indoor bike parking, and paying for a bike sharing station at the Georgia Avenue store (and will be for the Fort Totten store, I don't know concerning the New Jersey Avenue store, which didn't require special city planning approvals).

The city could have also done other more important roadway reconfiguration projects for the Georgia Avenue store but ignored the need.

Employee treatment/labor issues/wages.  I didn't oppose the company coming into the city but I am going to be very specific about not shopping there, because I don't think the company treats "average" employees very well.

The Walmart on Atlantic Boulevard in Canton is collecting food for employees who can't afford Thanksgiving dinner. The company said this is proof that employees look out for one another. The group of employees who have held national strikes against the world's largest retailer says the food drive is proof Walmart doesn't pay associates enough to survive. The Organization United for Respect at Walmart, or OUR Walmart, is holding strikes against the chain at stores in Dayton and Cincinnati on Monday, Nov. 18. (courtesy of OUR Walmart)

I wrote about the employee thing in the piece cited above in the summer but it gets re-emphasized by a recent story in the Cleveland Plain Dealer, "Is Walmart's request of associates to help provide Thanksgiving dinner for co-workers proof of low wages? " where workers at one Walmart store are organizing a holiday donation program--for other employees who make very little money.

Product access and selection.  In many retail categories other than food, there just aren't many competitors anymore.  There are traditional department stores, but very few are left generally or in cities.  General merchandise stores are limited too: in the face of competition Kmart and Sears are reeling, while Target manages to succeed.  Plus you have Kohls selling apparel, and in small towns in the midwest, Shopko.  And then you have other category killer brands like Bed, Bath and Beyond or Best Buy or Staples in office supplies, etc.

You just don't have many choices.

Note that Kroger has some stores for their name stores and banners that include soft good sales in a "Marketplace" format.   Plus there is their Fred Meyer division which does this.  And the unaffiliated Meijer Company in the Midwest and HEB in Texas also.  Otherwise, there aren't traditional competitors left.  Increasingly, Walmart is the only "choice" that's available.  At least communities where Kroger and Meijer are active have more choice than much of the rest of the country.

Because DC is understored in many retail categories, especially home goods and apparel, having Walmart will provide more access to a great number of product categories without necessarily impinging on other retailers--at least those located in the city.  Presumably, the Walmart stores in the city will reduce the number of trips in-city residents make to out-of-the-city retailers.  This would reduce trips and increase local sales tax revenues.

Cost savings for consumers.  As far as saving money goes, if you shop smart at grocery stores (e.g., buy certain items when they are on sale) you pay about the same amount as Walmart, and that doesn't take into account (1) deep discount stores like Aldi; (2) ethnic stores; and (3) the competitive price reaction by supermarkets--e.g., Safeway has lowered some prices, like cilantro, to the same price as the ethnic stores, in advance of Walmart's opening.

Greenwashing.  A couple of years ago, I wrote about how Walmart makes their decisions on the basis of business considerations.  This was in response to people saying "Walmart won't make healthy food despite their affiliation with Michelle Obama because the company is bad."

I responded, no, Walmart makes decisions that favor their business, and will sell healthy food for the political and other benefits the same way they treat employees badly to cut down on labor costs--it will make them more money.

The same goes for environmental practices.  They will engage in better practices to the extent that it saves the company money and generates positive publicity.  Hey, that's the way of business.

... even though, a few weeks ago, the Institute for Local Self Reliance released a report, Walmart’s Assault on the Climate: The Truth Behind One of the Biggest Climate Polluters and Slickest Greenwashers in America, about what they call "greenwashing, and "Walmart’s rapidly expanding climate pollution."  Additionally, they criticize the Environmental Defense Fund for taking a lot of money from foundations affiliated with the company ("EDF Sells Green Cred to Walmart for the Low, Low Price of $66 Million," Grist Magazine).

Impact on traditional commercial districts.  The issue of the impact of Walmart on urban markets is tricky, because urban markets are traditionally understored, so they are lacking retail, whereas by comparison suburbs are over-stored. This is definitely the case in DC. So if a Walmart opens in DC, probably there will be less negative impact compared to a store opening in a location with a lot more retail competition. 

However, I have also written about how Walmart's presence changes the mix of stores in a commercial district, from locally owned to chains.  That is what has happened in Chicago's Austin neighborhood, even if the local Alderman doesn't notice ("Chicago politician tells Manhattan Beep Scott Stringer to welcome Walmart," New York Daily News).

Plus, Walmart's business model isn't designed to support other retailers, it's to capture as much as 100% of a customer's discretionary spending on retail.  That leaves nothing for other retailers. 

So it's a misnomer to call a Walmart store "an anchor," because by definition an anchor supports other stores and commercial districts more generally, by sharing customers.  Walmart has no intention of doing that.

So cities shouldn't be aiming to attract a company like this to their commercial districts.  Or at least there should be a commitment to the development and execution of a program to mitigate the expected negative effects.

Bad customer service.  Walmart sales at the level of individual stores continues to drop.  This is a function of two things; (1) a reliance on lower income consumers, who continue to have less money to spend since the US remains in recession and (2) cut backs in labor and the array of products carried, both measures to cut costs, which ends up leading to a great deal of out-of-stocks and other inventory problems (see "Customers Flee Wal-Mart Empty Shelves for Target, Costco" from Bloomberg) which comes back to the customer in terms of "bad service."

More generally, the company doesn't get rated highly for customer service anyway.  See "Who's right about Wal-Mart's customer satisfaction?" from MSN, "Which Retailers Have the Most Satisfied Customers?" from Time Magazine, and "Consumer Reports customer service survey: Walmart rated the worst" from the Chicago Tribune.

Is this a company towards which cities should be focusing their business recruitment efforts?

Photo: J. Emilio Flores for the New York Times.  Protest at a Walmart in Los Angeles, on Friday November 29th, 2013.

From the NYT article "Exhausted Shoppers Head Home, Replaced by the Next Wave":

The shopping season also was the occasion for protests by labor groups and some Walmart workers at stores across the country in an effort to rally support for higher wages, with some demonstrators conducting civil disobedience sit-ins in Chicago, Los Angeles, Alexandria, Va., and several other cities. Our Walmart, a union-backed group, said more than 110 people had been arrested at the demonstrations.