Wal-Mart Agrees to ‘Benefits Agreement’ in Chicago

MARK HAMSTRA

BENTONVILLE, Ark. — Wal-Mart Stores here said last week it plans to open “several dozen” stores “of varying size and format” in the Chicago area during the next five years.

“This will not only address Chicago's double-digit commercial vacancy rate but, more importantly, provide customers with more convenient access to affordable groceries, especially those 600,000 residents living within Chicago's three, self-identified food deserts,” the company said in a prepared statement.

Wal-Mart currently only operates one store within Chicago's city limits, and has fought for several years to open locations there — but has met resistance from union and community leaders. A municipal hearing was scheduled late last week for a proposed Supercenter in the Pullman Park area in the south of Chicago.

In making last week's announcement, the company said it had reached a “community benefits agreement” with local leaders, promising that it would pay a minimum hourly rate of $8.75 — exceeding the state's minimum wage by 50 cents — hire local residents and lease space to independent businesses in the lobby of the store, according to local reports.

Wal-Mart is referring to the development plan for the city as the “Chicago Community Investment Partnership.” It said the investment would create about 12,000 jobs during the next five years — including 2,000 construction jobs and 10,000 store positions. The company estimated its plan would generate $500 million-plus in sales and property taxes for the city.

In addition, Wal-Mart and the Walmart Foundation would develop charitable partnerships worth $20 million targeted toward reducing hunger, curbing youth violence and improving the quality of life for local residents. The charitable works would include an annual donation of 1.2 million meals to Chicago residents and 200,000 meals for children this summer.

Gary Giblen, an analyst with Quint-Miller & Co., New York, noted that Chicago is a prime expansion target for Wal-Mart.

“It's Middle America — they want Wal-Mart,” he said. “Chicago should be a Wal-Mart market, and it is inevitable that Wal-Mart will have more stores there.”

Chicago, Giblen pointed out, has been found to offer relatively high grocery prices — a reflection of its nature as a largely two-chain market, dominated by Supervalu's Jewel-Osco and Safeway's Dominick's banners.

“It would truly be a victory for consumers if Wal-Mart were to bring its low-priced offering to Chicago,” he said.

The strong union presence and a difficult zoning process have thrown up “artificial” barriers to Wal-Mart's growth in the market, he said.

In a prepared statement issued by Wal-Mart, Chicago Alderman Anthony A. Beale, whose 9th Ward includes the proposed Pullman Park location, said the area welcomed the store.

“Our city is facing a number of challenges, but most of all, we need good jobs,” he said. “There is a growing divide between the ‘haves’ and the ‘have-nots,’ and this initiative has the potential to begin to level the playing field for all Chicagoans.”

Chicago Mayor Richard Daley, who previously vetoed a measure seeking to block development of big-box stores in the city, also spoke out in favor of Wal-Mart last week, according to reports.

“We need these stores all over the city, and we need the jobs and the economic power they bring to the community,” the Chicago Tribune quoted him as saying.