Story by Christopher Peak
When Walmart decides to move into a neighborhood, approval is often contentious and met with opposition from local businesses and residents. Concerned citizens may fear an increase in traffic, stray gray and blue plastic bags wrapped around light poles, or just the idea of a big box invasion into a hipster neighborhood. Small business owners are typically hesitant, as a Walmart down the street could draw customers away. Some people just don’t like the idea of being associated with Walmart — as if the big blue sign is some sort of scarlet letter on the town.
There are other, serious reservations as well — from trying to minimize overtime and scheduled hours among associates, to the decision to end healthcare benefits for thousands of its workers. The fact that the founders, the Walton family, donate just .04 percent of their combined $140 billion fortune to their own foundation does not help the Walmart image.
But inevitably, towns vote, and proposals get passed, and the circus, eventually, does come to town. There are benefits, of course, to having a Walmart as your neighbor. They bring in customers and foot traffic that can be beneficial to nearby local businesses. Walmart also pays hefty property taxes — when it wants to. A 2005 independent study by the Corporate Research Project of 2,833 randomly selected Walmart stores found that 35% have challenged the tax assessment of its property. A similar study in 2007 confirmed the study:
This first-ever investigation of Wal-Mart’s local property tax records finds that the retail giant systematically seeks to minimize its payment of taxes that support public schools and other vital local government services. Online appendices with lists of stores and distribution centers examined.
But the biggest downside to a Walmart opening up in your community is that after all the protests, the negotiations, and, almost inevitably, the acceptance, the retail giant might just break its lease, pack up shop, and move a mile down the road, where it starts the process all over again, and Walmart’s giant, hard-won original behemoth of a structure sits abandoned, looming over its increasingly frustrated neighbors like a gargantuan concrete coffin.
In Seabrook, New Hampshire, a small coastal town on the border of Massachusetts, the new, 120,000-plus square foot Walmart was met with wide acceptance. With a population of just under 9,000, and in between shopping hubs like Boston, and Kittery, Maine, residents welcomed the retail giant, as did folks just across the Massachusetts line, who were already crossing the border to travel the three miles north to save on sales tax. The location seemed perfect for Walmart, and they planned to move into a retail plaza owned and operated by a leasing company called Brixmor.
When the Seabrook location opened, early reports from local business owners were positive. Walmart, as expected, did bring foot traffic to the rest of the plaza, which was your rather ordinary and typical small shopping center which was home to a hair and nail salon, a chain video game store, and an eyeglass shop run by two brothers. It also had a national grocery store as its neighbor — Shaws.
In Seabrook, small business owners claimed that once Walmart moved into the plaza, Brixmor locked the rest of the stores into long-term leases, and, according to one business owner in the plaza, without their knowledge. Brixmor declined to comment on the lease terms.
So when Walmart decided to relocate just up the street to a shiny new shopping plaza (with 70,000 more feet of retail space), trading in locally owned neighbors Hair Excitement and Appealing Eyes for regional and national chains like Dick’s Sporting Goods, Panera Bread, and McDonalds, the tenants of the plaza where understandably annoyed.
The decision by Walmart to move less than a mile away was made after ongoing negotiations with neighboring supermarket giant Shaws turned hostile. Lease restrictions on Walmart prevented the store from selling groceries, an increasingly crucial piece in Walmart’s business plan.
Appealing Eyes, the Seabrook family-run optometrist shop owned by David Thompson, which he operates with his brother Kevin, has seen such a dramatic decrease in the number of customers that they’ve cut their staff to what it was when they first opened their store 14 years ago. “We’ve sold one pair of prescription eyeglasses this month. That’s like our bread and butter. You know, we can’t sell a $9 frame like they (Walmart) do.”
The Walmart effect works both ways as Thompson told me. “We had a great relationship with their optical department when they were here.” If Walmart couldn’t fill a prescription for lenses, or didn’t offer a particular set of frames, they directed customers to nearby Appealing Eyes, just a few stores down.
But that’s all changed since Walmart moved out six months ago. The day I visited the plaza, it seemed rather bare, perhaps because it was an off-peak Tuesday morning in late November. Thompson ruefully joked that all of the cars in the parking lot likely belonged to employees. And the stagnant foot traffic hasn’t just affected the small businesses. Gaming empire GameStop, which operates next door to Thompson, has also seen a sharp decrease in sales. “Part of it is because the store moved with the new Walmart up the street,” the bearded employee tells me, resulting in having two locations within a mile of each other. The other reason for the lackluster sales is because, “Nobody knows we’re here, anymore.”
For larger, national chains like GameStop, moving locations is rather painless, so when Gamestop’s lease ends in June, the few employees left will walk to the new location (next to the new Walmart). Thompson, the eyeglass shop owner, isn’t as free to move. He’s locked into his lease for three more years. “I’ve thought about breaking our lease, but it would cost me $3,500, times however many months to break it. We’re talking hundreds of thousands of dollars.”
What used to be a thriving shopping plaza, now has just six stores remaining, and come next summer, there will be just Thompson, a small nail shop, and the Hair Excitement Salon.
When I approached the door of the salon, two women were standing outside in the 20-degree weather, smoking. They weren’t on break, there just weren’t any customers. As I approached, asking for a manager, they eagerly asked me if I wanted a hair cut. I felt bad saying no, that I was only there to ask about how business had been since Walmart left. “We’ve seen a dramatic decrease,” the two women told me, almost in sync. Though neither had an idea of exactly how much sales were down compared to previous years, one woman noted, “Foot traffic is way down. Especially for this time of year.”
Despite sitting vacant, the building that once housed one of the largest Walmarts in New England, is still being paid by Walmart because its lease is still open, and according to a GameStop employee, “They’re still paying the lease to prevent a competitor, like Target, to move in. I wouldn’t be surprised if they signed a new lease just for that purpose.”
While a competitor would likely impact business for the new Walmart super-center a mile away, the salon and eyeglass shop would welcome another retailer to take that space. But that’s unlikely.
Walmart‘s relocation isn’t specific to Seabrook. It’s not specific to New Hampshire, nor the country, in fact. There’s actually a long history of the retail giant moving into a town and in just a few short years, after some bad blood with local businesses or grocery chains, leaving to a new location that is just miles, sometimes yards, away. As in Seabrook’s case, the original building oftentimes sits unused for years because the building is too cavernous for most businesses to takeover.
Walmart has wanted to move into the grocery space ever since it first experimented with selling groceries in the 1980s. And in the mid 90s, the retailer became one of the five largest grocery chains, along with Safeway, Kroger, Albertson’s, and Royal Ahold.
Their size alone allows them to negotiate for the lowest possible price with vendors — which then forces other stores, like a Shaws, to lower their prices or risk losing business, which is why negotiations between the Walmart and Shaws locations in Seabrook became so contested.
Had Walmart been allowed to sell groceries next door to Shaws, it would in turn cost Shaws business. Shaws (and it’s sister company, Star Market) is a New England grocery chain powerhouse — in business for over one hundred years with 30,000 employees and 155 stores across Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont.
In Seabrook, it was the ultimate match pitting big business against big business. And in that fight, nobody wins. According to an employee who works in the Seabrook plaza, Shaws was “fed up” with Walmart’s insistence on selling food, and seeing the writing on the wall, decided to close. The exit of Shaws left the plaza with one less consumer draw. But standing alone was Walmart. It had won the fight— which happens a lot. Today, Walmart is the largest grocery retailer in the U.S.
In a 2006 report by Thomas O. Graff, an Associate Professor of Geosciences with the University of Arkansas, Walmart’s switch from smaller retail locations to Supercenters has helped ensure its dominance in the retail grocery medium.
As Graff points out, the desire to be the country’s largest grocery has a dramatic impact on the rest of the American grocery industry:
“The Walmart expansion into grocery retailing is having a dramatic destabilizing impact on the American retail grocery industry. In its fifteen years of employing the Supercenter format, Walmart has become the largest grocery retailer in the nation and has forced significant adjustments in the market shares of the major grocery chains. The chains are being forced to restructure to accommodate the growing Walmart market presence.
No longer do metropolitan markets provide a safe refuge for grocery chains from Supercenter competition. From 1998 to 2002 Walmart opened nine Supercenters selling groceries in the Oklahoma City market. At least twenty-eight large Oklahoma City grocery stores were closed in the wake of the Walmart expansion.”
More recently, Walmart has even begun adding gasoline into its portfolio, having self-serve gas stations in more than 1200 Walmart parking lots.
In 2013, Walmart left a Cleveland Heights location in Ohio to move less than two miles up the road to a new shopping plaza in South Euclid. In 2007, in neighboring Streetsboro, Ohio, Walmart built a 224,000 square foot building, only to move 4,000 feet away just a few years later to an even bigger location. In 2014, a Walmart in St. Anthony, Minnesota ended its 20-year lease 11 years early when it closed and reopened 2.8 miles away in nearby Roseville with a larger, 152,000 square foot building. And soon, Walmart will be building a supercenter in nearby Blaine, Minnesota, in a new, larger building and less than two miles away from an already existing Walmart.
Similar moves have been made across the United States from Wisconsin to Florida to Alabama. In all instances, the new locations sold groceries, while the original stores did not.
And whenever Walmart moves, it leaves behind property.
Walmart has a lot of abandoned locations. So many, in fact, that Walmart has its own realty division. Al Norman, a land-use activist based in Massachusetts and author of Occupy Walmart, says retail giants, and in particular, Walmart, “have a history of abandoning perfectly usable facilities to build another store down the street or across the road.” Norman says this is a result of the company’s focus switching in the mid-90s when it decided to build more “supercenters,” the term used for Walmarts with grocery divisions.
In an interview with the Cleveland Plain-Dealer, Stacy Mitchell, a senior researcher at the nonprofit Institute for Local Self-Reliance in Minneapolis, said that this practice of seeing “Walmart abandoning stores that in many cases are not that old and moving down the street or a mile down the road to build a new supercenter… is now the norm.”
I emailed Chris Buchanan, the director of public affairs and government relations for Walmart Stores. Buchanan said that most of these vacant “buildings are still being paid for, at least until the building’s lease is up,” which prevents new retailers from coming in and in some cases, saving the area.
But even when the property is available to lease, finding a replacement to move into an abandoned Walmart location is difficult. Most of Walmart’s buildings are built to spec, and according to Mitchell, most retailers don’t need a space that exceeds 100,000 square feet. This results in empty football fields of boxed-concrete left littered across the country.
In Tampa, Walmart moved less than two miles away to open its new supercenter — a building that can now sell food, thanks to 200,000 square feet of new shelving space. The old building, which had just 120,000 square feet, is closed, and remains empty. After Walmart’s departure, employees of neighboring businesses felt an immediate, negative impact.
A 2012 detailed study by the Universtity of Chicago, Loyola University, and the Chicago Center for Tax and Budget Accountability, concluded that the effect Walmart has on surrounding smaller businesses can be, and often times is always, devastating:
The opening of a Wal-Mart on the West Side of Chicago in 2006 led to the closure of about one-quarter of the businesses within a four-mile radius, according to this study by researchers at Loyola University. They tracked 306 businesses, checking their status before Wal-Mart opened and one and two years after it opened. More than half were also surveyed by phone about employees, work hours, and wages. By the second year, 82 of the businesses had closed. Businesses within close proximity of Wal-Mart had a 40 percent chance of closing. The probability of going out of business fell 6 percent with each mile away from Wal-Mart. These closures eliminated the equivalent of 300 full-time jobs, about as many Wal-Mart added to the area. Sales tax and employment data provided by the state of Illinois for Wal-Mart’s zip code and surrounding zip codes confirmed that overall sales and employment in the neighborhood did not increase, but actually dipped from the trend line. Although Wal-Mart claims its urban stores recapture dollars leaking to the suburbs, the findings of this study suggest that urban Wal-Mart stores primarily displace sales from other city stores. “There is no evidence that Wal-Mart sparked any significant net growth in economic activity or employment in the area,” the researchers conclude. The study also examines Wal-Mart’s Job and Opportunity Zones initiative, which provided marketing for five local businesses, and found it largely ineffective.
In 2005, Walmart had 356 “dead stores,” a term that refers to empty storefronts. These dead stores resulted in 27 million square feet of abandoned, empty space.
The recession in 2008 forced Walmart to sell off a lot of those buildings. But today, Walmart still has 83 stores that are either for sale or lease. And at the time of this story’s publication, Walmart has 489 properties available for purchase. This includes 51 tracts of land totaling 1,258 acres of land.
The environmental impact of these massive structures is also substantial. In Copley, Ohio, Walmart wants 40 acres of wetlands to build a new store, and then close an old store a mile away. And in Davie, Fla., Walmart is seeking permission to destroy 17 acres of wetlands to build a location that’s just a few miles away from six other Walmart stores.
“These huge stores create a heat-island effect,” Al Norman wrote in an email to me. The culprit is the acres of dark asphalt, more often than not twice the size of a super-center building footprint. This effect, especially in an urban setting, can actually change the weather patterns, as Walmart acknowledged in a 2005 “environmental pilot store” memo, stating: “All of the buildings and pavements, especially in our very dense downtown cores, reflect and give off heat. This build-up of heat causes more violent thunderstorms, which can result in flooding and increased stormwater runoff.”
To their credit though, Walmart has been building and retrofitting locations to be more environmentally friendly since the early 90s. In 2005, Walmart set a goal to be 100 percent powered by renewable energy, and to reduce building energy intensity, or use per square foot, by 20 percent by 2020. Currently, renewable energy provides 21 percent of Walmart’s electricity worldwide — which is impressive. Yet the new stores are almost always built on virgin land and according to the Environmental Protection Agency, debris from new construction sites contribute more than a quarter of the total non-industrial waste generated in the United States.
In 1990, Walmart’s net sales were $25.8 billion. At the end of 2014, net sales surpassed $473.1 billion. What started in Bentonville, Arkansas in 1945 with Sam Walton’s first Five and Dime store, has reproduced and copied itself 11,000 times over and in 27 countries. One by one, each store growing to what has now become a global supremacy.
But with supremacy comes responsibility — at least the expectation that it should. Whether it’s skipping out on current leases to abandon a perfectly fine location just to build a new and bigger one up the street, or its unwillingness to give its workers healthcare, or allow for them to unionize, or give them a living wage, one thing seems to be clear — Walmart usually gets its way.
In a 2012 interview with Freakonomics.com, Al Norman said:
There used to be a Walmart bumper sticker which read: “Outta my way, I’m shopping at Walmart.” But if you look behind the sticker price, there is a hidden price to our economy of shopping at the giant chain stores.
But that price is hidden — often shrouded behind really good PR, a cute flower logo that “symbolizes the friendliness and outstanding quality of the brand,” and discounted prices that make consumers feel good about finding a bargain, but discounted prices that are actually too low to sustain any reasonable opposition.
It’s just a charade, like the Wizard of Oz. Meant to give an illusion of something great, when in reality, it’s just the opposite.