Wal-Mart: Shoppers Exit City

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The New York Sun

City Council members have so far managed to keep Wal-Mart out of the city, but they can’t stop New York City residents from shopping at Wal-Mart.


The nation’s largest retailer will announce today that city residents are heading to suburban Wal-Mart stores in record numbers – spending 30% more at the region’s half dozen or so Wal-Mart stores last year than they did in 2004.


The retailer hopes these statistics will persuade City Council members to approve Wal-Mart stores within the five boroughs. Using credit card data, the company says city residents spent about $128 million in 2005 at stores in New Jersey, Long Island, Connecticut, and Westchester County. In 2004, New Yorkers spent about $98 million in those stores.


The loss of tax revenue to the city from these sales is significant. Wal-Mart says every new store in New York City would create about 300 new jobs and generate about $5 million in tax revenue for the city.


A Wal-Mart spokesman, Philip Serghini, said the leakage of dollars to suburban stores proves “consumers in New York are interested in stretching their paychecks and they see Wal-Mart as a way to do that.” Mr. Serghini would not say how many stores Wal-Mart is seeking to open.


The statistics were released with a new poll for Wal-Mart conducted by Voter Consumer Research, which showed that 60% of adults living in the city support Wal-Mart stores within city limits, and 62% support a Wal-Mart store in their neighborhood. Residents with lower incomes supported Wal-Mart more than those reporting a higher income. The poll was based on 604 interviews with adult New Yorkers.


A Quinnipiac University poll released in February found that 51% of respondents favored Wal-Mart opening a store in New York City, while 47% opposed it. That poll was based on interviews with 1,072 New York City registered voters.


Last week, Wal-Mart appeared to back down from plans to put a new store in an existing retail space in Flushing, Queens, after the company had begun seeking bids to build a $5 million to $10 million store.


Mr. Serghini said Wal-Mart is ramping up its efforts to persuade City Council members, who have some authority over store siting through the city’s land use process, that Wal-Mart’s heath care policies have improved, that the stores would benefit consumers, and that Wal-Marts would create new jobs for city residents.


“If all day long you hear Wal-Mart is bad, then that is what you will believe,” Mr. Serghini said. “People think we have no health insurance, which is absolutely false.”


Members of the City Council and union leaders have criticized Wal-Mart’s treatment of its employees. Some have questioned the chain store’s effect on smaller neighborhood businesses.


A lobbyist who represents anti-Wal-Mart groups, Richard Lipsky, said that “leakage” numbers are imperfect indicators because new stores within city limits would not stop people from driving to suburbs to shop. He said many New Yorkers go to suburban Wal-Marts to escape the city and to get a break on sales tax.


“Leakage will continue on a massive scale for a whole host of reasons, and the store you build in the city will further erode local business, local commerce, and local shopping strips, which are important for the integrity of neighborhoods,” Mr. Lipsky said.


“People often like to drive to a bargain, but they often don’t want the bargain in their own neighborhood,” Mr. Lipsky said.


A senior fellow at the Manhattan Institute, Steven Malanga, said the increase in city consumers shopping in suburban Wal-Marts could be a result of an increase in stores within driving distance, or a sign that Wal-Mart is taking business away from other suburban discount stores.


Mr. Malanga said Wal-Mart is following the same pattern of other big box stores, like Target and Home Depot, which first landed in the city’s suburbs. They noticed the amount of sales that were coming from city residents, and then found sites in the boroughs outside Manhattan to launch their first city stores. Mr. Malanga said that those chains’ stores in New York City are among the highest-grossing stores in the country.


Mr. Malanga said the City Council is the biggest hurdle to Wal-Mart opening in New York City. “The City Council is almost completely a tool of the unions,” he said. “This is not what is good for consumers, it is about city councilmen who have to appease the union movement.”


Employees at Wal-Mart are not represented by unions, and the company has resisted union organizing efforts.


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