Business

Report: Wal-Mart Scales Back Plans For New York City Store

Walmart (file / credit: YURI CORTEZ/AFP/GettyImages)

Walmart (file / credit: YURI CORTEZ/AFP/GettyImages)

NEW YORK (CBSNewYork) — Wal-Mart has decided to scale back plans to open its first New York City amidst staunch opposition, according to published report.

The retail giant had been pushing to open a store in the East New York section of Brooklyn as part of the Gateway II development, but the plans fell through in September after Wal-Mart was unable to come to financial terms with the developer in charge of the project, according to the New York Times.

Wal-Mart also told the newspaper it has canceled its contracts with lobbyists and consultants that had been advocating for a New York City store.

While some sources told the newspaper the retailer has all but abandoned its efforts in the city, spokesman Steve Restivo said the retailer has not given up its plans.

Labor unions have been fighting the entry of Wal-Mart into the city, with the backing of several politicians – including many Democratic mayoral candidates, the newspaper pointed out.

City Council Speaker Christine Quinn -– who officially announced her candidacy for mayor Sunday — has previously declared her strong opposition to having the store open in the city.

“Walmart doesn’t bring jobs; it takes away jobs. They kill jobs,” Quinn said in February 2011.

Public Advocate Bill de Blasio, also a mayoral candidate, has also come out in opposition to Wal-Mart. He has issued several reports against the retailer, including one that said it would result in a net loss of jobs in New York City, the newspaper reported.

The prospect of a Wal-Mart has also sparked fears among small business owners. When Wal-Mart firs announced hopes to open a store in Brooklyn two years ago, many local retailers expressed concern that the retailer would leave them unable to compete.

“They are a monster that is going to eat us up,” Mark Tanis, owner of Shoppers’ World in East New York, told CBS 2 in January 2011. He said bringing a Wal-Mart to Brooklyn would put his store out of business.

“A jacket I’m selling for $24.99, they could easily come and sell that for $15,” he said.

In fact, Tanis said, Wal-Mart’s pricing and advertising power threaten the entire stretch of stores on Pitkin Avenue.

“I think it would look like a ghost town if Wal-Mart was to come,” he said.

But Mayor Michael Bloomberg has emphasized that Wal-Mart has a legal right to open in the Big Apple, adding that the company provides a large number of entry-level jobs.

And according to a new Quinnipiac University poll released in March 2011, 57 percent of New Yorkers said elected officials should allow Wal-Mart to open in the city. Sixty-eight percent of respondents said they would shop at a city Wal-Mart if it were convenient for them.

Having saturated rural and suburban areas, Wal-Mart has made inroads in major urban areas in recent years – although not without staunch resistance.

Like New York, Chicago had no Wal-Mart stores at all, until the retailer got the green light for a Supercenter on that city’s struggling West Side in 2006. Soon afterward, the Chicago City Council passed an ordinance that required big-box retailers to pay a minimum of $10 per hour and $3 hourly in benefits, but since-retired Mayor Richard M. Daley was quick to veto the ordinance.

Wal-Mart finally got the green light for expansion in Chicago in 2010, when it reached a deal with labor unions to set starting wages at $8.75 per hour, which was 50 cents less than unions had wanted.

The retailer generated little controversy when it began opening supercenters in “food deserts” beginning in 2011. But plans for a Wal-Mart “Neighborhood Market” store in the city’s trendy and affluent East Lakeview neighborhood generated an uproar among neighbors, who said the retailer would drive the numerous small, independent stores in the area out of business.

Neighbors in the fashionable Chicago community also argued that wages at the store would be so low that no one working there could possibly afford to live in the affluent surrounding neighborhood.

After plans for the Wal-Mart were announced, many small businesses along the East Lakeview thoroughfare of Broadway put up signs in their windows reading, “Wal-Mart: Not in My Neighborhood” – showing a frowning Wal-Mart smiley icon. But Chicago Ald. Tom Tunney (44th), who represents the area, said there was nothing he or anyone else could do to stop Wal-Mart from entering.

Ultimately, Wal-Mart prevailed, and the store opened this past January.

In New York, Wal-Mart failed twice to open a store in the city prior to its likewise unsuccessful Brooklyn plan.

A developer had planned to include a Wal-Mart in a development in Rego Park Queens in 2005, but dropped the plans in the face of stiff opposition, the New York Times report said. The following year, plans for a Wal-Mart in a development on Staten Island fell through, the report said.

In 2007, then-Wal-Mart chief executive officer H. Lee Scott Jr. said opening in New York City at all was “not worth the effort,” the newspaper recalled.

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