September 21, 2010

Will Wal-Mart Try To Follow Target's Lead And Land In San Francisco?

"Despite tight confidentiality agreements Wal-Mart demands from anyone with whom it's considering doing real estate business, [Garrick Brown of Colliers] said he has heard 'whispers' that the company is looking at approximately 10 locations in Alameda County, up to six in San Jose, a 'handful' in Contra Costa County, 'at least a dozen' sites in the Sacramento area and the Central Valley, and a 'couple' in San Francisco."

Walmart sets sights on San Francisco [SFGate]

First Published: September 21, 2010 7:45 AM

Comments from "Plugged In" Readers

They have no idea what kind of shizstorm they are inviting by even thinking of coming here.
There is no freedom of choice here. The BOS makes the difficult decisions so that we the sheeple dont have to

Posted by: joe at September 21, 2010 8:55 AM

They can look all they want. Navigating the political process will be nigh impossible for them.

Posted by: Q at September 21, 2010 9:14 AM

NO! The answer is NO!

Posted by: Christopher Carrington at September 21, 2010 9:32 AM

Unlike its vendors, Wal-Mart pays top dollar for top-notch lawyers who can steamroll the BOS and anyone else. If they want an SF location, they will get it. This city does not have nearly enough supermarkets and could easily support several more. Look for Safeway to provide the loudest opposition (perhaps in the guise of "neighborhood groups").

Posted by: A.T. at September 21, 2010 9:32 AM

I generally feel like there's a place for big box stores in SF, in the right place (Bayshore Boulevard; Target in mid-Market is fine with me). But I have a visceral negative reaction to a Walmart in San Francisco. I went back to the little town in upstate NY where I grew up recently, found the 8-block main commercial street decimated (empty storefronts everywhere), and then learned why - there was a new Walmart a couple miles outside town. Walmart has sucked the vitality out of thousands of small towns and cities across America, and I just don't want them in SF.

Posted by: Mike Sullivan at September 21, 2010 9:36 AM

seems to me it would be hard to allow Target but refuse Walmart.
obviously, they have different corporate standards, but in the end they are similar businesses.

I believe a city has a right to limit what sorts of stores is held within that area, but does it have the right to block only one business while allowing other similar businesses?

this coming from a Walmart Hater.

the answer is simple: if you don't want Walmart to decimate your local small businesses, then pony up extra money and go shop at your local businesses and not Walmart. Walmart has excellent business sense, it won't keep a store open that loses money.

it takes two to tango.

Posted by: ex SF-er at September 21, 2010 9:52 AM

"if you don't want Walmart to decimate your local small businesses, then pony up extra money and go shop at your local businesses"

it's not nearly as simple as that: even if I don't shop at WMT, if most of my neighbors do, then the local small business closes. My individual actions alone have no bearing on the businesses success, the only way it can survive is if the entire community decides to not go to WMT, which is really no different, in my mind, than trying to stop it from coming in at all.

Posted by: lyqwyd at September 21, 2010 10:46 AM

I find it hard to believe that the hippie fascists in SF would ever allow a WM to open here.

I'm no fan of WM (politics and sociological/economic concerns aside, shopping there is depressing, their private label stuff is junk, and Target is just about as cheap) but if they want to open a store here, let them. Maybe it will force Walgreen's and Safeway to lower their prices.

Posted by: Mikey at September 21, 2010 11:12 AM

"Walmart has excellent business sense, it won't keep a store open that loses money."

Their excellent business sense includes building multiple stores in a new area, keeping them open long enough to smother the local small businesses, then shuttering two in three of their own locations, leaving residents with no alternative to the remaining location.

Posted by: BobN at September 21, 2010 11:27 AM

I have a new concept for a business to compete with Walmart and Costco:

I'll call it "Container-Co" -- instead of unloading the shipping containers from China and stocking the merchandise on the store shelves, I'll just let customers rummage through the containers RIGHT ON THE SHIP while docked in the port of Oakland! I'll save a fortune on real estate, transportation and staffing.

It's pure genius, and none of those NIMBYs in SF can stop me.

Posted by: Jimmy (No Longer Bitter) at September 21, 2010 11:58 AM

WalMart is a front for the Chinese invasion. They've used outsourcing and union busting to destroy America.

Posted by: dissent at September 21, 2010 12:09 PM

Unlike its vendors, Wal-Mart pays top dollar for top-notch lawyers who can steamroll the BOS and anyone else. If they want an SF location, they will get it.
Why all the fatalism. If little ole Hercules was able to block them, I'm sure Ess Eff could muster their forces if necessary.

Posted by: EBGuy at September 21, 2010 12:22 PM

BobN: i doubt many people, yourself included, understand the costs of opening new stores and shuttering old stores. provide a link or an example. simply not true.

Posted by: AO at September 21, 2010 12:39 PM

I also call BS on BobN's assertion.

Posted by: yao at September 21, 2010 1:04 PM

"WalMart is a front for the Chinese invasion. They've used outsourcing and union busting to destroy America."

It's funny because back in the day Wal-Mart used to be all about "Buy American." Sam Walton was certainly no saint and single-handledly killed many Mom and Pop businesses in towns across America, but he had more values than his kids and the people who run Wal-Mart now. A lot of Bay Areans/Californians don't know this history (or that much about Wal-Mart in general) because Wal-Mart has largely been kept out of their cities, but anyone who spent some time in other parts of the country in the 80s/90s is likely familiar with this switch in strategy from Buy American to Buy Chinese.

Without getting too political, it would make sense for Wal-Mart to open in some of the areas mentioned, given their business model, e.g. especially some of the lower income areas. I'd imagine they are targeting the SE part of the city if they're indeed looking at San Francisco County as an expansion option.

Posted by: sfrenegade at September 21, 2010 1:21 PM

Not sure this makes any difference to anyone, but supposedly size of these urban locations would be more akin to the SF Target. I have no idea what they're planning to sell in a store this size, but I think I heard a report about it on Marketplace (on KQED.)
I get the yuck factor thinking about WalMart, too... not sure I'll shop there.
I'd be interested to hear what BobN's example(s) is/are, too, but unlike some others, I don't think in rural areas that the cost of opening businesses for this strategy is prohibitively high if you plan it right.

Posted by: kaya at September 21, 2010 3:20 PM

Q: "I have no idea what they're planning to sell in a store this size..."

A: "But these aren't big boxes.

Instead, they are the "smaller format" stores favored by the likes of Trader Joe's Co., Whole Foods Market Inc. and the British supermarket chain Tesco PLC, whose Fresh & Easy "neighborhood markets" are coming to the Bay Area, including San Francisco's Bayview neighborhood.

And, like these others, they'll be primarily grocery stores, with plenty of fresh foods and prepared takeout."

Posted by: Q&A at September 21, 2010 3:29 PM

Didn't Walmart recently buy off Chicago and open a store after years of being denied entry?

Posted by: Eric in SF at September 21, 2010 4:14 PM

Regarding BobN's assertion above:

He may not be completely accurate in assertions of strategy, but the end result is the same. Throughout the midwest and south, where Walmart got its start (HQ'ed in Ark), Walmart opened hundred of stores outside of small towns that sucked the towns dry. Later, as Walmart went to larger and larger formats, it closed alot of these first and second generation stores down and replaced them with (fewer) mega stores. The impact on the particular town would be complete devestation...hardly any functioning small retailers left, no local taxes (sales/property), and shopping and retail jobs further away. It's a sad story.

It's more than a little ironic that after going for size, Walmart is now going for smaller footprints to colonize the last few remaining holdouts...like San Francisco.

However, I too agree that you can't really stop Walmart while allowing other big boxes. Not that the Supes won't try, but I think it's morally wrong to play favorites, even if overall I'm not happy with Walmart and Big Boxes generally have done to America. I think the best we can do is insist that they meet every reasonable criteria we can devise. (That's how Hercules won, btw...Walmart was trying to go into a property which was specifically zoned for smaller businesses...Walmart tried to buy off the City, but they stuck by their guns to hold out for the kind of urban place they wanted in their newly developed "new urbanist" downtown. Sadly, I don't think the property has been developed yet, but I hope some day it will be.)

Posted by: curmudgeon at September 21, 2010 5:27 PM

By the way, Eric in SF, I always enjoy clicking over to your really nice orchid photos!

I have relatives on the south side of Chicago. That battle will likely be re-enacted in SF, pitting the poor south side residents who just wanted jobs against the unions and the upper-class north side residents who did not like the anti-union aspect of Walmart or just the very idea of Walmart generally. Walmart (and its sharp, high-paid lawyers) worked out a deal where union builders construct the stores then low-wage employees work there.

Posted by: A.T. at September 21, 2010 5:45 PM

@lqyqyd: You are completely wrong about the effects of personal shopping habits. If you personally don't want Walmart, then shop elsewhere. If enough other people agree with you then other shops will thrive and Walmart will fail. But if large numbers of people love Walmart, it will thrive. Using political action to keep it out is just a way for a minority to prevent the majority from shopping where it wants.
Generally, our shopping choices (i.e. mix of restaurants, services etc.) is shaped by the collective effect of personal choices. There is no reason the existence of Walmart in that mix should be chosen by the political process rather than the standard economic process. (Other than the fact that activists in oh so tolerant SF love to impose their choices on others).

Posted by: Asmith at September 21, 2010 5:57 PM

We are buying at WM and causing our own economic destruction. I remember WM used to sell only merchandise made in the US AND it was inexpensive. We've outsourced all of our production and the middle class along with it.

Posted by: grumpy at September 21, 2010 8:20 PM

@Asmith

"You are completely wrong about the effects of personal shopping habits. ... If enough other people agree with you then other shops will thrive and Walmart will fail."

Those are two completely contradictory statements. If one person's actions alone are sufficient to make a difference, then it would not matter what other people do.

"Using political action to keep it out is just a way for a minority to prevent the majority from shopping where it wants."

Minority groups only win in democratic politics when the majority doesn't care, or supports the idea that the majority is pushing. If the majority is strongly opposed, the political system will go with the majority. If the majority of SF wants Walmart, it will come to SF.

Personally I don't care that much if it comes or not, as I won't shop there, it won't be anywhere near me, and it won't affect anyplace that I shop at, just pointing out that any individual decision on where to shop will have no bearing on Walmarts success.

If Walmart comes to SF, it will put stores out of business, and ship jobs offshore.

Posted by: lyqwyd at September 21, 2010 8:24 PM

Asmith, I realize that it's neoclassical economics dogma that the market is always correct and that one can always make completely free "choices", but you are the one that's completely wrong about the effects of personal shopping habits on a large scale retailer such as Wal Mart.

If I personally don't want a Wal Mart and consistently "choose" to not shop there, that will have absolutely no effect on Wal Mart's impact on the local marketplace if enough unenlightened other people (such as those who have low household incomes and only think in terms of nominal retail prices) stop patronizing the local stores and start shopping at Wal Mart. The local stores will shut down due to lack of business or even the perceived slackening of demand, and then Wal Mart's presence will reduce the number of participants in the marketplace, ultimately depriving me of my ability to choose to shop at local places.

It's an example of The Tyranny of the Marketplace, and the political process is a legitimate way to address problems that "the standard economic process" (itself just a neoclassical economics conceit) gets wrong sometimes.

And Wal Mart is not pure and aboveboard about politics, either. In other parts of California, they've used local ballot initiatives to write themselves variances to zoning that they didn't like when the usual techniques that curmudgeon refers to above didn't work. In the wake of the Citizens United decision, I expect them to do that more often, if not in S.F.

While I agree with the previous commenters that allowing one big box store and not Wal Mart wouldn't be fair, I'm fairly confident that Wal Mart, because of the arrogance that comes with size, will overreach and want some kind of variance or exemption from normal rules and the Board can use that as a reason to deny their use permit or what have you.

Posted by: Brahma (incensed renter) at September 21, 2010 8:51 PM

I have to say that I disagree with the idea that allowing Target (or any random big box) and not Walmart is unfair.

First, corporations don't "play fair", so I feel no obligation to play fair with them.

Second, each corporation should be judged on what it has to offer to SF. 2 corporations in the exact same market can behave very differently, and therefore they should be judged by whatever criteria we choose.

Third, corporations are not people, they have no morals or beliefs, nor are they alive. They are merely legal entities. Therefore the rules that we apply to people do not apply to them, no matter what the Supreme Court may say.

Finally, the idea that because they are labeled "big box" makes them equal is simply not accurate. Target has a market cap of about $40 billion, while Walmart has a market cap of about $200 billion. They are not even in the same league.

Like I said, I don't really care if Walmart comes to SF (although I would prefer if they didn't), I just strongly disagree with the idea that because we allow one company, that we have to allow another one that has some similarities.

I'm not trying to say that anybody who thinks we should be fair with them is wrong, or that my view is better, just throwing out a different view on the subject.

Posted by: lyqwyd at September 21, 2010 9:42 PM

Those are two completely contradictory statements. If one person's actions alone are sufficient to make a difference, then it would not matter what other people do.

no it's not.
One person can make a difference several ways

1) community shopping characteristics are an aggregate of singular (or personal) shopping characteristics. Thus, you as a singular person make up a part of the aggregate in your area. The so-called "grass roots movement" effect.

2) one person can make a difference by spreading their message that others then follow. although Walmart is by no means crying, I believe its mega rates of growth slowed somewhat in part due to the backlash against their corporate practices.
If you as a singular person went out and spread the message of Walmart's terrible business practices then you could in theory affect other people's decision to shop at that store.

First, corporations don't "play fair", so I feel no obligation to play fair with them.

Dangerous precedent IMO, but standard in San Francisco. The approval process is opaque and beholden to the whims of a few "important" people. I prefer to have the populace set up a standard set of rules and then adhere to those.

Target has a market cap of about $40 billion, while Walmart has a market cap of about $200 billion. They are not even in the same league.

Regardless of Market cap, both entities wield huge power in the retail marketplace, and both can be devastating to local small businesses that simply cannot compete.

You are mixing apples and oranges with WMT/TGT market cap info. WMT has a higher market cap in large part because they have expanded internationally further and also because they have Sam's club. Target has been shedding businesses (such as Dayton's, Mervyn's etc) which lowered it's market cap.

Target has 1743 Stores in 49 States (including 251 SuperTarget locations). Avg square foot 174,000 per store.
so 303,282,000 total square feet in the US.

walmart has 2500 stores in the US alone with an average of 194,000 sq ft.
so 485,000,000 total square feet in the US.

so the American presence is not so different IMO. WMT has about 60% more retail space in the US.

walmart's market cap is so big due to the above AND ALSO because has 600 sam's club stores in the US, 100 Sam's club stores internationally, and 4000+ Walmart stores internationally.

lastly: I believe you know we shouldn't confuse Market cap with real world anything. there are many instances where companies have market caps way out of proportion to their actual value. for instance, is Google unimportant because Apple has a market cap 60% higher?

Posted by: ex SF-er at September 22, 2010 6:50 AM

ex SF-er wrote:

One person can make a difference several ways
• community shopping characteristics are an aggregate of singular (or personal) shopping characteristics. Thus, you as a singular person make up a part of the aggregate in your area. The so-called "grass roots movement" effect.

Sure, in theory. In practice, if the majority of the people in your community decide to shop at Wal Mart, you can decide to shop at a local retailer and the effect you have on the local marketplace characteristics will be so tiny as to not have any effect whatsoever. Network effects and increasing returns effects will quickly kick in to the advantage of Wal Mart and to the deteriment of local, smaller retailers, ultimately reducing your ability to choose to shop at the local, smaller retailers.

A neoclassical economist wouldn't have any problem with this effect, because they think that "the market" has made things more "efficient" with regards to the distribution of goods, eliminating the "inefficiency" of the local, smaller retailers. But that's not the same thing as allowing you to continue to choose to patronize smaller, local retailers.

And starting a "grass roots movement" assumes that you can get a critical mass of other consumers to agree with your assessment that Wal Mart's business practices are so odious that avoiding patronizing their stores is worth giving up the ability to take advantage of their nominally lower prices on merchandise, which they (Wal Mart) are able to offer because of the aforementioned odious business practices such as union busting. This brings us to the impracticality of point two:

• one person can make a difference by spreading their message that others then follow… If you as a singular person went out and spread the message of Walmart's terrible business practices then you could in theory affect other people's decision to shop at that store.

Sure, in theory. In practice, it won't work, even assuming that you can reach enough other people to make an appreciable impact on Wal Mart's bottom line in that store.

Wal Mart has a marketing budget and a highly-funded corporate PR department that can swamp any message you as an individual can put out there. They can, and in the past have, used their funds to buy advertising space in multiple media to counter any and all "messages" that individuals attempt to use to "affect other people's decisions to shop at their stores. Take a look at the annual report from fiscal 2009; Wal Mart writes (I'm reading on pg. 38) "Advertising costs are expensed as incurred and were $2.3 billion… in fiscal 2009…Advertising costs consist primarily of print and television advertisements." Granted, that's worldwide, but the point is that Wal Mart is going to be much more effective at countering your "grass roots" messages than you are at getting your message out. And Wal Mart will be spreading the costs of developing such advertising over the revenue generated from all of its stores in multiple cities, whereas you are going to attempt to try to affect the sales at one store in one city by affecting the decisions made by people in one community with revenues derived from charitable donations, in the best case scenario. Again, network effects and increasing returns effects are going to redoubt to the benefit of Wal Mart, and swamp your efforts to the degree that it won't make much difference.

Posted by: Brahma (incensed renter) at September 22, 2010 8:17 AM

ex SF-er, I definitely understand your position, I just respectfully disagree.

Posted by: lyqwyd at September 22, 2010 8:48 AM

You guys are right. One person can't possibly make a difference. Why do I even vote?

Posted by: R at September 22, 2010 12:07 PM

@lyqwyd
Cool. You are a great poster whose posts I enjoy.

Posted by: ex SF-er at September 22, 2010 5:38 PM

God I hope not.

Posted by: StockBoySF at September 22, 2010 7:59 PM

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