Big Box Invasion
Update: Governor Brown has vetoed the so-called Walmart Bill, which would have added new restrictions on big box stores in California. The Governor said there are plenty of laws already on the books which enable cities and counties to assess whether a new superstore is in the best interest of the community.
Walmart - The very name prompts strong reactions. Some communities object to the big box store, claiming it pays low wages and hurts local business. But supporters say Walmart brings low prices and much-needed jobs. Now, as correspondent Judy Muller reports, Walmart is using a new strategy to expand its business.
The protesters cry: “Be smart! No Walmart!”
Walmart — the largest retailer in the world — is coming to Burbank, and not everyone is cheering. In fact, many are jeering. These residents marched on city hall, hoping to stop Walmart's expansion into their community.
“I don’t want Walmart in Burbank. I don’t want the property values in the city to go down.”
"They seem to have a history of taking away small towns."
“It’s the new evil empire."
Walmart was unavailable to talk with SoCal Connected for this report. But in the past, the retailer has rejected charges that it pays poverty wages and drives out local businesses.
Nevertheless, the company has struggled to overcome that negative image — especially here in Southern California.
“Walmart has had a lot of difficulty in the past with opening stores in Los Angeles and Orange County,” said Matthew Sullivan, managing director of Lee Investment Services.
Several local cities have taken steps to keep Walmart out of their communities.
In 2004, Inglewood residents voted down plans to open a Walmart there.
That same year, the Los Angeles City Council passed a resolution to prevent Walmart's super-centers from being built in the city.
And Hawthorne recently advised its planning commission to be on the alert for inquiries by Walmart.
"If we stop them right there, then they don’t have a chance to come in the city," said Daniel Juarez.
But all of those protests, ballot measures and resolutions may prove ineffective now that Walmart is using a new strategy in its campaign to expand.
"It's just really a shortcut to opening a store," said Matthew Sullivan.
Sullivan says Walmart is taking advantage of the recession by moving into vacant big box stores.
"So they are basically stepping in the shoes of the existing tenants," he said.
One former Mervyns in Torrance, for example, will soon re-open as a Walmart.
And that's exactly what happened in Burbank. Walmart just bought a space that used to be occupied by "The Great Indoors." By moving into an existing building, Walmart has to downsize a bit, but it manages to skip all of the zoning and environmental issues that can kill a deal. It also allows a Walmart to open quietly.
"It was a business transaction and it did not come through the city, and I was informed after the fact as well," said Burbank City Councilman Dr. David Gordon.
"I think Walmart is using this strategy to avoid any bad press or negative political repercussions of opening new stores," said Sullivan.
"I can't guarantee strategically that they don’t find a way to get into the city of LA by using some tricks in the planning process. I can tell you if there is any way to prevent that, there are at least a few of us that will fight any way we can," said L.A. City Councilman Paul Koretz.
Koretz should not count on support from fellow council member Bernard Parks, who has been an outspoken cheerleader for Walmart.
"We just talked with them the other day. We told them we have a couple of projects going where we believe are ideal for grocery stores," Parks said.
Parks told us he's shown Walmart officials several locations in South Los Angeles. He is sold on their promises of bringing jobs and affordable groceries to his district. He points to the success of a Walmart in Baldwin Hills.
"We know that that whole shopping center had somewhere in the neighborhood of 60 percent occupancy before they showed up. We know since they've been there it’s hovered about 95 percent," Parks said.
"It's good only if they come in with livable wage jobs, affordable benefits and good working conditions," said the Rev. Eric Lee of the Southern Christian Leadership Conference. "We would not want Wal-Mart in South Los Angeles if they are bringing poverty-wage jobs like they have here at the Walmart store in South Los Angeles."
Lee recently led a protest at one Walmart over a labor dispute. Walmart has been accused of paying wages so low that some workers must apply for welfare. And many employees say the company's health care plan is too expensive. Parks maintains the workers are happy to have jobs, especially in an area with high unemployment.
"If you walk through the store at the Baldwin Hills Shopping Center, not one of them has a ball and chain keeping them at their station," Parks said.
"I'm sorry to hear that Bernard Parks is saying people don’t have there’s no ball and chain and they can go work somewhere else. There is no other major retailer in our community that is offering jobs," Lee said.
And what about that other concern — that Walmart will undercut local businesses?
"I have had a lot of customers come in and ask me about this and they are always surprised when I tell them that I am for it," said Alan Arzoian, who owns Handy Market, a popular small grocery store in Burbank.
Generally, it's believed that small businesses take the hit when a Walmart moves in, but Arzoian says that — while that may be true for small towns — big communities like Burbank can absorb the competition.
"I think it's wonderful that Wal-Mart wants to come to Burbank. The space is available, there’s 350 new jobs. There is a great sales tax base that will be coming to Burbank versus going to outside cities. I think the neighborhood benefits from that," Arzoian said.
And a quick sampling of Handi Market customers shows a wide range of reactions to the news of Walmart's expansion into the community.
“It’s a shame that they’re here to destroy some of these other Burbank merchants.”
“Walmart, definitely, I mean I’m going to shop there too. But I’ll still go to the same old regular places.”
“It’s the area for corporate business up there so it doesn’t bother me. If it was on Magnolia Boulevard it would bother me.”
As for those tax benefits to the city, it's difficult to measure. Sales tax revenues are confidential in California, so no one knows how much Walmart sales contribute to a city's bottom line. But that may change.
Senate Bill 469, the so-called "Walmart Bill," is now sitting on Gov. Jerry Brown's desk. If he signs it, California cities will be required to do an economic impact report when a big store like Walmart or Target wants to build a new store.
Public records show hundreds of thousands of dollars have been spent on lobbying by both sides.
There's a lot at stake for Walmart. If SB 469 does pass, it could delay the opening of its stores for at least a year. Or it could derail the projects entirely.
But it's unclear if the bill would have any effect on stores like the one in Burbank, in which Walmart would just be taking over the existing space.
"I would think that Walmart is taking the opportunity to find more sites right now to ground lease or develop and I think the number is close to a dozen or so," said real estate expert Matt Sullivan.
Meanwhile, there are reports that stores may soon spring up in Irvine, Huntington Beach, Northridge and downtown Los Angeles, to name a few locations.
Chances are we'll be hearing more of that chant: "Be smart! No Walmart!"