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2010-12-13
Atlanta, GA. Another Mayor Embraces Wal-Martís Voodoo Economics

Wal-Mart has learned over time that if you want to get into Big City markets in America, you first have to get into the offices of Big City politicians.

No one knows how much time and money Wal-Mart has spent wooing the likes of Chicago Mayor Richard Daley, or New York City Mayor Michael Bloomberg, but the investment on Wal-Mart's part has been a key part of its urban strategy.

The company understands that when it comes to Wal-Mart, the decision to embrace America's largest private employer is as much a political decision as it is an economic one for elected officials.

Some urban Mayors want nothing to do with Wal-Mart, like Boston's Mayor Tom Menino, who basically gave Wal-Mart a thumbs down in Downtown Crossing.

In Chicago, Wal-Mart scored better with Mayor Daley once the Windy City's chances for an Olympic nomination were blown away.

In New York City, Wal-Mart's former CEO Lee Scott once bragged to the media that Mayor Bloomberg had called him up to urge him to come to Manhattan.

This week, to show how popular they are in the Big Apple, Wal-Mart released a poll commissioned by Wal-Mart which showed that 71% of residents want a Wal-Mart in New York City.

Now that Wal-Mart has tapped out suburban markets, and same store sales at U.S. stores have declined several quarters in a row, the retailer is moving into urban areas as its main 2011 focus. Atlanta is just the latest spin of the wheel.

So it was not unexpected that Wal-Mart would display Atlanta Mayor Kasim Reed headlining the company's press briefing and swearing their mutual love for the Vine City neighborhood in Atlanta. At this week's news conference, Mayor Reed said the 'food desert' was over -- a term he probably first heard from Chicago to describe inner city areas that grocery stores reportedly have abandoned. Except in this case, another grocery store has located in Vine City and failed.

"It's a great day for the entire historic Westside community," the Mayor was quoted as saying in the Atlanta Journal Constitution. "At a time when this community needed help Wal-Mart stepped up." Wal-Mart's spokesman sounded a little surprised by the open arms welcome. "We're happy to know you want us here. We can feel it," said the Wal-Mart public relations staffer.

Mayor Reed is not the first Atlanta Mayor to carry Wal-Mart's water. It was roughly four years ago that Wal-Mart hired former Atlanta Mayor Andrew Young to lead a group called Working Families For Wal-Mart. The job didn't work out too well for Mayor Young, who, when asked by the media if he was concerned about Wal-Mart causing smaller, mom and pop stores to close, replied: ""Well, I think they should; they ran the `mom and pop' stores out of my neighborhood. But you see, those are the people who have been overcharging us, selling us stale bread and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they've ripped off our communities enough. First it was Jews, then it was Koreans and now it's Arabs; very few black people own these stores."

These are the same neighborhoods that Mayor Reed is now calling a 'food desert.'

Wal-Mart's media show was probably weeks in the making, so the attempt to sound spontaneous might have sounded contrived. But from Wal-Mart's point of view, getting a story in the Journal Constitution without one mention of opposition to the proposed store, must have been the highlight of the week. No doubt the Mayor's office emptied out to stand in the cold to offer a warm welcome to Wal-Mart.

But the backstory is that a Publix grocery store failed on this very site, in part because Wal-Mart has been gobbling up market share in the grocery industry. Publix, which generally has been characterized as holding up fairly well to the threat from Wal-Mart, has still closed stores like this one in Vine City. The Publix lasted only 8 years. What was a 28,000 s.f. grocery store will now become an 80,000 s.f. Wal-Mart superstore -- one of their made-for-the-city models that has been shrunk to fit the urban scene.

But this store still is nearly 1.5 times the size of a football field, and is taking up far too much land in the process. The current owner of the site, Russell New Urban Development, apparently thinks big box stores have something to do with 'new urbanism.' To pull off this project, Russell had to buy more land from the city -- in the form of the Atlanta Development Authority. The ADA told the media that Publix failed because it didn't have a drugstore inside -- which must have puzzled other drugstores in the Vine City neighborhood who are now realizing that Wal-Mart is going to eat into their sales too.

What you can do: The newspaper repeated the retailer's claims that the new Wal-Mart will create 150 jobs -- despite the fact that most of these jobs will come from sales at other merchants in the Vine City trade area -- including the former Publix employees, some of whom have been out of work for a year by now.

City officials may believe that the other merchants in Vine City are only nail salons and barber shops, but the arrival of Wal-Mart in a low income community is like a retail plague: it weakens everyone, and kills off the weak.

Readers are urged to email Mayor Kasim Reed at mayorreed@atlantaga.gov with the following message: "Dear Mayor Reed, The arrival of Wal-Mart at your front door is not a sign of economic development, but a harbinger of economic displacement. Across the country, Wal-Mart has largely succeeded by transferring sales from existing merchants. Vine City is not suffering from a 'food desert.' What you have is an 'entrepreneurial desert.' If you are putting your faith in national chain stores to lift your economy, then you must remember this one basic fact: retail follows growth -- it cannot lead it.

There is a reason why Publix failed at this location -- and others throughout the south. It has nothing to do with having a drugstore, but more to do with the saturation of national chain stores in the grocery industry. One national study has said that for every one Wal-Mart superstore that opens, two local grocery stores will close. The good news is that you already lost a Publix, so now you only have one other grocery store to shut down. Perhaps a drugstore, an electronics store, etc.

Wal-Mart can't sell you the shovel to dig yourself out of this 'jobs desert.' Perhaps it is desperation which makes Mayors cast their lot with Wal-Mart -- but as an economic strategly -- this is voodoo economics at its worst."










 
 
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