Tehachapi, CA. Wal-Mart Called 'Kiss of Death' For Small Businesses
Wall Street investors like Steve Forbes often refer to the 'creative destructionism" of capitalism. By that they mean that new retail projects often kill off older retail projects, and so progress inevitably means destruction of some jobs and revenues.
Wal-Mart often boasts of the gross job growth its stores will create, but never the net job impact after "creative destructionism" has taken place.
Consultants hired by the city of Tehachapi, California have warned the city that if a 165,000 sf. Wal-Mart superstore is built, there will be a downside to the retail sector.
According to the Draft Environmental Impact Report (DEIR), which is almost 600 pages long, a new Wal-Mart will kill of one of the city's two existing grocery stores, and likely force the existing Kmart to go out of business.
As the Tehachapi News reported this week, a new Wal-Mart "will bring economic hardship upon some existing stores." The proposed store has 34,293 s.f. of grocery space, and this could have a severe impact on either the existing Albertson's or Save Mart. "The Wal-Mart grocery component will potentially cause one of the existing supermarkets in Tehachapi to close," the consultants concluded.
The news was not much better for Kmart. "The existing Tehachapi Kmart store is likely to be vulnerable to new competition," the report noted.
Tehachapi's current square footage devoted to groceries is 93,566 square feet. Adding a Wal-Mart grocery section at 34,293 represents a sudden increase in capacity of 37%.
"Given the relatively modest growth in citywide grocery demand over the next several years," the DEIR says, "only a small portion of Wal-Mart's grocery sales would be supported by incremental demand. The vast majority of Wal-Mart's grocery sales would be diverted from existing supermarkets in the City... the proposed project could potentially cause one of the existing supermarkets in Tehachapi to close, given that the combined sales volumes of the two existing supermarkets would fall 35 percent from the existing level with the entry of the Walmart store in 2011."
Wal-Mart took exception with these conclusions. "We disagree with the finding of the EIR when it comes to store closures," a Wal-Mart spokesman said. "Studies have shown that the presence of Wal-Mart provides positive economic benefits to the cities, the local economy and to neighboring businesses."
Wal-Mart continued to maintain that their store would actually "create 300 new jobs, the majority of them full-time." This is Wal-Math, which is not taught in Tehachapi schools: One job 'created' by Wal-Mart, minus one job lost at Kmart of Albertson's, equals one job.
"We are excited to be able to bring new jobs, tax revenue and one-stop shopping to Tehachapi," the company blithely told the News.
Kmart shrugged off the bad news. "Retailing is a competitive business," said a spokesman for Sears Holding Company, which owns Kmart. "We are always in proximity to each other."
But the countryside is littered with dead Kmarts, many of which have been filled by other competitors -- including Wal-Mart.
The spokesman at Save Mart was a litte more realistic. She told The News, "A Supercenter Walmart is a significant competitor. We will continue to do the things we do best, serving the Tehachapi community. We are hopeful they will continue to support our business." But 'hope' will not be enough to save Save Mart.
The DEIR says that the "Tehachapi Kmart store is vulnerable to closure, due to the chain's internal challenges combined with increased competition introduced by the proposed project. The existing Kmart store is approximately 91,500 square feet, and the larger of the two existing supermarkets (Albertsons) is approximately 49,500 square feet. Thus, in the worst-case scenario of these two stores closing, the existing amount of vacant square feet in the trade area would increase by approximately 141,000 s.f." That's 85% of the new Wal-Mart superstore's square footage.
Smaller players in the Tehachapi trade area were more outspoken in their assessment. The owner of Radio Shack described Wal-Mart's potential impact as "drastic," and added, "You'll see a lot of empty buildings. It will have a big impact on business in this town. Radio Shacks have survived Wal-Mart but they really put a dent in business. They ran the one in Ridgecrest (CA) out."
The News quoted the owner of Southern Shooters Supply as saying, "Yeah, it's going to kill us, like a lot of businesses in town. We're still trying to decide what we're going to do. Wal-Mart is the kiss of death for any small business in a small community. Look at the drug stores, the grocery stores, Radio Shack. They're (Wal-Mart) going to undercut us all."
What you can do: The DEIR noted that "cumulative mobile source noise impacts would occur primarily as a result of increased traffic on local roadways due to the proposed project and related projects within the study area." The noise impacts cannot be mitigated.
A fiscal impact report noted that the "Police Department indicates that additional police services may be required for the site... .The cumulative increase of police service would require additional officers to maintain the existing ratios of officers to civilians... the combination of the related projects and the proposed projects may require additional staffing to the extent that an expanded police station may be required... the proposed project when combined with the related projects could result in a significant impact." Yet the fiscal study did not estimate the added revenue cost of more police for Tehachapi.
The impact on this huge store on traffic has not been resolved. According to the DEIR, "Nine of the 19 key study intersections will be significantly impacted with the addition of project traffic... three impacted intersections... would continue to operate at a less than acceptable Level of Service, therefore the cumulative traffic impacts would be significant and unavoidable... "
The DEIR also says that the Wal-Mart project will create nearly 8,100 tons of carbon dioxide emissions per year without any project design features, of which 6,700 is from cars. With mitigation features, greenhouse gas emissions could be cut by 7% to 7.6 metric tons.
The DEIR also looked at a "reduced intensity alternative" to the larger store -- and analyzed the impact of cutting the store size to 123,750 s.f.
But the 'reduced intensity' store -- a 25% smaller footprint -- did not make much difference to the environmental impacts. "The building would be rectangular shaped and would be constructed out of the same type of materials, such as concrete masonry block, stucco and metal with decorative elements on the main store frontage with arches and architectural accents and canopies as well as a clay tile roof," the report said.
"Similar to the proposed project, this alternative could potentially cause one of the existing supermarkets and the Kmart in Tehachapi to close... There would be a similar increase in fire and police protection services as a result of operational activities...
"New project-related vehicle trips would still occur, but it is assumed the number of trips would be reduced due to the reduction in square footage and therefore, smaller amount of merchandise available to purchase at the reduced Wal-Mart... is assumed that trip generation from the project would be reduced... However, this alternative would still likely contribute to significant and unavoidable cumulative impacts at the three identified intersections, as the identified
mitigation measures for those intersections are not feasible... "
"Therefore, similar to the proposed project, the Reduced Intensity Alternative would still result in significant and unavoidable impacts with respect to operational cumulative noise, and cumulative traffic impacts at three intersections. All other less than significant impacts would be either less or similar to the proposed project."
Readers are urged to email the Mayor of Tehachapi, Linda Vernon, at: firstname.lastname@example.org with this message: "Dear Mayor Vernon, You do not need a Wal-Mart superstore in Tehachapi, especially one that is 165,000 s.f. As your own DEIR demonstrates, you will also lose almost as much square footage of retail as you will gain, and the net impact of jobs will be almost negligible. Instead, you will be expanding the suburban sprawl model of a single story box with a massive parking apron around it. This does not fit the character of Tehachapi, and will only draw foot traffic away from your historic downtown.
There is enough information in the DEIR to reject this project. It will increase your crime, and leave you with several intersections with unacceptable traffic congestion. This is all you will get from a Wal-Mart -- along with more empty retail buildings that will be very hard to fill."