Wal-Mart draws ire while rival Target avoids negative press - East Valley Tribune: Business

Wal-Mart draws ire while rival Target avoids negative press

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Posted: Sunday, February 8, 2004 7:03 am | Updated: 5:11 pm, Thu Oct 6, 2011.

Wal-Mart is the Goliath that everybody has in the sights of their slingshots.

Rival "big-box" discounter Target paradoxically is less of a target.

"Americans just don’t like the big guy. (Wal-Mart) is just the big guy," said Jay Butler, director of Arizona Real Estate Center at Arizona State University.

Wal-Mart is regularly criticized for bringing noise and traffic into neighborhoods, trampling over smaller shops and treating employees poorly. Traffic and swamping the competition are typical of all big boxes, said Michael Niemira, chief economist for the International Council of Shopping Centers. Employee woes are typical of any large employer, he said.

"When you get that big you become the target for attacks," Niemira said. "The economic reaction (of Wal-Mart and Target) is the same, but Wal-Mart has a bigger negative perception. Target is in its shadow."

That perception might change with two proposed Super Targets planned to open in Gilbert in early 2005. That’s Target’s version of the department storesupermarket combination, similar to the Wal-Mart Supercenter. Local retail real-estate experts are hearing rumblings.

That shouldn’t come as a surprise. Animosity toward Wal-Mart seemed to kick into high gear when the Supercenters entered the Valley in the late 1990s.

Wal-Mart opened its first two local Supercenters in Mesa and Scottsdale with little opposition, but when the company staked out space for more stores in Mesa, Chandler and Gilbert, antagonism was swift and vocal.

Wal-Mart spokesman Pete Kanelos said it is a typical scenario, with a minority of residents getting bankrolled by supermarket workers’ unions in hopes of stirring up sentiment against the stores.

"Are you going to find a handful of people opposed to any commercial property? Probably," Kanelos said. "But a lot of times the impression is that the community is opposed, and that’s not the case. We’ve found in community after community if there is opposition, it’s a small vocal minority. You can’t gauge community support based on people who show up at a (City Council) meeting."

The saga of the newest East Valley Wal-Mart, which opened just weeks ago at Greenfield and McKellips roads in Mesa, seems to bear out Kanelos’ assertion.

Wal-Mart scoped out a spot for the store at Lindsay and McKellips roads in October 1998. Opposition pushed the company from site to site with Wal-Mart digging in its heels at its current location by October 1999.

Opponents continued to fight, stalling the project for several years, and eventually forcing it to a referendum. Mesans voted overwhelmingly — 67 percent — for the Wal-Mart, even though the United Food and Commercial Workers Local 99 sank a lot of cash into the campaign to stop the supercenter.

The union blames Wal-Mart, which is not unionized, for its woes in winning favorable contract terms for supermarket workers.

In Southern California, striking supermarket employees have been — unsuccessfully, so far — holding out for free health care benefits, pension fund increases and a wage boost, while the supermarket chains say they can’t compete with Wal-Mart’s low prices without cutting expenses. Similar negotiations — minus a strike — are happening in the Valley.

The supermarkets have reason to worry, according to an analysis of Wal-Mart by Retail Forward, a national retail consulting firm.

Wal-Mart’s growth for a decade has been largely due to its foray into food, according to the analysis.

"Wal-Mart is now the top grocer in the nation," the Retail Forward report stated. "More than 8 percent of the U. S. spending on supermarkettype products now goes through a Wal-Mart store."

Retail Forward predicts that the number of Wal-Mart Supercenters will double by 2007 to more than 2,000 locations, and that the retailer’s grocery and drug sales in the United States will top $162 billion.

Even more ominous to grocery chains, "Retail Forward estimates that for every Wal-Mart Supercenter that opens in the next five years, two supermarkets will close their doors."

If the analysis is accurate, about 2,000 more supermarkets will be shuttered within five years.

Wal-Mart forces other retailers to change — to become what Wal-Mart is not by selling less generic and more specialty products, or providing a different kind of customer service. It also forces suppliers to change, Retail Forward stated.

"An increasing number of suppliers report that Wal-Mart now represents over 10 percent of their company sales — for some as high as 30 percent," the analysis concluded. "Suppliers will need to do business the Wal-Mart way."

That means becoming more efficient and more technologically advanced.

Wal-Mart’s sheer size means retail developers also have to meet Wal-Mart’s demands.

All that keeps prices low and consumers happy, the retail experts said.

"There are always winners and losers," Niemira said. "The consumers are the winners, but other retailers can be too if they carve out their own niche. If you don’t recognize Wal-Mart’s presence and change, you may not stay in business. The nature of this business is competition."

Target, which also is not unionized, found its niche. The company has differentiated itself as the cheap-but-stylish option while Wal-Mart’s image is the low-cost leader, said Louie Moses, creative director for local public relations and advertising firm Moses Anshell.

And that also helps boost Target’s esteem and lessens potential opposition when it is looking for a place to build a store. It’s the best of the big boxes if one is going in your neighborhood anyway, Moses said.

"The sense is neighbors wouldn’t want a Target either, but it’s the lesser of two evils," Moses said. "Target is at least a cool store, and when I tell friends from out of town that one is coming into my neighborhood, at least I won’t be embarrassed."

But the fact is, while people may not want a Wal-Mart next door, "sooner or later you are going to buy things in Wal-Mart," Moses said.

"The trend in retailing is that it’s OK to save money. Even for luxury shoppers," Moses said.

Jonathan Bernstein, president of Bernstein Crisis Management, said Wal-Mart is hugely successful because it gives people what they want — low prices and a variety of goods in a single location, despite the company’s image as a hard-liner with employees, suppliers and others.

"Most people won’t sacrifice creature comforts for a principle," he said.

But Bernstein also said Wal-Mart’s image is more fiction than fact, and the company could take a PR lesson from Target.

"Wal-Mart has developed a reputation as being one of the most sued by employees, and they’ve done nothing to dispel that image," Bernstein said. "But it doesn’t stop them from providing a lot of jobs."

"I believe if they did an effective job of communication, they’d save millions," he said. "But communications for Wal-Mart is a low priority. Target is famous for its community relations programs, and that helps dispel (neighbors’) discomfort with having a large retailer nearby."

Birth of a Wal-Mart

Timeline of the Mesa Wal-Mart Supercenter at Greenfield and McKellips roads in Mesa.

October 1998: Wal-Mart, which already has its first Mesa Supercenter under construction at Stapely Drive and Baseline Road, approaches the city about building a second one at Lindsay and McKellips roads

October 1999: After meeting neighborhood resistance at the original proposed store site and two others, Wal-Mart stakes out the 35-acre site of a defunct munitions plant at Greenfield and McKellips roads and digs in its heels

February 2000: Mesa City Council approves rezoning of the property for the Wal-Mart. March 2000 Opponents, aided by the United Food and Commercial Workers labor union, submit enough signatures for a referendum that will delay the project for two years and put it to a vote of Mesa residents

February 2001: After nearly a year of legal wrangling, Arizona courts rule the issue will go on the next city election ballot — more than a year away

March 2002:Mesa voters overwhelmingly approve the Wal-Mart with 67 percent supporting the project

January 2004: The Wal-Mart Supercenter opens

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