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

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 Chicago’s predominantly African-American Southside.

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 not be part of the Chatham Market retail development, which is located 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. Support for the proposed Wal-Mart from the South Side neighborhood’s local alderman could not overcome organized community opposition. 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.

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 and conservative politics as a reason to continue to keep it out.

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 may remain Wal-Mart’s only Chicago experiment.