Retailer Wal-Mart checks out Garden Grove, then checks out
Many cities would be cheering the news that Wal-Mart and one of its mega-controversial superstores had moved out of town before even unpacking its bags.
But in Garden Grove, a town always pressed for cash and respect, city officials and neighborhood business owners are mourning the big-box retailer’s abrupt departure -- which occurred just days before city planners were to vote on the project.
“It was cruel the way they did it,” said Garden Grove Councilman Bruce Broadwater. “They built people up and got the community really excited. Then they dropped the bomb on us and ran off.”
Unlike cities elsewhere -- where the super-sized Wal-Marts are often viewed as a threat to local businesses -- there was little opposition to the planned superstore in Garden Grove. To the contrary, some saw it as the cavalry coming.
No area is feeling the effects of Wal-Mart’s 11th-hour bolt more than the restaurants, dry cleaners and beauty salons at the business-starved southwest corner of Chapman Avenue and Brookhurst Street. Here, they were counting the days until the Wal-Mart Supercenter opened its doors and shoppers began returning to the long-neglected center.
In preparation for the grand opening, the strip mall’s owners spent $2 million renovating the tired center and signed Verizon Wireless and Wells Fargo to deals contingent on Wal-Mart’s arrival.
“You hear all these stories about Wal-Mart coming to towns and shutting other businesses down because of the competition,” said Tom Nguyen, who represents CC Technology, the center’s owners. “Well, it’s just the opposite here. Wal-Mart not coming is going to cause a lot of these businesses to shut down, and it’s going to be impossible to lease any of these open spaces now.
“Businesses want to be next an anchor that brings the traffic into the center,” Nguyen said. “Without an anchor, they’re dead.”
For Garden Grove, it marks another down day for a city that has been courted and wooed before, only to get dumped. Last year, a Korean businessman promised to spend $8 billion on a theme park, a boutique hotel and an upscale outdoor mall. But the deal fizzled just like the dreamy proposal for a Las Vegas-style casino, the London Bridge across a faux river and the Music City RiverWalk.
Wal-Mart hinted it might be pulling the plug on the Garden Grove site in early October, notifying city officials that the two-story Supercenter would be downsized to a regular store. Then on Oct. 19, Wal-Mart told Garden Grove officials that even a one-story, 105,000-square-foot store was not financially feasible.
Almost immediately, city leaders were skeptical of Wal-Mart’s reasons for dropping its plans and leaving town.
“Displeased and disappointed is how Garden Grove feels about this unexpected decision from Wal-Mart, particularly because of the amount of time and effort already invested by both the city and the community,” Garden Grove City Manager Matt Fertal said in a terse e-mail posted on the city’s website.
Nearly two weeks later, Fertal was still perplexed.
“I can understand that original two-story mega-store might not have been financially feasible,” he said. “But I find it hard to believe a downsized store wouldn’t have been viable at that location.”
Councilman Mark Rosen said he was disappointed but not surprised by Wal-Mart’s decision.
“I was warned in advance that Wal-Mart is a huge corporation and they’ll be as likely to leave you high and dry as they will be your buddy,” he said.
A Wal-Mart in Garden Grove would have been the company’s 12th in Orange County and ninth in the northern portion of the county.
But it would have been the county’s first Supercenter and one of the first in an urban area of Southern California.
Councilman Steve Jones believes that Garden Grove simply got caught up in the company’s changing corporate strategy, which he said includes more of an international focus.
“I think Wal-Mart’s problems are bigger than Garden Grove,” Jones said. “Their stock has been flat for two years. Wall Street has been telling Wal-Mart to stop cannibalizing their existing U.S. stores by putting stores too close to each other. I don’t take it personally. I don’t think this has anything to do with Garden Grove.”
But Wal-Mart officials said this week that the company’s evolving corporate strategy was not related to its exit from Garden Grove.
“As we reviewed this proposed opportunity, it no longer made financial sense for the company,” said Tiffany Moffatt, a company spokeswoman. “The construction costs didn’t pan out for this specific project. We were doing everything in our power to make this work, but we’re continuing to look for more opportunities in Orange County.”
There was some community opposition to a Supercenter, which combines a regular Wal-Mart with a discount supermarket. But it was minimal compared to what has happened in cities like Long Beach and San Diego, which passed ordinances banning the mega-stores. San Diego’s never took effect, because the council failed to override a mayoral veto.
All indications were that the Garden Grove City Council was poised to approve the Wal-Mart proposal.
“If there was any opposition on the council,” Broadwater said, “they were way outvoted.”
In many areas of Southern California, the concern has been that the super-sized stores would crush local competition and leave towns overwhelmed with traffic. But in Garden Grove, environmental reviews showed minimal traffic problems, and most business owners were hoping Wal-Mart could revive their blighted neighborhood.
“A Wal-Mart would have upgraded this place,” said Shelly Holman, who owns a pet store next to the planned Wal-Mart site. “It’s disappointing they’re not coming. We have to do something over here. It’s very quiet.”
City officials said the effects of Wal-Mart’s pullout will be significant -- $500,000 a year would have gone into city coffers -- but not devastating.
“This isn’t going to create havoc within the city’s financial structure,” Fertal said. “It’s not going to determine whether we add more police, but it would have helped. We’re always looking for new revenue generators.”
Fertal said the city would begin searching immediately for a Wal-Mart replacement.
“That neighborhood is begging for an anchor,” he said. “The list of developers interested in that land is short, but we’ll have to go back to that list.”