The Chicago City Council has been fighting with Wal-Mart Stores Inc. (NYSE:WMT) for six years over the retailer’s plan to open five Supercenters in Chicago’s inner city. But now smaller Walmart storescould be in the work as the retail stock branches out without its Supercenter model and embraces more reasonable sizes for urban locations.
The dispute with Walmart and Chicago’s City Council is the Council’s insistence that Walmart pay a “living wage”, defined by the city as $11.03/hour. The city’s mayor has supported Wal-Mart’s intentions as have several community groups in areas where the supercenters would have been built. These areas are known as “shopping deserts” for their lack of places to shop.
On the other side of the dispute is the Chicago Federation of Labor, which has pushed the city hard to ensure that Walmart pays the living wage.
Following some talks between the mayor and Walmart, sources at City Hall have told the Chicago Sun-Times that an agreement could mean that the retailer would open not one but dozens of stores in the Chicago area. The stores would range from the monster supercenters to outlets as small as 20,000 square feet.
While this would not be Walmart’s first go at building smaller stores in the US, it would certainly be its most ambitious such project. And it may be just what the company needs to wedge itself into the largest US cities, where it has virtually no presence at all and where the vast majority of Americans live.
Walmart’s has virtually stopped growing in the US. The target demographic for its merchandise lives in large numbers in big US cities, and if the company wants to grow US revenues and profits, it needs to go where its customers are.
Opening non-union stores in heavily unionized big cities will continue to be a challenge for Wal-Mart, but the company’s ability to employ thousands of people at more than minimum wage has a powerful effect on elected politicians. That’s especially true when unemployment rates are as high as they are now, and there’s little optimism that the rates will fall very much very soon.
If Wal-Mart Stores Inc. and the unions and the Chicago City Council can strike a deal, this could be a win-win-win situation. WMT stockis trading up slightly today.
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