Communities Oppose Wal-Mart

Photograph

By: Scott Olsen

Date: May 26, 2004

Source: Photo by Scott Olson/Getty Images.

About the Photographer: This photograph is part of the collection maintained at Getty Images, a worldwide provider of visual content materials to such communications groups as advertisers, broadcasters, designers, magazines, new media organizations, newspapers, and producers. The photographer, Scott Olsen, is a free-lance photojournalist based in Chicago, Illinois.

INTRODUCTION

Wal-Mart is the best known retail company in North America. It is the largest private employer in the United States, operating almost 4,000 stores and warehouse outlets. Wal-Mart has expanded at a rate that has approached sixty stores per month at various times since the year 2000.

The core philosophy of Wal-Mart is to provide a wide range of consumer goods to the public at the lowest possible price, with a corresponding emphasis on customer service. Wal-Mart has an unsurpassed purchasing power in the manufacturing sector. Having goods offered for sale in Wal-Mart stores is an important factor in the success of many producers of consumer goods. An example of Wal-Mart's market dominance is illustrated by the agreement signed by American country music singer Garth Brooks with Wal-Mart in 2005, making the retailer the exclusive vendor of his music.

The rise of Wal-Mart from a single retail outlet located in Rogers, Arkansas, in 1962 to its position as one of the world's most powerful companies occurred in a span of less than forty years. In many North American cities, Wal-Mart expansion plans invariably attract both supporters and detractors. The debates about the location of a Wal-Mart store in an urban area are often particularly volatile, since a wide range of issues are raised, including the nature of the jobs created in the proposed stores, the non-union work-force policy of Wal-Mart generally, and the impact of the full service Wal-Marts on existing businesses and neighborhoods.

In 2004, Wal-Mart had approximately fifty stores located in the greater Chicago area. The company decided that it wanted to build two new stores within the city limits of Chicago, one on the south side and one on the west side. For most of its history, Wal-Mart's policy was to locate its stores in rural or suburban areas to take advantage of generally lower land acquisition and labor costs. Each of the proposed Chicago Wal-Marts required the approval of a re-zoning application to permit the land to be used for this large-scale, commercial purpose.

Both of the Chicago neighborhoods selected by Wal-Mart were historically disadvantaged. Each area had a largely African American population, a segment of the community that Wal-Mart opponents have charged is under-represented in the Wal-Mart workforce. Prior to the formal hearing of the re-zoning applications, Wal-Mart made a concerted effort to demonstrate a commitment to these communities, through both advertising and contributions to local religious and educational groups.

The battle lines in each re-zoning application were clearly drawn. Wal-Mart, supported by a number of local Chicago politicians, argued that the new stores would have a positive economic impact on each community. Wal-Mart claimed that the employees for the new store would be hired primarily from the local community. The political supporters of Wal-Mart pointed to the construction jobs that would be created by the projects themselves, as well as the likelihood that other retail businesses would establish themselves in close proximity to Wal-Mart.

A coalition of community and labor groups opposed the construction of the two new Chicago Wal-Marts. The community groups saw a negative impact on the existing community, fearing that local businesses would be destroyed by Wal-Mart. Labor unions used the re-zoning applications as an opportunity to criticize Wal-Mart for its aggressive opposition to unionized workers anywhere in its empire, as well as to point out what the labor interests described as the low wages and poor benefits of Wal-Mart employees.

PRIMARY SOURCE

COMMUNITIES OPPOSE WAL-MART

See primary source image.

SIGNIFICANCE

Shortly after this photograph was taken on May 26, 2004, a split decision was rendered in the fight to establish Wal-Mart stores within Chicago's city limits. The west side proposal was approved, while the south side application failed to pass the Chicago assembly.

The events in Chicago represent in microcosm the issues facing Wal-Mart's expansion into large urban centers across North America. In each case, the issues are the same—a large, successful retailer engenders fear that a local commercial landscape will be irrevocably changed by its presence in an area. Community opponents of Wal-Mart developments often argue that "big box" stores destroy the economic viability of an older commercial district in an urban area.

A second question that is inextricably linked to Wal-Mart's commercial power concerns what protection, if any, a local government should provide to other retailers who are not able to offer comparable goods for sale as cheaply as Wal-Mart or its large scale competition, such as Target and Costco. This question, in turn, requires consideration of the reasons why Wal-Mart occupies such a pre-eminent position in the retail market, involving such issues as Wal-Mart's policies concerning its workforce. These debates are often focused on what Wal-Mart stands for, rather than on the merits of a particular local re-zoning application.

Given its buying power, Wal-Mart can in many cases dictate the terms upon which it purchases goods from manufacturers. Wal-Mart asserts that it must seek the lowest possible price because its customers demand these kinds of goods; to do otherwise would be bad business. Since its founding, Wal-Mart has operated under the theory that consumers are more interested in buying cheap and reliable goods than in purchasing a particular product brand. It is the volume of sales that makes Wal-Mart profitable—the company earns less than four cents in margin for each dollar of revenue generated.

Much of the Chicago opposition focused on the wages to be paid in the proposed stores. The labor groups that worked to defeat the Wal-Mart applications pointed to the aggressive anti-union history of the company; at the time of the Chicago applications, no Wal-Mart store anywhere in North America had successfully unionized. Wal-Mart maintained that its employees received wages comparable to the rest of the North American retail sector.

Wal-Mart's attitude towards unions was demonstrated in a dispute at the Wal-Mart store in Jonquiere, Quebec, Canada, in 2005. The company closed its store there after an employee union was certified in accordance with Quebec labor law. Wal-Mart claimed that the unionization of the store and the union demand that thirty more employees be hired rendered the store unprofitable. The battle created a division between the Wal-Mart employees in Jonquiere. Some believed that Wal-Mart closed the store to demonstrate the extreme measures it was prepared to take to combat unionization of its workforce, while others believed that the margins in the retail industry are so slender that the additional costs traditionally associated with unionized workforces cannot be sustained. Even after the store closed, these questions remained open.

Wal-Mart lost its south side Chicago zoning application battle, but it may ultimately have won the regional retail war. Wal-Mart built a large store within four miles of the proposed south side site, outside of the Chicago city limits where it could obtain the necessary municipal approvals more readily.

FURTHER RESOURCES

Books

Dicker, John. United States of Wal-Mart. New York: Penguin Books, 2005.

Fishman, Charles. The Wal-Mart Effect: How the World's Most Successful Company Really Works—and How It's Transforming the American Economy. New York: Penguin, 2006.

Zukin, Sharon. Point of Purchase: How Shopping Changed America. New York: Routledge, 2004.

Periodicals

Struck, Doug. "Wal-Mart Leaves Bitter Chill/Quebec Store Closes after Vote to Unionize." Washington Post (April 14, 2005): E1.

Surowiecki, James. "The Customer Is King." The New Yorker (February 14, 2005).

Web sites

Swanson, Al. "Analysis: Wal-Mart Keeps Coming." Washington Times June 3, 2004. <http://www.washtimes.com/upi-breaking/20040603-024504-8072r.htm> (accessed June 2, 2006).