California's chilly welcome for Wal-Mart
'Always low prices' are no longer always enough for a retail giant to build more stores.
America's biggest retailer, Wal-Mart, - loved by millions for "always low prices," loathed by others for "always low wages" - is running into opposition in America's biggest state.
On Tuesday, voters in Inglewood, a community near Los Angeles International Airport, chose not to let Wal-Mart develop a new superstore in there. The giant chain had fought hard to let "the people" decide, rather than a zoning board, but lost by a 2-to-1 margin.
The giant chain's tactics of going around reluctant local officials to woo local voters is likely to continue in some cases and in new forms. The retailer has gotten voters or officials in other California cities to repeal prohibitive ordinances against "big box" stores, including Contra Costa in the north and Calexico in the south.
Still, the vote Tuesday here may signal that, for all the benefits of its low-priced consumer goods, the Arkansas-based chain is at risk of going too far with its aggressive tactics.
"The tide of public opinion is absolutely going against Wal-Mart," says Kent Wong, labor expert at the University of California in Los Angeles. "This has broad implications for the expansion of Wal-Mart across the country.. They invested tremendous resources to allow them to open this superstore."
In the referendum, voters decided whether to let the chain bypass ordinary government oversight of its development. The idea was soundly rebuffed by a coalition of business, education and religious activists. "The last thing we wanted was for a corporation which is not a democracy to come in here and act like a sovereign nation," said volunteer Rachel Morris, who walked the city streets educating voters about what was at stake.
The measure called for a complex the size of 17 football fields to be built without the usual traffic studies, environmental reviews, and public hearings required by state and local laws. "They were trying to tell residents that Wal-Mart is so big that they don't have to follow state and local laws. That is a nightmare and we didn't buy it," says Morris.
After announcing last year it would build 40 supercenters in California, the chain has opened only one unopposed - in La Quinta, a desert community 200 miles east of L.A. The city of Oakland last year banned Wal-Mart from its communities and San Diego recently passed an ordinance to keep "big boxes" out.
After Inglewood officials last year tried to keep Wal-Mart out, the store got 10,000 signatures to take it directly to voters. Local officials had already filed suit, and more organizations were expected to follow, as the state attorney general held that the measure was likely unconstitutional. The Tuesday vote was considered a test case for similar moves by Wal-Mart to get into other communities nationwide.
"This was a trial balloon to see if they could get away with it," says Gerome Horton, state assemblyman for the district. "All indications were that this was a model they hoped to try again and again unless someone stopped them."
The negative vote reflects what several national experts say is increased scrutiny of Wal-Mart as it expands across the country. The chain now has 3,000 outlets and 1.2 million employees, the largest private employer in the US.
"It's almost unheard of to build a broad coalition to oppose Wal-Mart ... you don't see this very often," says Mr. Wong of UCLA's Labor Center. "It reflects a maturing on the part of various community interests in trying to determine how to defeat this."
The vote came after a high-profile PR battle, in which Wal-Mart peppered the airwaves for months with television ads showing happy employees extolling the virtues of working at Wal Mart. Meanwhile, local coalitions of residents, small businesses, and religious leaders canvassed neighborhoods with pamphlets questioning the authority of any corporation to exert its will over and above existing laws.
"This clearly shows that corporations like Wal-Mart and other international giants are not going to be able to bully their way into communities with sweet talk and plans to circumvent normal processes," says Daniel Tabor, former Inglewood councilman.
Although activists wanted to make sure voters knew it was Wal-Mart's attempts to avoid oversight that was at issue, the usual debate over the plusses and minuses of the retail giant ensued as well. Wal-Mart detractors say its low priced products and services drive out smaller local businesses and other established supermarket chains. They say low wages ($11,700, on average) and limited health coverage cost communities money in public healthcare costs for employees who have nowhere else to turn.
Moreover, they say the company is now so strong that it forces its suppliers to outsource jobs to India and China to compete, costing Americans jobs. "In recent years Wal-Mart has become the symbol for a ruthless corporation that throws its weight around to get its way," says Harley Shaiken, a labor expert at the University of California, Berkeley.
Supporters counter that a Wal-Mart in a community provides hundreds of jobs, bargain-basement prices for consumers, saving the average household $500 a year on foodstuffs alone. The Los Angeles Economic Development Council called Wal-Mart good for the area, while Mayor Roosevelt Dorn said it would provide 1,000 local jobs and $5 million in sales tax for the city of only 115,000.
But scrutiny of Wal-Mart has expanded as the chain has grown. "The California vote is important because the whole issue has reached its tipping point," says Kate Bronfenbrenner, a labor economist at Cornell University. "Is Wal-Mart going to keep expanding or [will Americans say] 'that's enough?' "