Decision May Affect Wal-Mart’s Plans for Palmdale Store
Voters on Nov. 7 will decide whether to approve a ballot measure that, if passed, could clear the way here for California’s first Wal-Mart Supercenter--although company officials say they have no immediate plans to build one in the state.
Wal-Mart’s Supercenter outlets offer full-service grocery and auto repair shops, in addition to the clothing, housewares and electronics found in its traditional stores.
Company officials say Wal-Mart wants to build another store--not a Supercenter--in Palmdale, but leaders of the local grocers’ union are skeptical. They fear Wal-Mart intends to put a Supercenter on a parcel of land that the City Council recently converted into a commercial site. So they organized a petition drive to put Measure T on the ballot, allowing voters to uphold or reject the council’s decision.
“If this would have been a regular Wal-Mart, we would not have taken this position,” said Rick Icaza, president of the United Food and Commercial Workers International Union Local 770. “It’s Wal-Mart’s attempt to get into the grocery industry. This will be a full-on, full-scale grocery.”
Icaza does not believe company officials, who say a traditional Wal-Mart will be built.
“We have no plans on the table to build Supercenters in California at this time,” said Bob McAdam, Wal-Mart’s director of state and local government relations. “Our plan is to build a discount store on the site.”
Zoning Decision Made in March
The issue stems from a decision in March by the Palmdale City Council to rezone a 13-acre parcel from single-family residential to community commercial. The converted land, if voters pass Measure T, will become part of a 33-acre site for a new retail center anchored by Wal-Mart at 47th Street and Avenue S.
But union officials are concerned that based on its size, the proposed 235,000 square feet of retail space will be converted into a Supercenter, with a full-service grocery store. Regular Wal-Marts are generally less than 150,000 square feet.
“When we discovered it, we went out and got 7,000 signatures to overrule the decision of the City Council,” Icaza said. After receiving the petition, the council had to either repeal the zoning change or let voters decide.
The proposed Wal-Mart store would be the second in Palmdale and the third in the Antelope Valley. A Wal-Mart in neighboring Lancaster was the first in the state.
Mayor Jim Ledford, co-author of the ballot argument in support of Measure T, rejected opposition claims that the area cannot support another Wal-Mart.
“I might support their argument in a community that’s built out,” Ledford said. But “Palmdale is a different dynamic. It is a city of 100 square miles in size, and only 20% of it is developed.”
The proposed Wal-Mart would serve about 50,000 residents of east Palmdale as well as outlying communities such as Littlerock and Pearblossom, he said, adding that the population of the entire region is expected to grow dramatically.
Wal-Mart’s McAdam said the company finds the Antelope Valley an attractive place to do business because of the growth potential and availability of land.
There are 1,742 Wal-Mart stores in the United States, along with 835 Supercenters and 469 Sam’s Clubs. The nearest Supercenter to Los Angeles is in Las Vegas, he said.
Disagreements on Advantages
Officials estimate that in the first year, the city would see about $600,000 in tax revenue from the proposed retail center, including between $360,000 and $380,000 from sales at Wal-Mart. Critics, however, say the city would be trading away jobs for revenue.
“It’s the law of diminishing returns,” Icaza said. “The city is going to lose because they’ll lose all of their small business. The myth is [that Wal-Mart] creates all these jobs, but they are minimum-wage jobs and they destroy two higher-paying jobs for every job they create.”
In response, McAdam said it is Wal-Mart’s policy not to release specific wage information, but that “nowhere in the country do we pay minimum wage.”
“What we’re putting in Palmdale is not a grocery store, so it will not be competitive with grocery store wages,” he said. “We will do a competitive market study and determine a wage range that is competitive with other retailers in the area.
“In a labor market like this, if we weren’t paying competitive wages, we couldn’t get the employees,” McAdam said.
Project developer Stanley Rothbart said that although Wal-Mart plans to open a discount store and not a Supercenter, there is room at the site for expansion.
“Wal-Mart has not made any commitment for a Supercenter in California,” Rothbart said. “In the long term, I can think of lots of reasons they would want to do it. The concept is extraordinarily viable and seems well suited for the California marketplace.”
Small Businesses Would Feel Effects
According to the company’s Web site, expansion plans call for opening 170 to 180 new Supercenters around the country.
Richard Giss, a retail analyst for Deloitte & Touche LLP, said Wal-Mart generally opens its stores outside urban areas, and once it builds them, people come.
“Wal-Mart understands their demographic better than almost everyone else,” Giss said. “They do not have a pattern of overpopulating an area with their stores. It hasn’t happened elsewhere.”
Addressing the concerns that small retailers would be forced out of business by Wal-Mart, Giss said small businesses are jeopardized in today’s environment by any big company.
“There’s no question the little guy’s life changes when Wal-Mart comes in,” he said. “For everyday items, Wal-Mart is tough competition. Where Wal-Mart can’t compete with [small stores] is in personal service. Big retailers don’t handle niches the way small retailers do. The small business may have to adjust and find a niche narrow enough to where Wal-Mart is not a competitor.”
