The Chicago Tribune reports that Wal-Mart, after having surmounted numerous obstacles in its efforts to open a store in Chicago, has seen the store generate lower sales than expected – about $50 million a year, compared to the $60 million to $70 million that was expected once the store opened. And the concern is that Wal-Mart’s vaunted urban strategy may not be everything the company said it was, which could hurt Wal-Mart at a time when it already is dealing with recalcitrant analysts who believe that its stock price and annual growth rates are not what they should be.
“After saturating rural and suburban America, the Bentonville, Ark.-based retailer began to target America's big cities to recharge growth,” the Tribune writes. “Instead, Wal-Mart has largely become the enemy at the gates. Los Angeles, after allowing one store to open, threw away the welcome mat. Boston shut its doors. And New York, the nation's largest city, spurned the retailer's overtures so forcefully that Wal-Mart CEO H. Lee Scott Jr. said publicly earlier this year that he didn't care if Wal-Mart ever opened there.
“Not so Chicago. Or so it seemed at first. With a pro-business mayor, vast food deserts, and an abundance of shuttered manufacturing sites ideal for building supercenters, Chicago was expected to become a shining example of Wal-Mart cracking the urban frontier. But the retailer encountered stiff resistance from organized labor, which poured at least $2.6 million into Chicago City Council elections earlier this year, in part to support aldermen likely to block Wal-Mart's march into the city. ” Which is at least one of the reasons Wal-Mart has found its efforts to open a second store stalled,
The reasons for Wal-Mart’s less-than-expected success include “out-of-stock problems and unfamiliarity with inner-city shopping patterns,” according to the story, and “local business owners say they are disappointed with a program Wal-Mart launched aimed at helping them survive in the shadows of its new store.” Still, the Tribune reports that local residents say that they are happy with their Wal-Mart, and the store has been demonstrably good at both hiring people who might have been viewed as unemployable elsewhere and bringing retail options to neighborhoods that previously found them lacking.
“After saturating rural and suburban America, the Bentonville, Ark.-based retailer began to target America's big cities to recharge growth,” the Tribune writes. “Instead, Wal-Mart has largely become the enemy at the gates. Los Angeles, after allowing one store to open, threw away the welcome mat. Boston shut its doors. And New York, the nation's largest city, spurned the retailer's overtures so forcefully that Wal-Mart CEO H. Lee Scott Jr. said publicly earlier this year that he didn't care if Wal-Mart ever opened there.
“Not so Chicago. Or so it seemed at first. With a pro-business mayor, vast food deserts, and an abundance of shuttered manufacturing sites ideal for building supercenters, Chicago was expected to become a shining example of Wal-Mart cracking the urban frontier. But the retailer encountered stiff resistance from organized labor, which poured at least $2.6 million into Chicago City Council elections earlier this year, in part to support aldermen likely to block Wal-Mart's march into the city. ” Which is at least one of the reasons Wal-Mart has found its efforts to open a second store stalled,
The reasons for Wal-Mart’s less-than-expected success include “out-of-stock problems and unfamiliarity with inner-city shopping patterns,” according to the story, and “local business owners say they are disappointed with a program Wal-Mart launched aimed at helping them survive in the shadows of its new store.” Still, the Tribune reports that local residents say that they are happy with their Wal-Mart, and the store has been demonstrably good at both hiring people who might have been viewed as unemployable elsewhere and bringing retail options to neighborhoods that previously found them lacking.
- KC's View:
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Okay, so Lee Scott probably doesn’t wander the halls of headquarters in Bentonville warbling “My kind of town, Chicago is…”
It is a tough town, with urban canyons deep enough to make even the Bentonville Behemoth feel small. But I have to say that I find it bewildering why the city would prevent Wal-Mart from opening in neighborhoods that need shopping alternatives. Such is the pull of the political undercurrents, I guess … but it doesn’t make me feel better about the system.
