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At least for now, it looks like Wal-Mart is deescalating its push to break into New York City’s retail market.
Although the big-box chain has reaffirmed its commitment to exploring opportunities to open up stores in the city, it seems clear that the company is tampering down the capacity of its campaign.
A recent New York Times report points to the company’s failed efforts to bring stores to Queens, Staten Island and most recently to the East New York section of Brooklyn as possible reasons why it may be toning down its push. The report also reveals that the retail giant ended contracts with five lobbyist consultants tied to the East New York project.
One of those terminated lobbyists hinted to the Times that Wal-Mart’s push to open a store New York is all but dead. A Wal-Mart spokesman said the terminations were a common-sense reaction to the end of the East New York efforts, and that Wal-Mart is still committed to penetrating the city’s market.
“New Yorkers want us here, and residents continue to go out of their way to shop at our stores outside the city,” [the spokesman told the Times]. According to Wal-Mart research, New York City residents spent more than $215 million in 2012 at Walmart stores in New York’s suburbs, like White Plains, Valley Stream, N.Y., and Secaucus, N.J.
The report also points to the fact that the leading Democratic candidates for mayor, including current front-runner Christine Quinn, aren’t too keen on the big-box chain, and have staunchly opposed its quest to land in the city. Public Advocate Bill de Blasio, one of those mayoral hopefuls, released a 2010 report, which charges Wal-Mart with offering its workers sub-standard wages and benefits, driving out local businesses and hurt the overall economy of surrounding communities.
Any New Yorker who is excited about the prospect of a Wal-Mart in the city, might want to consider a few key findings from the report:
- Wal-Mart store openings kill three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter.
- Wal-Mart’s entry into a new market does not increase overall retail activity or employment opportunities. Research from Chicago shows retail employment did not increase in Wal-Mart’s zip code, and fell significantly in those adjacent.
- Wal-Mart’s entry into a new market has a strongly negative effect on existing retailers.8 Supermarkets and discount variety stores are the most adversely affected sectors, suffering sales declines of 10 to 40% after Wal-Mart moves in.
- The value of Wal-Mart to the economy will likely be less than the value of the jobs and businesses it replaces. A study estimating the future impact of Wal-Mart on the grocery industry in California found that, “the full economic impact of those lost wages and benefits throughout southern California could approach $2.8 billion per year.”
- Chain stores, like Wal-Mart send most of their revenues out of the community, while local businesses keep more consumer dollars in the local economy: for every $100 spent in locally owned businesses, $68 stayed in the local economy while chain stores only left $43 to re-circulate locally.
- Wal-Mart has thousands of associates who qualify for Medicaid and other publicly subsidized care, leaving taxpayers to foot the bill.13 For instance in Ohio Wal-Mart has more associates and associate dependents on Medicaid than any other employer, costing taxpayers $44.8 million in 2009.
- According to estimates, Wal-Mart likely avoided paying $245 million in taxes 2008 by paying rent to itself and then deducting that rent from its taxable income.