Two new reports take opposing corners in debate over Wal-Mart expansion in Chico
Imagine a Chico with two Wal-Marts. And then supersize them. What would that do to the local economy? Would it make it nice and fat? Absolutely not, one study says.
“Chico already serves as a regional retail magnet,” the study, conducted by California Economic Research Associates, states. “Consequently, neither of these Supercenters will generate substantial gains in sales tax revenues, since they simply displace other existing retail.”
The study, commissioned by Chico Advocates for a Responsible Economy, a group opposed to Wal-Mart’s expansion plans, makes even more dreary predictions of Chico’s future, should one or both of the Supercenters be approved: A number of grocery stores will likely close, the Chico Mall could lose business, and downtown would be subject to store closures and urban decay.
This report comes right on the heels of a survey conducted by the pro-Wal-Mart Chico Economic Planning Corp. that paints a much prettier picture of the impacts of Supercenters on communities. The corporation’s Web site explains the study as finding that “95 percent of economic development leaders surveyed in Wal-Mart communities believe their Supercenter has had a positive impact on their community and economy.”
Among the findings were that if any local businesses had closed after a Supercenter opened, they were groceries or mom-and-pop stores, and Wal-Mart for the most part made good on promises to the community.
The survey also showed that the major impetus for approving a Supercenter was sales tax. According to CERA’s study, however, sales tax isn’t going to be a factor in Supercenters in Chico. Much of the displaced sales will be grocery sales.
“CERA estimates that the Albertson’s and Raley’s (East Avenue) will close soon after the opening of the northern Wal-Mart Supercenter,” the report continues. “Both these stores anchor shopping centers which will deteriorate substantially after these closings.”
Heather Schlaff, who heads CARE, presented the study at the group’s meeting last Thursday (Oct. 26). Schlaff said she had decided that she needed more facts to run a successful campaign against Wal-Mart’s expansion in Chico.
“We want to be as responsible in our claims as we can be,” she said.
She enlisted the help of Stockton land-use attorney Brett Jolley, who has been involved in Chico Wal-Mart issues in the past. The study was prepared by Philip G. King and Sharmila King, both PhDs and respected economists. Philip works at San Francisco State, Sharmila at University of the Pacific.
“We specifically wanted a study about Chico,” Schlaff said. “I wanted to have as many facts as I could get. I didn’t want to go by any other city—people kept saying, ‘Well, that’s not Chico. We’re different.’ “
The study looks at all of the possibilities: What will the impact be if the existing Wal-Mart expands to a Supercenter? What will happen if only the north site is approved? And what would the outcome be if both sites get the go-ahead?
In general, the findings were: Not good.
“There definitely is going to be great detriment to local business if either one of the Supercenters are built,” Schlaff said, “to both shopping centers as well as to downtown Chico. I was really surprised. I didn’t think it would come out as grim as it did.”
Because Chico is already a retail magnet and there are so many other Wal-Marts nearby (Oroville, Willows and Red Bluff, to name a few), it is unlikely that one or two Supercenters will attract business that is not already in Chico. That said, the report estimates that two Supercenters in Chico will generate about $58 million a year in grocery sales alone—that’s 21 percent of current sales in the area. That doesn’t paint a pretty picture for existing supermarkets. And both Supercenters would do considerably more damage to local businesses than either one would on its own.
“Businesses that could possibly sustain one would not be able to sustain both of them,” Schlaff said.
She isn’t the only one worrying about the potential impacts of more Wal-Mart in Chico. The Thursday meeting was attended by about three dozen concerned citizens.
“I live on the north side, so the north site is too close for comfort,” said Kathryn Robinson, who attended the meeting with her sister, Nancy Park, who lives in central Chico. “I haven’t stepped inside a Wal-Mart in six years.”
“It’s a tremendous threat to downtown,” Park added.
She’s right. Less foot traffic downtown would contribute to its decline as well, according to the report. “As shoppers diminish and the downtown deteriorates, commerce will spiral downward and the downtown could eventually become blighted, as so many Central Valley downtowns already have.”
And downtown isn’t the only place that will suffer. An estimated $78 million would be displaced by nongrocery sales in two Supercenters. That means more people spending their money at Wal-Mart than downtown or at, for example, the Chico Mall. “The expansion [of the Forest Avenue store] could put JC Penney or Sears out of business, which would turn the Chico Mall into a ghost mall,” the report states.
Wal-Mart isn’t particularly worried about this economic study. Kevin Loscotoff, senior manager of public affairs for the company, said other cities have released similar reports and their claims have not been realized.
“We’ve seen reports like [this one] on a number of projects in California,” he said. “The problem is that they are politically motivated.”
Schlaff said that she is prepared to pay for the study conducted by CERA through Jolley, but she has not yet received a bill.
The source of funding for the CEPCO survey has also drawn some questions—Wal-Mart paid $5,000 for it. The survey, which touts the benefits of Wal-Mart Supercenters to California cities, was done by phone, and involved economic development personnel and Chamber of Commerce leaders in cities with Supercenters.
Schlaff said she isn’t concerned by the survey.
“Those people were probably in favor of those projects coming into town, so it’s not unusual that they [were so positive],” Schlaff said about the people surveyed. “It isn’t scientific or an actual study. And it was paid for by Wal-Mart.”
Loscotoff was understandably happy about the survey’s results but added: “The Chico city staff is conducting an economic study as part of the environmental-impact report. In terms of accuracy and balance in these types of reports, the city is probably the most qualified as a third party to study it.”
The EIRs on both sites (being done separately) are in the works. When they are completed, there will be a public-comment period. Schlaff urges those concerned about the economic impact of Wal-Mart expansion to speak up. “Public pressure can and will make a difference,” she said.
Count the impact
CERA looked at sales at existing grocery stores in Chico and, based on square footage, estimated how much business would be lost if either Wal-Mart Supercenter were to open. FoodMaxx and the southern Raley’s would likely close if the southern expansion is approved. If the northern Supercenter is built, Albertson’s and Raley’s on East Avenue will close. These are the stores that would be hardest hit:
|Grocery store||Current annual |
sales, in millions
|Estimated loss |
in sales from
in sales from
|Safeway (East Ave.)||$23.8||5%||20%|
|Raley’s (East Ave.)||$15.6||25%|