Walmart Is Walking Away From The Poor D.C. Residents It Agreed To Serve

After getting stores into gentrifying neighborhoods, the megaretailer will no longer build two stores destined for underserved communities.

01/18/2016 04:03 pm ET | Updated Jan 18, 2016
Jeff Chiu/Associated Press

WASHINGTON -- Melinda Jones needed a Walmart badly. The 50-year-old lives in the far eastern corner of Washington, D.C. The closest grocery options are over the line in Maryland, well out of walking distance. Because any shopping trip is a production, she typically takes the train out to Virginia and carpools with family to a military commissary.

"There's nowhere to shop around here. A Walmart would have been great," Jones said. "I can't believe it ... This makes me want to cry."

Jones was supposed to have her shiny new Walmart, at a site called Capitol Gateway, as part of a five-store deal hatched between the company and city officials in 2013. But late last week, the Arkansas-based retailer said it was scrapping plans for the two as-yet-unopened stores in the city. Faced with lagging sales, Walmart is closing 154 locations and laying off 10,000 employees in the U.S.

Right now, there's little sympathy in D.C. for Walmart's revenue struggles. The two jettisoned stores would have served the city's two poorest wards, an area that Washingtonians call "east of the river," that river being the Anacostia. While near-downtown neighborhoods have boomed in recent years, with an influx of wealthier, mostly white residents spurring new development, many of the predominantly African-American neighborhoods like Jones' haven't shared in the new prosperity.

It's hard to come by much fresh produce in Jones' neighborhood. The closest options tend to be corner stores that skew toward juice drinks, tobacco, candy and beer. The Walmart stores slated for D.C. vary in size, with some much smaller than a typical supercenter, but they would all serve as a convenient one-stop shop to cover just about any basic needs. Jones anticipated that the Walmart would potentially be transformative for her neighbors, particularly older residents who don't have ready access to cars.

Walmart is the largest retailer and private-sector employer in the world. After permeating much of rural and suburban America, the company worked hard to make inroads into two other relatively untapped markets -- overseas, in countries like South Africa, and in America's major cities. Given the company's image as a low-road employer, any foray into the latter brings intense union opposition, along with the general reservations of big-city liberals.

That's why the two stores east of the river were a lynchpin of the Walmart deal. If the company would agree to build those locations, and hopefully spur new development in the process, then city officials would give Walmart the entree to the better-off neighborhoods that it wanted. The agreement helped Walmart boosters overcome loud opposition from labor and community groups that wanted to keep the retailer out for good. But after building three stores west of the river, Walmart is walking away from the neighborhoods that needed it most.

The about-face is an embarrassment for city officials who pushed the deal. It isn't clear what sort of long-term implications it might have for Walmart's reputation beyond D.C. 

“As part of a broad, strategic review of our existing portfolio and pipeline, we've concluded opening two additional stores in Washington, DC is not viable at this time," Brian Nick, a Walmart spokesman, said in an email. "Our experience over the last three years operating our current stores in DC has given us a fuller view on building and operating stores in the District. This decision will not affect our three existing stores and we look forward to continue serving these customers in the future.”

A councilmember told the Washington Post that Walmart said privately it was concerned about the city's minimum wage, which will rise to $11.50 this summer, and its proposed paid-leave plan, which would impose a new tax on large employers.

"If you make a deal with Walmart expect to get stung," tweeted David Grosso, a city councilmember. Former Mayor Vincent Gray, who brokered the deal, said the city has "absolutely been shafted."

Though it was just a handshake deal, city officials told the Post they are looking into their legal options.

People who live and work near the two scuttled stores expressed a mixture of disappointment and bewilderment at the announcement.

Carl Williams saw the news on television on Friday night. For 17 years, Williams has worked as a barber at Like That Barber Shop, directly across the street from the site where one of the Walmarts was expected to be built, in Skyland Town Center, in Ward 7.

Right now, the mixed-use Skyland project is a leveled field beside a CVS. The city has poured $90 million into the project and must now find someone other than Walmart to anchor it.

Williams said he followed the Walmart developments closely, even going to community meetings on the issue. Like other people interviewed, he used the word "needed" to describe the store.

"I'm in disbelief. It's shocking that they would back out like that," Williams said. "We definitely need the retail. There's nothing happening around here."

Across the street, James Mayo was waiting at a bus stop in front of the Skyland field. He said it was "terrible news" about Walmart, for the community and for himself personally.

"I planned on trying to get a job there. Everybody around here probably would've tried to get a job," Mayo said. "Here one minute, gone the next."

The unemployment rate in Mayo's ward was 13.3 percent last year, more than double the rate of wealthier wards. In nearby Ward 8, it was even higher -- 16.5 percent, or roughly triple the national rate. A recent study by the Urban Institute found that the vast majority of economically challenged neighborhoods are east of the river, with the city's poorest residents increasingly concentrated there.

Shimona Ingram, 38, lives near the shelved Walmart that would have gone in at Capitol Gateway. She's lived in the neighborhood for eight years, and she's used to trekking out to the Save-A-Lot or the Safeway in Maryland. Like Mayo, the toughest part to swallow was the thought of new jobs no longer coming to the neighborhood.

"It's a loss," Ingram said. "We're losing out on everything around here."

This post has been updated with comment from Walmart.

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