Chicago Nixes Second Wal-Mart: The End of Its Urban Strategy?

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Apparently to preserve Mayor Richard Daley’s détente with organized labor, Chicago government has nixed a renewed effort by Wal-Mart to build a new Supercenter in the predominantly African-American Chatham neighborhood on Chicago’s South Side.

In vetoing the bid, Chicago’s planning commissioner–who must approve stores bigger than 100,000 square feet– cited the 2004 promise by the original lead developer that Wal-Mart would no longer be part of the Chatham Market retail development, which is located at a former industrial site in a Tax Increment Finance (TIF) district. Since the company has been effectively shut out of Los Angeles, Boston, and New York City, Chicago has been described as “ground zero” in Wal-Mart’s strategy for moving into untapped urban markets.

In 2004, the company’s effort to put a store in Chicago’s impoverished West Side provoked a bitter battle in Chicago City Council. Unions and community organizations including ACORN mounted a citywide effort to block the notoriously anti-union, low-wage company from operating in the city. Wal-Mart succeeded only after Mayor Daley wielded his first-ever veto against a union-backed bill that would have required “big box” stores like Wal-Mart to pay a “retail living wage” or provide compensating benefits. However, Wal-Mart’s success in getting a West Side location was not duplicated in its simultaneous bid for a South Side store in the Chatham development. Support for the proposed Wal-Mart from the Chatham neighborhood’s local alderman could not overcome organized community opposition.

In order to win zoning changes needed for the larger Chatham project, and a reported $33 million in TIF funds for environmental clean-up, Monroe Investment Partners LLC told city government Wal-Mart would no longer be part of the Southside development. But when Archon Group, a unit of investment bank Goldman Sachs, became lead developer for the Chatham site, it renewed the bid to include a Wal-Mart store.

Backers of the proposed Southside Wal-Mart claim the store would provide new grocery options for a depressed area, although there are already a Food 4 Less and Jewel-Osco located nearby. Other residents in the South Side and elsewhere in Chicago cite Wal-Mart’s anti-labor stance and conservative politics as a reason to continue to keep it out. Having spent at least $2.5 million in the aldermanic elections that followed the Mayor’s veto, Chicago unions have threatened to reintroduce the retail living wage measure if a second Wal-Mart is approved.

The experience of the existing West Side store is decidedly mixed. The store’s sales last fall were reportedly “good, not great.” Independent businesspeople near the West Side store have mixed feelings about Wal-Mart’s Jobs and Opportunity Zone Program, with some worried about being run out of business while others are happy to have a big player’s presence in an economically depressed area. At the moment, the West Side store looks like it may remain Wal-Mart’s only Chicago experiment.

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