Wal-Mart Spurs Emotions

By Marita Thomas
Globe St. Retail
March 24, 2005

WASHINGTON, DC - As big box retailers move into urban areas in the Northeast, Wal-Mart becomes a lightening rod for complaints and concerns, said Mia Masten, the giant retailer’s community affairs manager, during a panel discussion entitled “Mid-Atlantic Big Box Development –Growth and Limits” at the International Council of Shopping Centers Idea Exchange here. Target Corp.’s Michael Logan, senior manager of government affairs, agreed that in most peoples’ minds “there’s Big Box and there’s Wal-Mart, and Wal-Mart gets all the opposition.”

As a result, Masten is on a mission to distinguish between “legitimate and illegitimate concerns,” she said, adding, “we’re dealing with reputation issues and project issues.” Of changing Wal-Mart’s reputation, she added, “it’s imperative that we do that, otherwise, we won’t grow.” As for project issues, she said the retailer was becoming more flexible and adaptable, more involved in each community’s concerns.

The retailer became a “focal point in the last local election cycle,” she said, pointing out that unions organized a $25-million fund specifically targeted against Wal-Mart, “even though we’re not the only non-union retailer. When a lot of blatantly false information gets repeated over and over, it begins to take hold.” In January, Wal-Mart began to rebut with a “just the facts” campaign.

In entering urban areas, both Masten and Logan said their respective retail companies are becoming more flexible and moving away from “battleship” design. “Urban projects are significantly more complex than ‘cornfield’ sites,” said Drew Greenwald, president of New York-based Grid Properties. “Even where there is not opposition, it’s difficult and involves odd-shaped sites, existing uses of properties, and high costs. But density, and the relatively higher levels of income, are the rewards,” he said. “However, union versus non-union battles are an area nobody wants to touch.”

“People react to big boxes emotionally,” said Mark Laken, SVP leasing for Owings Mills, MD-based Erwin L. Greenberg Commercial Real Estate. He agreed that much of the big box legislation being introduced is targeted at Wal-Mart. “Legislation can take some of the emotion out of the process (of development),” he said, “but it requires the retailers to spend more time and money going through the process.”

Despite the drawbacks, Thomas Gallagher, real estate manager for Home Depot, said, “we still see a lot of growth potential in the Mid-Atlantic.” Regarding urban areas, “we want to have a dialog about the look, landscaping, delivery hours and all other concerns before we begin. It’s frustrating when there’s no criterion established in advance. A retailer would like to have criteria to aim for and then have those rules stand still.”

Without revealing where or when, Logan said Target’s plans for Northeast urban areas are “aggressive.” Masten said, “ditto,” for Wal-Mart, and Home Depot’s Gallagher added, “the same.”

Meanwhile, changing anchor trends at shopping centers are taking big boxes to new areas, said Richard Kabat, president of Potomac, MD-based Kabco. “No one’s embarrassed to shop at discount and outlet stores today,” he said. “All lines are blurred, which means all kinds of retailers can mix in the same locations. Sears, Wal-Mart and Burlington Coat Factory can get together with Ann Taylor, Chico’s and Joseph A. Banks. There’s a Nordstrom and a Target anchoring a center in California,” he said. “We’ll see Wal-Mart in centers with upscale shops and department stores.”

Laken agreed, “people want one-stop shopping. Tenants recognize that they can fit with stores they formerly shunned.”