Housing Complex

A Few Thoughts on the Walmart Pullout Threat

So Walmart has announced that it will cancel three of its six planned D.C. stores if the living wage bill becomes law. I'll have a column in the paper on Thursday with a more reasoned argument on the subject, but here are a few quick thoughts:

1. This might be a bluff. Ward 7 Councilmember Yvette Alexander is convinced it isn't, but I wouldn't rule it out. Walmart stands to lose money if the Large Retailer Accountability Act is enacted. So if the company can gin up opposition to the bill by demonstrating in advance that making it law will cost D.C. some valuable retail, it stands to gain—even if it has no real intention of canceling plans for these three stores.

2. If Walmart follows through on its threat, it's a loss for the District. It's debatable whether Walmart's arrival in D.C. is good news or bad news for the city—but these three stores are the ones the District could use. Walmart critics argue that the big box retailer has a history of driving nearby local businesses under, and at some of the planned sites, like Georgia Avenue and H Street NW, there's plenty of existing business within walking distance that could suffer. But these aren't the stores Walmart's threatening to cancel. The ones we'll lose—at Ward 7's Skyland Town Center and Capitol Gateway, and to a lesser extent the one at the intersection of New York Avenue and Blandensburg Road NE in Ward 5—are in areas that are lacking in retail, particularly grocery retail. They're also relatively close to the Maryland border, so they'd help plug retail leakage and bring sales tax dollars into the District. It's a shame that these stores are the ones on the chopping block.

3. Maybe Walmart didn't really want these stores anyway. Mayor Vince Gray issued an ultimatum to the company in 2011: Build a store at Skyland, or forget about the other D.C. stores you're planning. This is the company's opportunity to get out of that obligation. With its three stores in the Northwest quadrant already under construction, Gray can't really follow through on his ultimatum anymore, and Walmart gets to dangle its less desirable stores as a bargaining chip to fight the legislation it hates.

All of this ought to become clearer in the coming weeks after the D.C. Council takes a second vote on the bill tomorrow and Gray decides whether to sign it.

Comments

  1. #1

    Whenever tying to figure out what Walmart is doing, just remember that they're a bunch of union-busting, low-wage-paying, small business-killing thugs. That's all they are and all they'll ever be. Everything they do is designed with those goals in mind. If they don't want to play by whatever rules we fucking feel like writing, let they go back to the slumifying suburbs. That sort of fuck-you position is the EXACT one they'd take if they were in our shoes.

  2. #2

    Skyland is far from a food desert. Safeway, Negril, and a Starbucks are across the street from the planned development.

  3. #3

    Good analysis Aaron.
    I think it's pretty clear that Walmart built its high priority stores first and is at best leveraging the others for greater citywide gains.
    I also think it's pretty clear that the administration got played. Starting with that ridiculous "community benefits agreement" with the huge back door, and continuing through today.

  4. #4

    Walmart is so GROSS. I shudder to think the obscenities that will arrive when the doors open. BOYCOTT!!!

  5. #5

    Will we see who on the council will play step and fetchit tomorrow?

  6. #6

    @ Drez: I also think it's pretty clear that the administration got played.

    Truer words were never spoken. Walmart has played Gray from the jump.

  7. #7

    Agreed with Aaron on #3 and Blevins. Promising a store at Skyland in particular was only about playing Mayor Gray. I'm waiting for his reaction on the matter.

  8. #8

    @Eric - the Safeway across from Skyland is a disgusting mess. Poor produce, dirty store, long lines. It takes 30 minutes in the check out line on most days. Negril has been gone for over a year and is now a wings spot. That area needs other food and grocery options. Wal-mart was an anchor tenant that would eventually bring other food choices. Maybe the city can lure Target back to the table for that location (I know, wishful thinking).

    @ Drez - the eminent domain lawsuits at Skyland were just resolved in February, so Wal-mart couldn't have built there sooner. But the administration probably did get played on the other locations. They were throwaways to Wal-Mart in order to get the premium locations built.

  9. #9

    Look... The reality is that it will only take two votes to kill the bill tomorrow... If that doesn't happen, Gray will almost certainly veto the bill before it becomes law. The real question here is why didn't the Council try and adopt a functional, less extreme wage adjustment that could have applied to every DC business. In a broader sense how does DC benefit by raising wages for what would likely have been a largely suburban labor force? Does it really make sense to potentially damage ourselves economically (through lower sales tax revenue and lower overall retail employment) so that non-DC residents can make a little more cash? Mendelson and Orange misplayed their hand and now we will likely find ourselves back at the starting gate... Gotta love DC politics.

  10. #10

    The choice of these three stores suggests a very specific strategy to pressure elected officials, going after Gray's beloved Skyland store and two others that have less around them. This is not some well-meaning company being forced out by an overzealous law--it's a huge corporation making a calculated threat designed to hit at the most strategic points. The question is whether the DC Council will fall for it or actually show some spine.

  11. #11

    @Hillcrestrez
    I hear what you are saying about the legal mess, but Walmart can certainly afford top notch lawyers and understood this going in.
    The delay due to legal entanglement at Skyline was a feature, not a bug, if you get my drift.
    Come to think of it, the Mayor's office has pretty good lawyers too. Or so I'm told.

  12. #12

    Agree with Mister Goat.
    @NW Dave you let the perfect be the enemy of the good.
    Baby steps.

  13. #13

    PASS THE BILL!
    KILL WALMART!

  14. #14

    Aaron, you're being silly if you think there's even a small chance they're bluffing. Or you're just not thinking it through.

    They probably felt pressure to send some kind of message, and what kind of message would Walmart send if it turned out they were just bluffing? Message or not, they probably had already projected extra-thin margins east of the river. The bill may well make those stores uneconomic.

    Add it up and you know they are not bluffing, regardless of what you think about Walmart.

  15. #15

    Having said the above, I personally believe that 6 Walmarts packed into 68.3 square miles is excessive but that's not my call to make. I also agree with Aaron that it's unfortunate the three on the chopping block are the three the city really needs. But the bill is thoughtless and discriminatory. I expect such awfulness from Orange and some of the other nitwits that supported it, but mistakenly thought Evans to be savvier.

  16. #16

    What "DC" said. 100% agree with that. I've cheered for every single town, city, suburb, anyone who ever stood up against Walmart. Just think about this: there are a multitude of studies that show that a greater percentage of money paid to small business goes toward supporting the local economy, vs big box stores, where the money goes elsewhere (like 70% of small business dollars go to local economy vs 30% of big box-store dollars); large corporate chains in a region actually depress the number of retail jobs - not increase them; and other depressing facts. Read all of the information here: http://www.ilsr.org/key-studies-walmart-and-bigbox-retail/#3. I'm about to write to all of the at-large members and McDuffie (my Ward 5 rep), Tommy Wells & Muriel Bowser (running for Mayor) to tell them that Walmart can kiss my ass. If they vote against the LRAA (Large Retailer Accountability Act) tomorrow, I will not vote for them next time, and I'll actively tell others to not vote for them. Walmart cannot win this, not where I live, not tomorrow. You should stand up too.

  17. #17

    This is still America, isn't it? We still believe in Capitalism, right? The DC Council continues to bite off it's hand in spite of it's face. Regardless if you like Walmart...want to shop at Walmart...or never plan to step foot in any of their DC stores the bottom line is these stores will bring JOBS and tax dollars to this city. This measure if plain foolish (which is why it's going to pass). DC government = BIG JOKE!

  18. #18

    I have a hard time believing DC needs SIX Walmarts.

  19. #19

    very interesting analysis, aaron. #3 is particularly compelling.
    thanks!

  20. #20

    very interesting take, thanks aaron! I find #3 particularly curious.

  21. #21

    @Peteykins
    >I have a hard time believing DC needs SIX Walmarts.<

    You do wonder, why. But then I think about CVS.

  22. #22

    Seems like there's too much going up in the air for the people we have on the ground.

    Big retail is so over.

  23. #23

    I don't particularly care about Walmart, but the bill makes no sense anyway. Why should the size of store matter? Why should Apple or Starbucks or CVS be able to pay minimum wage and not Target or Macy's? The former make tons of profit and probably take up as much square footage in DC and employ as many people as the latter. I am not even sure the bill, if passed, would survive a legal challenge and I don't want DC paying a bunch of lawyers to defend it.

    Agreed with everyone who says Walmart never wanted and never planned to build the Skyland store. The council is just giving them an easy way out.

  24. #24

    It's a little late to realize that the quest for sales taxes comes at a price......

  25. #25
  26. #26

    Read The Fine Bill:

    http://dcclims1.dccouncil.us/images/00001/20130708104620.pdf

    Anybody who claims (like Walmart) that the bill (Bill B20-62, engrossed version) is "discriminatory" or "thoughtless" or that it won't "survive a legal challenge" needs to Read The Fine Bill. It is very carefully drafted, with expanded findings in the engrossed version, to withstand a court challenge by Walmart or any other corporate blackmailer.

    Please read & understand the legal effect of including such legislative fact-finding in the body of the law, esp. these findings directly rebutting all of Walmart's whiny ass tiny baby crying:

    "(13) Living wages would make it easier for families to be able to afford to live in
    the District.

    "(14) Wal-Mart has already detailed to District residents that it intends to offer full and part-time employees a healthcare plan and they plan to create jobs that would pay an average of $12.49 an hour.

    "(15) The District should embrace businesses’ wage and benefit promises, such as Wal-Mart's, and require by law that large retailers provide living wages and benefits.

    "(16) The retail industry has oversaturated the rural and suburban markets, so the
    only way they can grow is to expand in large urban centers.

    "(17) With the influx of over 1,000 residents a month there is a growing and dynamic market for large retailers to thrive in the District

    "(18) It is appropriate to set a standard for larger businesses in the retail industry
    because:

    "(A) Large retailers are better able to afford the cost of paying a living wage than many other kinds of employers since most of them make profits well in excess of $1 billion a year;

    "(B) A number of large retailers in the region are already paying a living wage, providing evidence that it is feasible for employers in this industry to create good jobs while still operating profitably;

    "(C) Large retailers generally are less likely than other kinds of businesses
    to respond to such regulation by closing or reducing employment because the retail industry is more location-dependent; and

    "(D) Other cities, such as Sante Fe and San Francisco, which have enacted living wage laws have experienced no negative impact on retail employment and development."

  27. #27

    @Liz #16, it seems clear to me that Tommy Wells & Muriel Bowser are gambling their political careers on the assumption that we don't mind corporate blackmail. I think that assumption is going to blow up in their face. Regardless of the technical details of the bill and aside from any of the sound bites and talking points being thrown around on Twitter and in blog comments like these. If they are seen to have so little self-respect as legislators that they would vote down a bill after being threatened and intimidated, we will know they lack the character to lead DC.

  28. #28

    What's lost on both sides is we're talking about a full-time job with a salary, pretax, of $26K/a year. And we know Walmart is more of a fan of hiring part-time folks because they have to pay less benefits.
    For the city: is that really a livable wage? Maybe for someone who lives with 6 other people, but a single parent or even a single person trying to live alone? It could be done but only with great hardship; exactly what's occurring now for the city’s working poor.
    For Walmart: is $12.50/hour that radical a wage? Maybe in 1993, but certainly not in 2013 when food and transportation--especially in DC--are going up. We're talking about peanuts here, but as someone else noted, Walmart really doesn't do concessions because they don't want to set precedents for other localities. And businesses don’t become worth $300 billion because they’re friends of labor.
    The only way to get companies to share their profits with the employees who make them profitable is through organized labor or legislation. We’ve seen time and time again in this country that without protection low-wage workers ALWAYS lose.

  29. #29

    The amazing thing is that Bonds, Alexander, and Barry all co-sponsored this legislation. It is a great sentiment, but quite clearly targeted Wal-Mart from the get-go. What did they think would be the response from Wal-Mart? This is the firm that's closed stores rather than allow them to unionize.

    I predict Alexander and Bonds will cave, and Barry will not because he will anticipate that those two will, so he can keep the appearance of fighting for DC wage earners while knowing that the bill won't pass.

    Wal-Mart will use this to pull out of at least one store they don't want to do. It will come at first as delays, then it just won't happen.

  30. #30

    I’m skeptical if Walmart in DC is a good idea in the first place. I believe Walmart will bring jobs, retail/food in areas of need, and possibly set a trend for future corporations looking to move into DC but concerned for how the stores will be managed. My personal experience with Walmart is that they are disaster zones and highly unorganized. Has anyone ever been to the Walmart in Landover Hills (Capital Plaza Mall)….WOW….what a wreck.

    One the other hand I don’t agree with the bill. Walmart is a business and they have the right to earn and make as much money as they can. It’s unfair to ask Walmart or any other retail store at 75,000 square feet to pay employees a higher min wage. If Washington DC wants to go in this route then ALL retailers should be required to raise the min. wage. Ask yourself how you would feel in this situation….if you owned a company that was being forced to pay employees a higher min. wage which significantly decreases the amount of money you will make. I understand that Walmart is the number 1 retailer and has lots of money to go around but that’s not the point. I believe you need to be fair to everyone regardless of how big or small the size of the company.

    If the bill is passed and Walmart goes along with the new law not only will Pandora’s box be open and future retailers be hesitant to develop in DC, but Walmart may also be looked upon as a corporate leader willing to sacrifice for the overall good of a community (and have some leverage in DC). If Walmart pulls out of the three locations identified good luck finding a retailer to replace them.

    DC Council get your crap together…either include all retail companies in this increase or none at all.

  31. #31

    I don't have an issue with a higher minimum wage law in D.C. I do have an issue with a law that is intended to have a discriminatory impact on certain parties, even one as unbeloved as Walmart. IMO the law should be called the "Giant Food/Ahold Racket Protection Act of 2013." I belive that their lobbyists, fearing competition from Walmart, were dolling out goodies all over the Council on this one.

  32. #32

    Uh, that's "doling out" goodies to the DC Council.

  33. #33

    @31 I like that theory.

    In a perfect world the large retailers would be willing to "take one for the team" and I hope Walmart and other large retail would be okay with making a sacrifice (in some situations) for the overall good.....but you simply just can't force larger retail to pay higher wages. Walmart has the right to run their business the way they see fit.

    Instead of forcing a law why don't we just reward any retailers that are willing to pay a higher min. wage to employees.

  34. #34

    And should Wal-Mart bully the council on this bit of legislation, they could do it again. Regulations on energy use, waste disposal, transit, other labor laws could be dispensed with as well.

  35. #35

    This is an interesting discussion. I am no Wal-Mart fan but I wonder how many of the "EFF Walmart" people have VIABLE retail and grocery options. I would bet that most of you do and I wonder how many people around Skyland take this position. It is easy to take a hard line when it does not directly impact your neighborhood. I am sure that Rappaport and Walmart are just rattling swords at this point. But bear in mind - the District need Walmart at Skyland much more than Walmart needs Skyland. Itis the anchor for a bigger development that included housing and other retail. Can DC afford to for Skyland to fail?

  36. #36

    I think it's just stupid and short-sighted to VOTE now. Wait. Table the bill. Or better yet, announce it's been killed altogether. Sit calmly, and bite your tongue till Walmart is well into construction on the other two stores east of the river and the one in Ward 5).

    Then, once Walmart has already opened the other three stores (in somewhat wealthier neighborhoods with less need for higher paying jobs than EotR) and has already spent TENS OF MILLIONS in construction on the final three, but has not yet opened them, revive it as a zombie bill from a previous session. Do a quick vote, pass it, and then the requirement applies to the three stores that the city actually WANTED that are too far in development for Walmart to abandon. And even IF Walmart abandons them, it's a far more desirable deal to a Target executive to just take over construction of stores that are 80% done. And the savings of not spending the 80% of the money Walmart just wrote off to back out might be enough to make a Target there profitable despite the higher wages.

    Yes it's underhanded. But this is politics, not a pee-wee football game. Evil is expected to a certain degree, and against a company like Walmart, where they have so much evil they can sell you the surplus for $3.99 in Aisle 666, it's not really that bad.

  37. #37

    Does anyone believe Walmart can ill-afford to pay its employees who reside in the second highest MSA 12.50. If not, then this is perfect. It serves as an experiment for assessing a higher minimum wage.

  38. #38

    Shawguy, sounds like a plan. The bill is fine, but the timing is awful. Do it once Wal-Mart has sunk too much money into all 6 stores for them to realistically be able to pull out, and they'll grit their teeth and comply. They'll still make money, just less of it, so they won't summarily close stores that are already open.

  39. #39

    People believe Democrats can't be MBAs and vice versa we can. But me defending Walmart is about to make me a little ill.

    1.) The city spent years courting Walmart...to unilateral change those terms, wont send just a shiver down Walmarts spine but any future company being courted by DC--they will be wary that their promises are as good as toilet paper.

    2.) DC is under-retailed. For a city of this size/income potential you typically have more grocery option, more pharmacies, clothing stores etc. You can put 12 Walmarts and still see DC tags in VA/MD.

    3) They are going to do it. There are a number of alternate sites they can go in the region and make money. VA/MD has and will remain competitors for DC. I am sure PG even called seconds after the bill was introduced. Plus they will have pressure to not give in..from the collection of business interest that don't want to see them set a precedent.

  40. #40

    At some point the so-called representatives of the majority of the people in this city and in this country need to determine whether they want to provide a better life for the majority of their citizens or cowtow to the large corporate interests making billions exploiting laborers all over the world and certainly not just in Washington, DC. They do not call the shots in our communities and many communities do just fine without Walmart’s presence. With the high cost of living in the Washington, DC area none of the prospective Walmart employees would have any money to shop in Walmart because the minimum wage would not even cover most of the monthly rent and food expenses, not to mention the cost of transportation to work. The workforce is primarily part-time with no benefits so why allow this major exploiter into another major American city to further their own corporate interests to the complete detriment to the majority of those part-time workers. Who cares if they pull out, we will not be bullied by any Walmart or other corporate interests in this city. It is their loss and not ours. Their bottom line isn’t suffering by paying DC workers a mere $12.50 an hour as the Walmart family make billions each and every year as their workers do not get their fair share of any of their profits.

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