Having saturated the rural landscape, shuttering local stores in small town America along the way, now, in the wake of stagnant sales and increased competition, Walmart desperately needs to expand into urban markets.
And what better urban market than one full of eight million people? While the big box retailer is eager to enter the Big Apple, challenges loom large. Given the negative reputation Walmart has earned for being hostile to workers among other problems, many New Yorkers are skeptical, to put it mildly.
To counter the opposition, Walmart is positioning itself as the solution to urban food deserts -- areas where finding real food is next to impossible. But as Anna Lappé has eloquently argued, the big box chain isn't the answer: "Let's be clear, expanding into so-called food deserts is an expansion strategy for Walmart. It's not a charitable move."
Research Shows Walmart Kills Both Jobs and Food Access
Now a report released last month by Manhattan Borough President Scott Stringer concludes that not only would bringing Walmart to Harlem spell disaster for labor, but it could also make an already dire food access problem there even worse.
Based on data from Chicago's negative experience, the report found that within two years of a Walmart store opening in New York:
As Stringer explained, Walmart shouldn't be undermining city programs to improve fresh food availability: "Walmart would be a bane, not a boon, to the health food economy of Harlem -- or any other New York City neighborhood."
Moreover, previous economic analysis has shown that Walmart's promise of jobs doesn't pan out either. In a report from last summer called "The Walmartization of New York City," researchers at the City University of New York concluded that, "despite Walmart's promises of jobs and lower prices for the community, the longer term impact is actually the opposite."
Assuming Walmart opened the 159 stores needed to reach 21 percent grocery market share in New York City (the same proportion the company enjoys nationally), the impact would be a net loss of almost 4,000 jobs, and a loss of more than $453 million in wages per year for all remaining workers.
What about the new Walmart jobs? According to the report, 4,279 new low-wage Walmart workers would have to "rely on social services to make ends meet, costing New York taxpayers over $4 million per year" in health care benefits alone. This, in a city where the mayor has asked for $2 billion in budget cuts.
Current Walmart Locations Confirm Bleak Outlook
Other areas of the country have already had real world experiences to back up these projected findings. According to New York's Food for Thought report, of all the employers in Ohio, Walmart has the greatest number of associates and dependents enrolled in Medicaid, which in 2009 cost taxpayers $44.8 million.
Similarly, a 2004 study found that for each of California's whopping 44,000 Walmart employees, taxpayers had to spend $730 on health care and $1,222 on other forms of state and federal assistance such as (ironically) food stamps.
In 2006, Walmart entered Chicago and recently convinced local officials to approve two additional locations, including (after a long battle) on the city's South Side. How have things fared so far in the original Chicago location? Not so well.
A three-year study released by Loyola University Chicago in 2010 revealed that Walmart had not enhanced retail activity or even employment opportunities. In fact, "the probability of a local retailer going out of business during the study period was significantly higher for establishments close to Walmart's location." Specifically, researchers found that a nearby business had about a 40 percent chance of closing over a two-year period -- not very good odds.
If You Can't Beat Them, Buy Them
Of course Walmart paints an entirely different picture, and is spending a ton of money to hide these sobering facts in a massive PR campaign. According to the Walmartization report, in the first half of 2011 alone, the company spent $2.1 million lobbying in New York, as much as they spent there in the past four years combined. There's even a dedicated website complete with a "fact-checker" and the heartwarming tagline, "Helping NYC Save Money and Live Better."
Philanthropy is another time-honored corporate tactic, often used to buy silence from critics, curry favor with community leaders, or, in this case, grease the wheels to gain entry into a reluctant-but-lucrative market.
In December, Walmart announced a combined gift of $250,000 to five various New York City charities, including a home food delivery service and a soup kitchen. Of course $250K is chump change to a company whose net sales topped $405 billion in 2010, but to these five groups it no doubt means a lot. Moreover, in its press release, Walmart made sure to point out the company's "more than $13 million" in donations in New York City since 2007. (Similarly, Walmart pledged to donate $20 million to Chicago charities.)
But Walmart will need a lot more than a few million dollars in tax-deductible contributions to make up for all the job losses, decrease in available fresh food (and even increased obesity) that could befall New Yorkers.
Other cities should also brace themselves, as the company is opening four stores in Washington, D.C. later this year, with additional area sites planned. Other locations on the agenda include Boston and San Francisco. But mostly the company is keeping quiet about its urban expansion agenda, at least publicly. Last year in Boston, the company was said to be "quietly chatting up city officials" while scouting neighborhoods.
I shudder to think of the consequences to American's already suffering urban populations if Walmart succeeds in duplicating its rural retail takeover. What to do about it? Support the United Food and Commercial Workers, which has an important campaign called Making Change at Walmart. See also the Big Box Tool Kit, which is chock-full of news and practical resources. Communities can work together to fight back, we just have to act before it's too late.
This article first appeared on Food Safety News.
Follow Michele Simon on Twitter: www.twitter.com/Appetite4Profit
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I am fortunate enough to have choices - there are many in blighted urban areas that do not.
We're committed to providing our customers with healthier and more affordable food choices, which includes giving communities increased access to grocery options by bringing stores to areas with limited or no access to fresh, affordable food. Our commitment to open up to 300 stores in areas serving USDA food deserts by 2016 will reach about 800,000 people in under-served urban and rural areas. These stores will also bring more than 40,000 jobs.
Walmart provides thousands of Americans with their first jobs, giving them training and work experience. More than 300,000 employees have chosen to stay with the company for more than 10 years and build a career. In 2010, we promoted more than 146,000 hourly associates and nearly 75 percent of our store management team started out in hourly positions.
Unfortunately, the studies referenced fail to show how our stores often serve as magnets for other new businesses. Chicago is a great example of the positive impact. You can visit http://www.walmartchicago.com/loyola/ to read about the benefits Walmart can bring and to learn about the flaws of the Loyola study. You can also visit http://reason.com/archives/2011/12/29/the-case-for-walmart for a different take on the “Food for Thought” report.
There is a solution to not contributing to the success of big box retailers. It's called not shopping there.
A note to all those disparaging progressives in the comments below: I am about as left-wing as one can get before becoming a Marxist. I just happen to care about indigent people getting food onto their plates more than I care about shady business practices and overprivileged upper middle class people worrying about what their neighborhood will look like.
My suggestion is that - rather than endlessly complain about the way certain companies are profiting at the expense of the things we love and appreciate most - we expand the definition of "profit" to mean that which benefits life on Earth, and agree to reward only THAT. Until we do so, we can blame all the world's ills on the evils of all the Wal-Marts of the world, but we're not going to rid ourselves of the behaviors we dislike - because underneath it all we're supporting the evil by refusing to change the system that rewards it.
I refuse to shop at Wall Mart. I don't want to reward bullying behavior.
What?
They DON'T do that?
People shop at Walmart because they WANT to?
Huh.
That doesn't fit the narrative....
In the science fiction film "Demolition Man" every restaurant was a Taco Bell. It's not so hard to imagine a world where every store is Walmart. That would then make it a monopoly. Not exactly "free market" now is it?