Every Chicagoan should know by now that Wal-Mart, who currently only has a single store in the city limits, plans to open about thirty new stores (the City Council approved the construction of a Supercenter in the Pullman community area on the far south side*). Wal-Mart announced they want to open “dozens of new stores” in the next five years in various sizes ranging from 8,000 square feet (think Walgreens) to 20,000 square feet (think Apple Store Michigan Avenue) to the typical 200,000 square feet Supercenter.
This is big news for Chicagoans, and residents of New York City (there are no Wal-Marts in NYC). Not only will they be able to buy Coca-Cola for 20 cents a can, they won’t be able to shop at existing stores – because many of them will close. For now, the Chicago Tribune is keeping tabs on the developing story.
People in Chicago protest a new Wal-Mart. Disclaimer: This photo is from 2005, before the first Chicago Wal-Mart opened in 2006. However, in 2010, prior to the City Council vote, there were rallies protesting and showing support for new Wal-Mart stores. Photo by Andrey Smagin.
While they report on the recorded impacts of incoming Wal-Mart stores on new markets, I hope they answer the questions surrounding the confusion over the alleged negotiations between Wal-Mart executives and Chicago labor unions (representing construction and service employees). The unions say they got Wal-Mart to agree to a minimum wage of $8.75 while Wal-Mart says it’s just a matter of internal policy to adjust wages for the market.
Wal-Mart has funded a possibly influential campaign to get Chicagoans to support their new proposed new stores. Part of the campaign included ads on buses and putting signs and t-shirts on youths in the street, saying “Jobs or else.” If you want a Wal-Mart in Chicago, the company urges you to contact your alderman. Photo by Ira of Being Totally Sweet in Chicago.
So what are those impacts?
Wal-Mart can afford to be bold, and its impact is readily seen. Median sales decrease 40 percent at similar high-volume stores when a Wal-Mart enters the market, 17 percent at supermarkets and about 6 percent at drugstores, according to a study published in June 2009 by researchers at multiple universities and led by the Tuck School of Business at Dartmouth College in Hanover, N.H.
Drugstores like Deerfield-based [Illinois] Walgreens are the least impacted, according to the study, and are generally able to stay afloat by increasing their assortment size.
Supermarkets, the study found, can survive by doing their best to differentiate themselves from Wal-Mart, rather than attempting to compete.
Ideas about marketing and additional discussion of impacts is written on page two of the article. This light investigation from the Tribune comes after a recently released study from the University of Illinois at Chicago (my alma mater). Here’s the synopsis from that study about the sole Chicago Wal-Mart in the Austin (west side) neighborhood:
The study found that stores near Wal-Mart were more likely to go out of business, eliminating the equivalent of about 300 full-time jobs — about as many as Wal-Mart initially added to the area.
Read the full press release on the UIC News site or download the study (PDF).
*UPDATE: Where is the Pullman community area? It’s northwest of Lake Calumet and home to the former Pullman Palace Car Company’s factory and company town (see detailed street map of the Pullman community area). There are four commuter rail stations on the Metra Electric line within walking distance of the new shopping center. The development, called Pullman Park, will be located at 111th Street and the Bishop Ford Expressway (I-94). It includes shopping, a school, and housing, among other uses. The CTA #111/111th Street bus will run near Pullman Park.
