Inside Walmart’s slow, quiet campaign to crack New York City
This week, following a report in the Times on a bribery scandal in Mexico involving Walmart, the mayor weighed in in favor of Walmart's right to come to New York, the governor took a pass on the question, and several Democratic office-seekers, mindful of the strong opposition to Walmart by organized labor, weighed in, strongly, against.
Before this renewed debate, Walmart had been out of the news in New York for a while, more or less since late 2010, when the retailer announced plans to open up a store in East New York, and the City Council decided to hold a hearing about it. (They ultimately had to push the meeting to January 2011 because they needed a location bigger than the council chambers after seeing how many union members and others planned to flood the room.)
It almost seemed as if Walmart's long-held pursuit of a New York location had been put on ice.
But they've actually been campaigning here, quietly, the whole time.
Walmart's Steve Restivo, Senior Director for Community Affairs, said the company has yet to decide on any particular New York City location for its first proposed store.
"That's the million-dollar question," he said with a laugh. "It's no secret that we think a store makes sense in New York City, and our real-estate folks are doing their work. The process is that when we have a store that we think makes sense, we'll announce it."
New York is the only one of the United States' 10 most populous cities not to have a single store. (Boston isn't in the top 10, but it's the only major city in the Northeast that also has no Walmarts in the city proper.)
The retailer, which began as a regional store in north Arkansas and spread widely across America's exurban and suburban areas, has lately been trying to penetrate big cities, with some success, most notably in Los Angeles.
Restivo pointed to WalmartNYC.com, a resource hub for pro-store news and research, as the first city-specific site of its kind in company history. Facebook, too, is "a great place to have a conversation," he said, highlighting with pride the campaign's 60,000 Likes.
The company has used its online presense to push out polls that find that the majority of New Yorkers, when asked, are open to the idea of a Walmart or Walmarts in the city.
And recently New Yorkers have found in their mailboxes fliers passionately making Walmart's case.
"Care about a sustainable future?," reads one. "So does Walmart!"
A handsome out-of-work carpenter is the star of another advertisement. In it, he hopes for the City Council to resist the urgings of "special interests" (revealed in another ad to be the grocery workers' union and city-based food retailers) because, as it reads, "I need a job;" the buildings workers unions have backed Walmart's expansion into New York City.
And then there's a pop quiz. Do you want (1) a Walmart in New York City or (2) fewer jobs, higher prices, and "your rights being taken away." Those who choose No. 1 are encouraged to join the company's "Community Action Network."
Two other advertisements draw elected officials more deeply into the mix, alternately playing to their authority and questioning it. "According to the New York City Council," reads one, "3 million people lack adequate access to grocery stores." And then the other: "Walmart isn't seeking government zoning approval or anything else from the City Council."
Walmart has focused on the three arguments in New York City that it focuses on everywhere: price, jobs and community growth. But they've added a fourth, an appeal to New Yorkers not to let elected officials and unions dictate their choices.
The first two are perhaps obvious. Walmart's prices tend to be less than other retailers, and its price stability—its prices stay nearly constant from store to store, whether rural, suburban, or urban—means that those of us in expensive markets like New York City benefit from an even greater price discrepancy than our neighbors in cheaper environments. On jobs and community growth, the simple selling point is that New York City needs more of the former and is willing to invest in the latter.
It's the last argument that puts a fine point on the company's strategy for getting into New York City: Who are the City Council and a handful of advocates to tell the rest of New York City that they really don't actually want a Walmart?
I talked to Bertha Lewis, a longtime activist, formerly with ACORN, presently with Walmart Free NYC, about the way Walmart had been making its case. She was particularly annoyed at the argument that appeared to suggest a rift between Manhattan legislators and citizens in poor areas of the outer boroughs.
"Where the hell is he coming up with that?" she asked. "You see how despicable these people are. You're going to try to polarize by class, right?"
"Their strategy now is urban expansion, which is code word for black and brown neighborhoods, poor neighborhoods, places that they believe are not as powerful politically, that have high unemployment and poverty, so that they can come in and be a predatory retailer," she said.
And the argument about availability of fresh food in underserved neighborhoods is part of what she sees as predatory, of a piece with predatory lenders.
"For years, a red line was drawn around these neighborhoods, and they didn't have access to credit. It's almost the same language now. It's, 'Aww, you don't have access to fresh food,' and, 'aww, you don't have access to affordable goods. Let Walmart help you. It's a cynical race-based ploy."
"What they didn't count on is that we're not here for a Walmart plantation. There was full employment on plantations, but we're not going to do that here," she said.
She derided Walmart's online campaigning as a mere mimicking of engagement.
"We throw up a website and they throw up a website to appear as though they're all hip with social media," she said.
But, as Restivo pointed out, the Walmart Free NYC Facebook group, with its 4,800 Likes, trails the company's by a significant margin.
"I think the message that has resonated best with elected official is, 'Let the customers decide where they want to shop and work,'" he said. "The question we've asked is, 'Should folks who live in Manhattan who have lots of shopping options be telling someone who lives in the Bronx what type of stores they should have in their community or what type of jobs they should be applying for?'"
"The conversation was fairly one-sided for a long-period of time," Restivo said. "In a lot of ways, it was our fault for not doing a better job telling our own story. As a result, perception was allowed to become reality in a lot of people's minds."
New Yorkers especially, he argues, come to the debate with baggage.
"We were starting from a point where a lot of folks had well-entrenched, deeply conceived notions about the company," he said.
The strategy: stacking up "urban myths"—that Walmart jobs are bad ones, that the entry of a Walmart store into a market triggers the inexorable decline of small businesses—against "facts." They did that, Restivo said, and found that "there was an appetite for hearing some good news about the company."
THE MEXICO SCANDAL GIVES WALMART'S OPPONENTS a place on the political agenda again, something they've lacked in the absence of any specific proposed Walmart location in New York City, leading them to fear they'd lose the fight without even getting to fight it.
Foes in Los Angeles recently geared up for a city council vote, only to find that Walmart had gotten the necessary permits to build their first store in the city's Chinatown neighborhood the day before, without needing any special approvals.
And so, this week, the forces rallied against Walmart's expansion into New York City —notably labor—called for city officials to investigate Walmart before the company gets any further here.
In a release, opponents demanded that city leaders hit pause on Walmart's arrival "until the full scope of the company's wrongdoing is revealed and adequate steps can be taken to ensure the retailer doesn't engage in any illegal activity to enter New York City."
The problem, say Walmart's critics, isn't simply that they don't know whether the company is doing anything wrong. It's that they don't know what they're doing at all.
Ever since there were the first rumblings that Walmart was eyeing a site in East New York, said Maritza Silva-Farrell of the Alliance for Greater New York, a group affiliated with the national group Jobs with Justice, "we've been trying to figure out what they want to do in New York."
"Are they actually going to community board hearings? Are they actually talking to the community?" she asked. "From what we know so far, none of those things have happened yet. But we don't know. And then we find out about bribery in Mexico, and it makes you think."
"We're looking everywhere," Lewis said, including as-of-right sites, places where they can just lease and move in. We're onto them. They can say, 'Nothing's wrong here, because we don't know where we're going.' But what the hell kind of business plan is that? You're the largest employer in the goddamn world and you're going to say, 'Oh, I don't know what I'm doing'? It's insulting."
Walmart's opponents are staying vigilant, she said. "We are everywhere. We are up their ass. And we're going to stay up their ass ... They need to be told, 'Walmart, you cannot come into New York City doing things the way that you always did them. We've seen what's happened in Chicago, in L.A., all over. If you're going to come into New York City, you need to come in a different way."
Silva-Farrell is more doubtful that there's anything Walmart can promise that would make its presense a net benefit for the city.
"It's really hard to trust a company that has failed so many communities so many times," she said.
Restivo admitted New York City has been an incredibly tough nut for the Walmart to crack.
"One of the things that has changed for us in recent years is that we've become more flexible in our approach to communities," Restivo told me. "That's part of an effort to do a better job of listening."
And that's reflected, he said, in just what size of store—Walmart's range from its 185,000 square foot SuperCenters to its new 15,000 square foot Express Stores—the company envisions for New York City.
"It depends on the site," Restivo said. "Those decisions are based on real estate availability and, more importantly, customer needs. If we're talking Midtown, we're talking about a smaller store. If we're talking about some of the outer boroughs, where there are larger parcels, a larger one-stop-shop store might make sense."
He's even willing to float the notion of no store at all.
"We want to be a good corporate neighbor in New York City for years and years to come. So we want to spend a little extra time on the front end making sure folks have informed opinions of Walmart."
THERE CAN BE LITTLE DOUBT WHAT VALUE Walmart sees in a New York City store. A look at a mapping of the area's stores helps to explain why. Since its founding in northwest Arkansas in 1962, Walmart stores have spiraled outward, across the country, a pattern made breathtaking in a visualization posted on FlowingData, the website of statistician Nathan Yau.
The company has saturated much of rural and suburban America—Walmart counts 3,029 SuperCenter stores, 629 Walmart discount stores, 168 Neighborhood Markets, a that pair of Neighborhood Express stores, located, naturally, in northwest Arkansas—but, by tradition, each store is placed close to another as they spread across the United States.
The reason? That network of stores is efficient, and its efficiencies are central to Walmart's business model. In an article in the journal Econometra last year, Thomas J. Holmes of the University of Minnesota wrote: "[The] economics of density are a substantial component of Wal-Mart profitability."
But zoom in on the New York City region, (click on the map at right to enlarge) and there's a gap in the network. Clustered around the city are stores—in North Bergen, N.J, in Valley Stream, N.Y.—that almost seem to be leaning up against the gates of the city. The presence of stores on all sides of the city means that Walmart has a distribution center ready to serve the five boroughs. And sitting inside that blank spot on the map are some 8.4 million potential Walmart shoppers.
That said, as valuable a prize as New York City is—and as unique a challenge as it poses the company, with its strong labor presence, tremendous existing retail offerings, and history and culture that prizes small businesses—the possibility of Walmart coming into New York City is part of a national debate over whether Walmarts are welcomed into American cities.
Both sides see hope in recent developments. In Washington D.C., Walmart recently announced that it was scaling back for now its plans for six stores to a single one, in the face of opposition.
Walmart Free NYC tweeted praise to its District counterparts. "@RESPECT_DC contributes to delay of multiple stores. Hope we have a similar victory soon!" But on the pro-Walmart side, L.A. has recently moved ahead on a contested 33,000 square foot store in that city's historic Chinatown neighborhood.
"We're seeing the same arguments from our critics from city to city," said Walmart's Restivo. "But we're also sharing information city to city as well."
He pointed to an editorial in the Los Angeles Times that called "unwise and counterproductive" an L.A. City Council attempt to temporarily block chain retail stores in Chinatown, a restriction targeted at Walmart.
"We're going to make sure folks in New York City see that," Restivo said.
It is perhaps too early to see how the Mexico allegations affect Walmart's bid to get into New York and other American cities.
Before the charges in Mexico came to light, Restivo complained that in the debate over Walmart's urban expansion is always the same arguments, the same criticisms, the same rhetoric.
"In a lot of ways it's a bad re-run, and for better or worse, it has gone unchecked for years," he said.
When I relayed the comment to Lewis to get her reaction, she let out a hearty laugh.
"I'm glad he thinks it's been a bad re-run, but it's about to turn into a nightmare."