Competitive Intelligence

Wal-Mart’s Supercenter Defeat in Inglewood: Can the Company be Stopped by Union-Backing California Shoppers?

Wal-Mart's recent defeat in a referendum to build a new Supercenter in Inglewood, California hasn't deterred the company from expanding its business in California and putting more pressure on grocers, despite pressure from union-supported opposition groups and even local politicians. Here's an excerpt from April 7th article in the North County Times:

The world's largest retailer spent more than $1 million to try to sway residents in the Los Angeles suburb of Inglewood to approve its ballot initiative clearing the way for a new store, but it lost the vote.

Tuesday's defeat represents at least the second time a majority of voters in a California community has blocked Wal-Mart's efforts. Last month, residents in San Marcos forced a referendum on a City Council decision to approve a new Wal-Mart store, and ultimately overturned it.

On Wednesday, the company downplayed the outcome of the Inglewood vote, saying it would not affect its strategy to open 40 of its hybrid grocery store and Wal-Mart Supercenter stores in California during the next four to six years.

"We've got a lot of things going on in the state. Inglewood was not our only interest," said Bob McAdam, Wal-Mart's vice president of corporate affairs. "That program continues moving forward. ... I don't see this deterring us from reaching our goal."

Critics of Bentonville, Ark.-based Wal-Mart Stores Inc. say the company's stores, particularly its roughly 200,000-square-foot Supercenters, lead to jammed roads and worsen suburban sprawl. Others, specifically labor unions, say Wal-Mart stores only create low-benefit, low-wage jobs and its low prices drive smaller competitors out of business.

The company rejects those criticisms, saying its stores help drive competition to the benefit of consumers and help attract other businesses, which leads to more jobs.

Wal-Mart has faced steady opposition throughout the United States, and California has been no exception, particularly since the company announced in 2002 its intention to expand its Supercenters here.

"We have challenges across the country, but I would say that it's perhaps more pronounced here in California," McAdam said.

The 4 1/2-month-long labor dispute by Southern California grocery workers focused unabashed public criticism by the workers' union and the supermarkets against Wal-Mart.

That sentiment lingers in union-strong areas of the state and remains an influential issue with many elected officials. In Los Angeles and other municipalities, city officials are considering or have passed ordinances to block the warehouse-sized stores.

"There is something brewing here, which is about holding Wal-Mart accountable," said Madeline Janis-Aparicio, executive director of the Los Angeles Alliance for a New Economy, which helped lobby residents of Inglewood to reject the Wal-Mart ballot initiative.

"The effort to stop them cold has not been successful. The effort to hold them accountable is gathering steam," Janis-Aparicio said. "They're in California, but they're not in firmly with both feet."

This could impact Wal-Mart more negatively than one might think, if the win bolsters opposition groups elsewhere and might even cause Wal-Mart to miss five-year goal of building another 40 Supercenters in the state. Apparently, when the grassroots go against you, "always low-prices" can't always ensure victory.

- Arik