A Bite Out of the Big Apple?

Word is spreading that Wal-Mart is looking for sites in New York City. The usual suspects—unions, social activists, politicians, all looking to score points with their constituencies and small business owners—are lining up to block the world’s largest retailer from planting a toehold in any of the five boroughs.

It’s a classic fight that has transpired across the country, most notably in Chicago where Wal-Mart has one store and is angling to place another within the city limits. It has scores of them ringing the Windy City.

It’s also a classic tale of elitism. Of out and out snobbery. I’ve said it publicly so I might as well put it in print—there is no difference between the operating practices of Wal-Mart and Target, or most other large scale retailers, with the notable exception of Costco. Only size differentiates them, Wal-Mart being several multiples larger than any other retailer. They pay low wages. They limit medical benefits. They employ far greater women and minorities in their stores compared to the percentage of women and minorities in positions of management, both at store and headquarters levels. Their sizes virtually assure that some managers are bigots or poor adherents to corporate policy, so the inevitable discrimination occurs in hiring and promotion. Because it is the largest company, Wal-Mart is the target (pun intended) of legal challenges. Back in the 1970s, when Sears was top dog, it bore the brunt of most discrimination lawsuits. Such is the burden of being number one. (Full disclosure: my wife has a modest holding of Wal-Mart stock.)

Target is among the largest U.S. corporations, with revenues exceeding $65 billion. Yet Target enjoys a warm and fuzzy reputation with shoppers, particularly the power elite. They lovingly, disarmingly call it “Tar-Zhay” and feel comfortable inside its stores. Their snobbery makes their skin crawl when inside a Wal-Mart.

The impact a Target or Wal-Mart has on a market can be equally devastating. Or exhilarating, depending on your point of view. There’s no doubt any small business that offers the same merchandise but at higher prices runs the risk of being closed down. It’s equally true that many retailers thrive in the shadow of one of the big box stores.

In downtown White Plains, NY, Target and Wal-Mart compete across the street from each other. On any given day, Wal-Mart has considerably more traffic, strong evidence that even in upscale Westchester County there is a solid customer base for a store that promises, and often delivers, savings on life’s necessities.

The current brouhaha over Wal-Mart was first reported in Crain’s New York Business earlier this week. Wal-Mart was said to be a possible tenant in the Gateway II project in the Jamaica Bay area of Brooklyn, a mostly working class neighborhood. Here’s Crain’s original reporting, though I can tell you with certainty that it parallels events and comments throughout the country over the last 20 or more years:

“’We don't like how they treat workers as it relates to salaries and benefits, and we're not going to have them in our community,” says City Councilman Charles Barron, D-Brooklyn. “They will have the fight of their lives.”

“United Food and Commercial Workers Local 1500 is planning a protest in the next week and is already arguing that Related's (the developer) earlier traffic study presented to gain land-use approval did not take into account a Walmart being situated in Gateway II. The union is planning to send canvassers out to the neighborhood to drum up opposition to a potential Walmart.

“’Walmart was never, ever mentioned once through the entire land-use process,” says Pat Purcell, assistant to the president of UFCW Local 1500. “The area cannot sustain a Walmart, a Target and a BJs. In this area, it's a job killer; it's just the wrong use.”’

Twice before Wal-Mart abandoned projects in Queens and Staten Island. I can’t forecast what will happen at Gateway II. But I can predict that unless more large-scale food retailers open more stores in the inner city featuring wide assortments at competitive prices, Wal-Mart will eventually take a big bite out of the Big Apple.