Housing Complex

The Retailer Hostage Effect of Drawn-Out Public Debate

The Roadside proposal, with a Wegmans in the background.

The Roadside proposal, with a Wegmans in the background.

Casual observers of the competition to develop the Walter Reed site would be forgiven for thinking a Wegmans supermarket might come to the site regardless of who wins. In their presentations to the community last month, each of the three teams vying to develop the Upper Georgia Avenue site hinted at a Wegmans there. Forest City said it had had discussions with Wegmans. Hines-Urban Atlantic presented a rendering of a supermarket with a big "W" logo on it. And Roadside Development hammered home its explicit commitment from Wegmans to be a part of the company's plans for the site.

But as Jonathan O'Connell lays out in a story today in the Washington Post, a Wegmans executive insists that the Rochester-based company is only coming to the District if the city selects Roadside.

This is where things get a little game-theoryish. It's entirely possible that Wegmans would be happy to come to Walter Reed if either of the other two teams is selected. After all, if the company thinks it makes business sense to open a store in D.C., it doesn't suddenly stop making sense if another (presumably competent) developer is chosen.

But if Wegmans, for whatever reason, has a slight preference for working with Roadside, it's in the company's interest to insist publicly that it'll only come if Roadside is selected. That ensures a big public push in Roadside's favor—after all, the supermarket is hugely popular, and many Washingtonians have been hoping for one for years—and makes the local Advisory Neighborhood Commission more likely to support it, which in turn is supposed to make the city more likely to pick it.

It's not dissimilar to what's been going on with Walmart and the living wage bill. Walmart announced that it would cancel plans for at least half its D.C. stores if the city enacts the Large Retailer Accountability Act of 2013, which would force companies like Walmart to pay higher wages. Now, it's entirely possible that it would still make business sense for Walmart to open those stores with the living wage bill in place. But because the company prefers not to have a living wage bill, Walmart executives may figure it's in their interest to do what they can to prevent its passage. And by threatening not to open stores in the poorest parts of the city, they may very well persuade Mayor Vince Gray to veto the bill.

Wegmans actually factors into the living wage bill debate, too. Ward 4 Councilmember Muriel Bowser really wants a Wegmans in her ward, because her constituents do. Wegmans doesn't like the bill, because it'd force Wegmans to pay higher wages. And the potential loss of a Wegmans appears to have factored into Bowser's decision to vote against the bill.

So what are we supposed to do about this? We can't really gag company executives from weighing in while the D.C. Council or the mayor's office is making its decision on what to do with legislation or public land. The problem would be solved if these matters were decided in secret, but that opens a whole host of other issues.

The best we can really hope for is the avoidance of bad precedent. If Gray is perceived as vetoing the living wage bill because of Walmart's threat, every company in town will feel empowered to threaten closing its stores if legislation it doesn't like passes. And if the city's perceived as picking Roadside because a Wegmans executive said the company wouldn't come under another developer, then retailers will feel empowered to make similar statements about their developers of choice in future public decisions.

Again, this could be avoided by cutting out all public debate, but that's not a very good solution. What could help is cutting down on all the dithering. If Gray had stated categorically as the Council debated the living wage bill that he would not sign it, Walmart wouldn't have been put in the position of extreme power it now holds. Likewise, if the city announced that it wouldn't consider statements of intent from potential retailers in picking a developer for a public site, but rather just the plans themselves, retailers wouldn't get to sway the debate unfairly. I'm not certain that'd solve the problem—or that it wouldn't create others—but it would help prevent retailers from taking these development decisions hostage the way they can now.

Rendering from Roadside Development

Comments

  1. #1

    My guess is that Wegman's has committed in some preliminary letter of intent to support Roadside's big. That means that they can't say publicly whether they would work with another developer if that party is down-selected.

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