LA QUINTA, Calif. -- Some 15 to 20 ordinances and a handful of lawsuits have been filed in California opposing Wal-Mart Stores' supercenter format. Among the most prominent is the Los Angeles City Council's proposed ban, which contends the large formats create traffic jams and environmental hazards, and drive down salaries for middle-class workers. Unions have backed several of the lawsuits.
The Bentonville, Ark., retailer has vowed to fight the ordinances, and in some cases has been successful in taking the matter to voters and overturning the bans. Wal-Mart claims organized labor and competitors are attempting to limit competition and protect market share.
"We're continuing to move forward with our [expansion] plans," said Western region spokesman Peter J. Kanelos. "Based on the amount of interest we've received in La Quinta, we're optimistic that the greater Coachella Valley will be supportive of our supercenter."
The 1,500 supercenters Wal-Mart operates in the United States have been driving revenues since their debut in 1988. Including California's 40, the retailer plans to open 1,000 more supercenters in the United States over the next five years. Some analysts estimate supercenters represented as much as 40% of Wal-Mart's revenues of almost $250 billion in 2003. Also, Wal-Mart operates 143 discount stores in California, worth some $520 million in sales taxes in 2002.
Wal-Mart supercenter foes in California are not alone in their resistance to the concept. It is estimated that over the last 16 years, about 200 U.S. communities have fought their construction.
West Coast analysts remain split on the controversy. "It may be too early to determine the benefit or loss here," said Liz Pierce, vice president of Sanders Morris Harris, Los Angeles. "It's the same controversy that surrounds Wal-Mart wherever they go. One side says this is great for the consumer, and the other side says it puts small businesses out. I'm not sure there is an answer, and I'm not sure we want the government to come in and regulate it."
"There is an inherent problem with these bans," insisted Jack Kyser, chief economist of the Los Angeles Economic Development Corp., a firm commissioned by Wal-Mart to study supercenter impact on communities. "The irony is in trying to keep Wal-Mart out. They will go for the easy victories on the periphery in surrounding cities, and just vacuum the sales-tax revenue right out. This can be very dangerous."
That scenario might be playing out here. Just five minutes down the road in Palm Desert, one battle rages on even as the La Quinta supercenter pulls from its customer base. A court ruled against a lawsuit filed by Palm Desert residents who claim they would be irreparably harmed by the city's approval of a supercenter and its potential environmental consequences. The plaintiffs have appealed the decision, and because a ruling is not expected until at least next year, they have effectively delayed its construction and scheduled summer 2004 opening.
