Wal-Mart rollout - or rollback?
LOS ANGELES — It is the world's largest company and America's top private employer.
Analysts say it saved US consumers $20 billion last year in its stores alone and another $100 billion by forcing other retailers to slash prices to compete.
But as Wal-Mart stores continue to spread across the US, community opposition is also mounting from critics who say its "always low prices" mean always low wages for nonunion workers and that its famous "rollbacks" on goods roll over local businesses and economies.
The latest legal battleground is California. The retail giant wants to place the first of several dozen grocery/retail superstores in California. Faced with a rebuff in Inglewood, near Los Angeles, the company got enough signatures to put its plans to a special ballot vote. But last week, two community groups filed suit to stop the vote, which would bypass the usual City Council oversight of such developments.
Analysts say the skirmish is a window into the kind of fights Wal-Mart can expect elsewhere in coming years. Already, the firm faces some 40 lawsuits regarding allegations such as forced overtime without pay and gender discrimination. But such backlashes may not stop the larger trend that Wal-Mart represents: catering to consumers that flock to big-box stores for deep-discount values.
"Whatever the skirmishes look like on the surface, the vast majority of people vote with their purses," says Ira Kalish, global director for Deloitte Research. "The American and global consumer has internalized discounting as important to them."
Fearing the foothold of Wal-Mart in Inglewood, the city last year attempted to pass an ordinance that would have blocked the company from building a combination grocery and discount store. Such superstores are typically twice the size - 180,000 to 225,000 square feet - of a typical Wal-Mart. Under pressure of a Wal-Mart lawsuit, the ordinance was rescinded and pro-Wal-Mart groups qualified an initiative for an April vote.
Critics say it is a violation of state law for the retailer to go around elected officials to the voters and worry that the special election sets a dangerous national precedent for companies to circumvent long-established rules on matters such as environmental oversight and public hearings.
Wal-Mart officials say the Inglewood fight is not backed by the majority of residents, but rather is fueled by money and union activists who don't like the store's nonunion policies.
More fights are coming within California alone, San Diego next month will consider a ban on retail stores that exceed 130,000 square feet. Contra Costa County in northern California already passed one, though it is being challenged by Wal-Mart officials. And San Marcos recently deadlocked on whether or not to rescind approval of a second Wal-Mart there, forcing a referendum on the issue to a March vote.
"So far a disproportionate amount of Wal-Mart's country-wide expansion has been in the South, which is fairly non-union," says Mr. Kalish. "Now that they are moving into more populated, industrialized and more unionized regions, they are going to come up against ... opposition."
All this moves the giant retailer into unknown territory, because no other American retailer has ever gotten so big. But they say the disputes not likely to deter Wal-Mart from growing, because Americans have gotten used to the giant "rollback" discounts offered by the store.
"Many workers might make less money, but to the extent that millions of consumers pay less, they free up money to buy other stuff - making them and society in a sense wealthier," says Kalish.
Such assessments are anathema to labor unions and social justice organizations who say that Wal-Mart's cheap prices come at the expense of decent wages and benefits for workers. "Wal-Mart has a track record of decimating locally owned small business," says Lizette Hernandez, of the Coalition for a Better Inglewood.
Joining the fight are other citizens and area officials who say they are concerned about the preservation of neighborhoods, traffic congestion, and retail sprawl. They say the Inglewood initiative requires only a majority for approval, but will require a higher standard - two-thirds of voters - to challenge specifics of the building phase once it begins.
"Wal-Mart is trying to muscle its way into the community by taking advantage of loopholes in the law that are inappropriate," says Gerome Horton, state assemblyman from Inglewood.
Part of the increased spotlight on Wal-Mart in California has come because of protracted contract disputes between southern California grocery workers and three major supermarket chains. Vons, Ralphs, and Albertsons have repeatedly said union concessions are needed for them to compete favorably with Wal-Mart's new grocery stores. Wal-Mart sales clerks reportedly make $8.23 to $10.00 per hour, compared with a reported $17.90 for senior clerks at Vons, Ralphs, and Albertsons.
Strikers have won much public support. Similar grocery strikes are in planning stages in other states, making the California confrontation with Wal-Mart a sort of national battleground.