WAL-MART'S BIG APPLE
THE US RETAILER PROMISES JOBS AND TAX REVENUE, BUT UNIONS WANT TO KEEP IT OUT OF THE CITY

Posted on Sat, Jan. 29, 2005

RETAIL
WAL-MART'S BIG APPLE
THE US RETAILER PROMISES JOBS AND TAX REVENUE, BUT UNIONS WANT TO KEEP IT OUT OF THE CITY

Financial Times

BY CHRISTOPHER GRIMES AND LAUREN FOSTER

As Wal-Mart prepared to roll out an advertising campaign to polish its image this month, the retail giant committed a public relations blunder in a market it desperately wants to crack -- New York.

The city council had invited Wal-Mart to speak at a hearing on the effect of ''big box'' or superstore retailers on the local economy. But Wal-Mart pulled out, citing a scheduling conflict.

A minor transgression, perhaps. But it was interpreted as a snub by some members of the council, which will review Wal-Mart's request to build a 12,500 sq m store in bustling Rego Park, Queens.

Some on the council say they are keeping an open mind but other powerful forces are determined to keep Wal-Mart out. The city's trades unions oppose Wal-Mart's plan on the grounds that the company is unfair to workers. They hope a well-publicised fight will set a precedent for other cities trying to keep the company at bay.

Wal-Mart's biggest proponent is Michael Bloomberg, mayor of New York, who says the city would benefit from jobs and increased tax revenue.

It is a fight Wal-Mart needs to win to keep its growth strategy on track, say analysts. The store chain -- considered by many city dwellers as an emblem of suburban life -- has dubbed New York its ''next retail frontier''. A move to Queens, across the river from Manhattan's upmarket retailers and chic boutiques, would place it in the midst of big immigrant and working-class populations.

A SECOND LOOK

Mia Masten, Wal-Mart's director of corporate affairs for the Eastern region, says the company -- like many retailers -- is re-examining New York and other urban areas.

``A lot of urban areas are experiencing a renaissance and we're essentially following the customers''.

The company has had mixed results from its attempts to move into urban areas. It prevailed in Chicago but lost a hard-fought campaign in suburban Los Angeles. Those battles may prove to be warm-ups for the fight with New York's well-organised labour groups.

''If people thought the presidential campaign was nasty, watch this battle,'' says Darrell Rigby, head of the global retail practice at Bain & Co. ``This is going to be very passionate over the next three years''.

BIG BOX INVASION

New York remains fiercely proud of its locally owned hardware shops and delicatessens but national chain stores have started to infiltrate the city, which now has about 20 "big box" stores, including Home Depot, Target and Costco.

Retailers, anxious for a foothold in one of the biggest markets in the US, have sometimes had to make concessions to counter local concerns.

Ikea, the Swedish furniture group, overcame community opposition to a store in Brooklyn by agreeing to develop a public esplanade along the waterfront and set up a weekend ferry service to Manhattan.

Union leaders in New York say they are not interested in extracting concessions from Wal-Mart.

Randi Weingarten, who leads the United Federation of Teachers and the Municipal Labor Committee, says she wants to send a bigger message to the company about its treatment of employees.

''I think if we stop Wal-Mart dead in its tracks, maybe they will change their practices,'' Ms Weingarten says. ``A lot of people want to make this a debate about big box stores, but Wal-Mart is a whole different kind of big box store''.

OPPONENTS

Wal-Mart's opponents are not raising new issues. They say the company forces competitors out of business and provides lower-paid jobs with fewer benefits. These are accusations the company has heard before and is working to dispel.

James Sanders, who chairs the city council's economic development committee, says he is ''leaving a light on'' for Wal-Mart to make its pitch. ``They need to go on the record. Until then, they are losing public sentiment''.

Ms Masten, who insists she did not snub the council, says Wal-Mart would prove ''an extraordinary asset to the local economy''. Her pitch is that each New York store would create about 300-350 jobs and wages would be competitive with other retailers in the area. Moreover, each store would generate more than $5m in property and sales tax revenue, she says.

Mr Rigby says Wal-Mart needs to succeed in New York and other cities.

© 2005 Herald.com and wire service sources.

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