No stopping Wal-Mart?
America’s largest retailer plans to double the size of its Chico store, and there is nothing the city can—or will—do about it
In the 1952 movie adaptation of H.G. Wells’ classic novel War of the Worlds, the invaders from Mars land their spacecrafts on earth in patterns of three as part of their strategy to take over the world one community at a time.
There is nothing, it seems, humans can do to stop the onslaught.
A decade after the movie came out, a man named Sam Walton built the first Wal-Mart store, in Bentonville, Ark. A short 30 years later, Wal-Mart became the world’s largest retailer. In 1994 it came to Chico, completing a pattern of three by joining stores existing in Oroville and Red Bluff.
Coincidence? Yes, but the parallel sure is hard to ignore as the offensive takes a new form.
Nearly 10 years after Wal-Mart first landed in Chico, the company has announced ambitious plans to build new or expand existing stores in California over the next four years into 40 “Supercenters” that will sell groceries along with clothing, cheap fiberboard furniture, TVs, motor oil, weed-whackers, CDs, mouthwash, goldfish, tires, footballs, school supplies and eyeglasses.
Chico’s store is included in those plans. But most people in town don’t know it yet. Stung by lawsuits and growth obstacles erected in other cities and towns, Wal-Mart is flying low here, hoping not to attract attention, lest some locals object to the biggest store in town getting even bigger and wreaking havoc on the existing business community.
Too late. There is court action brewing in the Chico case. A Stockton attorney, acting on behalf of a Chico man, John Shannon, has filed legal documents with the Butte County Superior Court to stop the expansion.
At public meetings, Wal-Mart officials or those representing them have downplayed the expansion, saying it may or may not happen. But people who work at the Chico store say they’ve been told the expansion will begin early next year.
Look out, folks. War of the Wal-Marts is coming to Chico.
Sometime next year, perhaps as soon as January, the so-called “Beast from Bentonville” will break ground on the 97,675-square-foot expansion of its Chico store, creating, according to critics, the potential to damage competition, including WinCo, Raley’s and Food Maxx, possibly throwing people out of work, and seriously undermine the bargaining power of the local grocery clerks’ union that is set to renegotiate its contract with Safeway next July.
The 70,000 grocery workers now on strike in Southern California are protesting the fact that management wants to cut health insurance and lower wages in the face of competition from Wal-Mart. The opening of a Wal-Mart “Supercenter” in Chico could provoke similar conflict here.
Of course, the expansion here will create as many as 250 new, low-paying, high-turnover jobs with a company that currently employs 1.4 million worldwide, nearly half of whom are expected to quit within the next year.
And there appears to be nothing the city can, or will, do about it. Wal-Mart is one of the top 25 sales-tax-generating companies in town, and sales tax is what the city government pretty much runs on these days.
To get a sense of how Wal-Mart tries to fly under the radar when it wants to open a new store, consider this: Up the road in Red Bluff, someone filed an application on Oct. 16 to build a commercial retail development permit that calls for the construction of a 212,000-square-foot retail store offering general merchandise, plants, groceries, auto lube, tires, garden products and furniture.
The cavernous store will be built on Mill Street, directly across the road from the Red Bluff Wal-Mart. All that is needed for approval is a general-plan amendment and a rezone of the building code for that side of the street.
There is no name on the project application, but a city government source made it clear Wal-Mart was behind it.
“It’s because they are getting involved in CEQA [California Environmental Quality Act] lawsuits,” the source told us. “We’ve been asked by Wal-Mart not to reveal the name.”
The planned structure is another supercenter Wal-Mart, and the existing store will move into it, leaving Red Bluff with an enormous—and empty—monument to big-box retail.
“Yeah, they’ve been very low-key about it,” our source continued. “We’re kind of afraid they are going to leave us with an empty big-box.”
The Wal-Mart Web site puts the company’s plans in perspective: “Wal-Mart Stores, Inc. announced the continuation of its aggressive unit growth for the fiscal year beginning February 1, 2004. Domestically, the Wal-Mart division plans to open approximately 50 to 55 new discount stores and 220 to 230 new Supercenters. Relocations or expansions of existing discount stores will account for approximately 140 of the Supercenters, while the remainder will be built in new locations.”
None of the Supercenters have been built yet in California. But plans call for 40 of them in the Golden State—including Chico and Red Bluff—to be constructed over the next four years. And there has been talk of building one in Paradise, as well.
As of the end of August, Wal-Mart, which had total sales of $244 billion last year, had 1,494 traditional Wal-Marts, 1,386 Supercenters, 532 Sam’s Clubs and 56 Neighborhood Markets. And that’s just in the United States. There are another 1,200 stores in nine other countries, including China and South Korea. Can Iraq be far behind?
What’s wrong with Wal-Mart?
Many people in Chico like Wal-Mart. Who doesn’t like low prices?
The problem is in what Wal-Mart has to do to offer those low prices. In its drive to cut costs, the nation’s largest employer pays nearly half of its workers less than the federal yearly poverty wage for a family of three, an average of $7.50 to $8.50 an hour, and the health insurance offered is only for catastrophic illness or injury. The employee must pay for all other medical expenses.
Even so, they must pay $33 a month for the catastrophic coverage. But half of the company’s more than 1 million U.S. employees are not covered because, as part-timers, do not qualify or they have opted out of the coverage.
Wal-Mart has been sued for a number of alleged indiscretions. Some managers are accused of forcing unpaid overtime. Another lawsuit contends that women, who make up 70 percent of Wal-Mart’s workforce, are passed over for promotion and not paid on par with male employees.
And just last week 60 Wal-Marts across the country were raided by federal agents, resulting in the arrests of 300 illegal immigrants hired to clean the stores. Though the janitors were contracted through another company, investigators say Wal-Mart knew who was cleaning its stores.
And remember that motto Wal-Mart used to boast, about selling only American-made products? After some consumer group investigations, the company added a tag line to its motto: “whenever possible.”
Apparently living up to the boast is getting harder to do. Next time you’re in the store, check out some of the product labels and see where those inexpensive items were made. Here’s a hint: Today Wal-Mart does more trade with China than either Great Britain or Russia. In fact, it’s China’s eighth-largest trading partner.
Wal-Mart has incredible leverage over its vendors, said Adam Loveall, vice-president of the United Food and Commercial Workers, the union that represents Safeway employees.
“If they say, ‘We need you to lower costs if you want to sell products in our store,’ what do the vendors do to lower costs? They move operations to China.”
Loveall said the union is concerned with the coming expansion as it gets ready to enter into new contract negations with Safeway management.
In 1996 Safeway clerks went out on strike when management threatened to cut retirement benefits and health insurance, saying it could not compete with stores like Wal-Mart.
“Wal-Mart puts in grocery markets and then pays below the community standard; they shoot right under it,” said Lovell.
“Once people in communities are informed about how big and exploitive Wal-Mart is, they pass ordinances that say, ‘We don’t want you here.'”
Last week the Oakland City Council passed such an ordinance. The measure limits the size of big-box grocery stores within city limits to less than 100,000 square feet.
A story in the San Francisco Chronicle quoted Oakland Council President Ignacio de la Fuente: “Supercenters are going into communities and doing damage to local economies. They say they bring jobs and sales tax, but they put local stores out of business. The reality is they drain the life out of our neighborhood commercial areas.”
However, a similar law in Contra Costa County is being challenged by a referendum placed on the March ballot. And who’s financing the referendum? You guessed it: Wal-Mart.
The city of Los Angeles is also looking into banning big-box grocery stores.
Until recently, Wal-Mart did not target large urban areas, opting instead for rural, small-town markets. But now that those are pretty much sewn up, the company is beginning to move into the major cities.
“It’s really a question of what kind of living standard do we want?” asked Loveall. “Do we want to dumb it down to the Wal-Mart level?”
His union has dealt with Wal-Mart before. A number of years ago a meat department in a Texas Wal-Mart voted to unionize. Eight days later the company decided to go to all pre-packaged meat, and Wal-Mart’s butchers were suddenly out of work.
“Wal-Mart and the UFCW have a 15-year relationship,” Loveall said. “It hasn’t been a beautiful one. It started as a polite conversation by us to try to keep the playing field level. They declined any organizing of the labor, even for lunch.”
All new hires are shown an anti-union video before they start work, Loveall said.
“It is company policy that there will be no consorting among employees, even outside work,” he added. “The employees get skittish when you ask them anything even relatively personal.”
Calls to Wal-Mart’s Bentonville headquarters were referred to a woman named Hope in the Northern California office. Efforts to reach Hope were unsuccessful.
One day last week the News & Review approached four Wal-Mart workers—three women and a man—on break and sitting at cement tables located across the parking lot about 75 feet from the store.
The workers were apprehensive when asked about their jobs and took furtive glances toward the store as they talked.
“I’m on the clock now,” said one woman. “I can’t talk.”
The others nodded in agreement and said nothing.
A female clerk who looked to be in her 60s and was working a check-out line told us the company said the expansion would begin next January and that 250 employees would be hired.
“Those dumb union people will probably start coming around and bothering us after that,” she predicted.
Pay poverty wages, Loveall contends, and you force people to get public assistance, which we all pay for.
“UFCW employees are proud people who work hard for a good living. They like to pay their own way. But to Wal-Mart 28 hours is full time.
"[A customer] can pay five cents less for milk or shop at Safeway and let the person who works there pay their own way through life, or you can shop at Wal-Mart and pay for those workers’ public assistance.”
If there’s one constant in the process here, it’s the confusion and mystery that swirl around the expansion. Whether by design or simple miscommunication, the city Planning and Housing departments as well as its Planning Commission and City Council at times have been bewildered and perplexed.
Part of the problem is the corporate makeup of Wal-Mart. The existing Chico store sits on a piece of property owned by Wal-Mart Real Estate Business Trust, a Delaware corporation. The store is to expand to a parcel of land to the south, toward Wittmeier Auto. That property, however, is owned by Wal-Mart Inc.
A third party, the Wilmington Trust Company, owns the building and then leases it back to Wal-Mart Inc. The city is also dealing with another participant, PacLand Engineering, a consulting firm out of Clackamas, Ore.
And listed on records at the city is still another owner, Robert M. Bedared, of 2001 S.E. 10th St., Bentonville Ark., the same address used by Wal-Mart Inc.
(The Delaware connection is for tax reasons. According to the Delaware Division of Corporations’ Web site, “Businesses choose Delaware not for one single reason, but because we provide a complete package of incorporation services including modern and flexible corporate laws.")
Repeated calls to Bedared in Bentonville were met with a cheery woman’s voice on an answering machine. The Bedareds were not in but any message would be returned, she said. None of ours were.
Dealing with the company borders on the surreal, Planning Department employees say. Wal-Mart is so layered with trusts and corporations and tax shelters that it is very difficult to know whom to talk to.
A Chico planning employee said that at one point even Wal-Mart Inc. complained that Wal-Mart Real Estate Trust was not returning phone calls. But now, apparently, the two companies have gotten together.
Wal-Mart’s first signal to the city that it planned to double its size in Chico came in August 2002, when it submitted blueprints and elevations that went before the Architectural Review Board, where it was easily approved.
Then, in April 2003, the company applied for a building permit and paid the city Building Department a fee of $70,990.28.
The matter was set to come before the Planning Commission for approval of both the expansion and a lot split in June. However, a few days before the meeting the agenda was changed to consider only the lot split. Wal-Mart was asking for the split, a relatively routine request, so it could sell a couple of small lots along Forest Avenue to a fast-food restaurant and a gas station.
At the meeting, Chairwoman Jolene Francis announced, “There was misconception that we will be talking about something that we will not be talking about: Item No. 2 on the agenda is dividing parcel, although notice indicates both the [parcel] map and the contemplated expansion. They’re not related.”
But she then went on to add that even though the matter was no longer on the agenda, the expansion “is a permitted use in that zoning district” and that “if it occurs in the future it will not require approval from the Planning Commission.”
Planner Pam Figge warned that, if Wal-Mart didn’t expand, some other store of equal size could move in, buy the property and build there.
Throughout the meeting, planning staff told the commissioners the meeting wasn’t about the expansion, but the expansion weighed heavy on nearly every remark and comment.
The commission was being asked to adopt what is called a mitigated negative declaration under terms of CEQA. It states that a full-blown (and expensive) environmental-impact report is not needed because whatever impacts the project will have can be mitigated to acceptable levels.
The impacts in this case included traffic, air quality and wetland issues, but in terms of the parcel split they didn’t much matter. They would be taken up when the issue of expansion came back before the commission sometime in late November or early December.
Still, the commission was told, it had no jurisdiction over the expansion because it was an accepted use in community/commercial zoned land.
“So the Planning Commission has no ability to control conditions under which a big box can expand?” asked Commissioner Jon Luvaas.
Assistant City Attorney Lori Barker told him that, unless the applicant needed a use permit for some reason, the commission had no jurisdiction.
At this point Stockton attorney Brett Jolley stepped before the commission and told it that to go forward with the parcel split would be a violation of CEQA.
“CEQA defines a project as the whole of an action that has potential to impact the environment,” Jolley told the commission. “Up to five days ago, the project for this meeting was a tentative map that would expand Wal-Mart from 125,000 square feet to 225,000 square feet, effectively adding a second Wal-Mart to town.”
The parcel split, he argued, was a step to facilitate the expansion, and to suggest the actions had nothing to do with each other was disingenuous.
To limit the analysis and consideration of the project to only the parcel map, he said, “is like having a 100-lot subdivision and saying, ‘We don’t have any discretion over whether homes are built, only over the division of land.'”
Commissioner Irv Schiffman, sounding genuinely perplexed, asked, “We will not have a second chance to consider Wal-Mart expansion? Does the Planning Commission have the right to review a second Wal-Mart coming into town?”
Francis told him no, and that the matter before them was only whether to allow the subdivision of the property.
Jolley warned the commission that it was proceeding with this project in a “piecemeal” manner, which is forbidden by CEQA.
Jolley, speaking on behalf of his client, told the commission that the initial study it was using did not address potential fallout from the huge expansion, including the closing of other grocery stores and the decaying of the downtown.
Mike Neer, who works with PacLand, the Oregon firm representing Wal-Mart, tried to calm any frayed nerves on the commission by saying the proposal before it was just to divide property for some kind of future development. He said the planning director and the city attorney had advised splitting the project into two phases.
“Just approve this,” he said. “It’s not asking for expansion. That’s not in front of you.”
Francis nodded, saying economics was not the Planning Commission’s concern, nor was big-box sprawl and how to control it. “We’ve never taken economics into account,” she said. “We try to avoid that.”
With that she announced it was time to quit “talking about whether or not Wal-Mart should expand.”
Schiffman remained skeptical of the proceedings.
“Everyone knows that Wal-Mart raises hackles when you hear the name, and it’s going to be a very controversial issue with its size,” he predicted. “People who read about this are going to think we are playing the game of legalese here, that we are purposely dividing it between the parcel and the building to allow it to go through without too much controversy, and I don’t want to be part of that.”
Monfort, recognizing the limitations the commission was working under, sort of waved the white flag.
“If it came to us, there is nothing in the city code that says Wal-Mart can’t build a huge big-box retail. We need a policy change.”
In the end the commission voted 4-3 to approve the lot split. Schiffman and Luvaas were joined by Commissioner Mary Brownell in voting no. Monfort joined Francis and Commissioners Vic Alvistur and Orville Hughes in favor.
Jolley appealed it to the City Council, which took up the matter on July 15. And again confusion reigned. In the end, though, and after listening to Jolley, Councilmember Coleen Jarvis made a motion to uphold the Planning Commission’s decision. Councilmember Dan Herbert seconded the motion.
The vote was 5-2, with Councilmembers Dan Nguyen-Tan and Scott Gruendl voting in the minority.
Later Nguyen-Tan said he voted in favor of the appeal because he had not made up his mind about the parcel split.
“I found it very confusing,” he said, “and from reading the staff report and Planning Commission minutes, it was clear that many nuances to the issue were not fully explored.”
Jarvis later expressed some frustration as well.
“Unless we have some sort of ordinance banning big-box retailers,” she said, “we have no way of stopping it.”
On Aug. 21 Jolley filed his suit in Butte County asking that the lot split decision be set aside, that the city and Wal-Mart suspend all activities leading to the expansion, that an environmental-impact report for the entire project be prepared, and that he be awarded reasonable legal fees for his efforts.
In a phone interview last week Jolley contended that the “city has bent over backwards to accommodate Wal-Mart by putting together a series of revised proposed negative declarations for this project.
“The Planning Commission meeting for this was scheduled for June 6, but on May 31, six days before the meeting, they issued a new proposed negative declaration that had a completely different project description that only included the subdivision map, not the expansion of the Wal-Mart.”
Jolley said he got word of this change the day of the meeting.
“Essentially this was the city and Wal-Mart saying, ‘Oh, sorry, there might be trouble if we go this route. We don’t want to consider this.'”
Jolley said he was retained by Shannon only shortly before the Planning Commission meeting. He submitted a letter to the city on June 3.
“I received a letter back the following day that said, ‘Sorry we won’t be considering the expansion issues anymore. We are only considering the map.'”
Jolley called the change on the agenda a “tactic to try to avoid any opposition of environmental review at the last minute.”
But why would the city cooperate with Wal-Mart?
Jolley said in part it could be the desire to increase the sales tax the store generates for city coffers, but he also pointed out that the supercenter is essentially a supermarket alongside a traditional Wal-Mart.
Adding this Wal-Mart supercenter to the existing business community, he says, could harm downtown businesses or other grocery stores. But such arguments, he allows, often fall on deaf ears.
“I’ve seen planning commissions and city councils say, ‘No we don’t think that will happen. We think free enterprise is a good thing and economic competition will benefit everybody.’ They don’t want to look ahead to the fact that you could potentially over-saturate any area of retail.”
He says the city has failed on a number of procedural and substantive issues, including not adequately circulating its documents, failing to provide an accurate and finite project description and proceeding in a piecemeal fashion by splitting up one project into several smaller projects in an effort to avoid studying the full environmental effect.
Jolley said he does not know who initiated that approach but suggests the city was very supportive of it.
“The overall long-term effects of this project need to be addressed before it is implemented into the city of Chico,” he said. “Right now, as far as Wal-Mart’s concerned, to the public they are saying they don’t know if the expansion will occur. But in reality I suppose it’s full steam ahead.”
How will this all end? Will the City Council rubber-stamp Wal-Mart’s expansion? Will Jolley prevail in his lawsuit? At this point nobody knows.
We do know how War of the Worlds ends. The Martians nearly conquer the Earth before succumbing to the smallest and least-expected resistance—a bacterium in the earth’s atmosphere to which they had no immunity.