At first glance, the numbers seem arbitrary.
Legislation before the D.C. Council would ban new stores with more than 80,000
square feet that devote 15 percent of their space to food and other nontaxable
A bill passed by the Maryland General Assembly would require companies with
more than 10,000 employees to spend 8 percent of payroll on health care.
A zoning rule approved in Montgomery County restricts the location of outlets
larger than 120,000 square feet with a full-service grocery and pharmacy.
But behind the hodgepodge of figures is a very specific goal: Keeping out Wal-Mart
Stores Inc. As the discount giant shifts its focus from the Washington region's
fast-growing fringes to its dense urban center, it has become locked in a bitter
behind-the-scenes struggle with the local unionized grocery industry, which
is scrambling to erect legislative barriers to the chain's growth.
The fight is taking on national significance. Wal-Mart, which has conquered
rural America with more than 3,000 stores, desperately needs to break into the
urban market to maintain its phenomenal growth. So far, it has been rebuffed
in Chicago, New York and Los Angeles, and the retailer views Washington as an
important frontier for expansion.
The Bentonville, Ark., company has already made strong inroads here. Since
its arrival in the region 13 years ago, Wal-Mart has quietly planted 147 stores
in Maryland and Virginia, including 32 in the greater Washington area. It is
now the No. 1 private employer in Virginia and one of the top 10 in Maryland,
with 52,000 workers in both states.
But the company has succeeded in such places as Prince Frederick and La Plata
in Maryland, and Warrenton and Burke in Virginia, far from the region's center.
Across the area, big-box stores are facing growing resistance from communities
worried about increased traffic and environmental impact. But Wal-Mart's inability
to open a store in the inner suburbs is unique. Both Home Depot and Best Buy
have stores inside the Beltway and the District. And Target, Wal-Mart's closest
competitor, has seven stores inside the Capital Beltway. Its first location
in the District is scheduled to open in 2007. "We'd like to be a part of
that success," said Mia Masten, Wal-Mart's head of corporate affairs for
the East Coast.
Although Target, Home Depot and Best Buy have no union, and Target is moving
into the grocery business, local unions are giving those chains a pass to focus
their energies, and cash, on a single foe.
"Wal-Mart is the biggest threat to our members' way of life," said
C. James Lowthers, president of United Food and Commercial Workers Local 400,
which represents local grocery workers at Giant, Safeway and Shoppers Food Warehouse.
Local unionized grocery chains, which dominate the area's closer-in suburbs,
fear they cannot compete with Wal-Mart's rock-bottom prices, technology-driven
efficiencies and cheaper, non-union labor force. Wal-Mart is now the nation's
largest food seller, and although it operates few of its full supermarket formats
in the Washington area, the chain says it wants to build the more profitable
stores wherever possible.
Giant Foo, Safeway and Shoppers Food control 55 percent of the local grocery
market, and their union is relying on its strong political ties and sympathetic
shoppers to stop Wal-Mart's expansion. At stake, the union says, is the future
of more than 20,000 supermarket jobs that offer a middle-class lifestyle to
the region's unskilled workers.
Wal-Mart's opponents, led by Local 400 and Giant Food, have already won several
high-profile victories. Six jurisdictions, including Prince William, Calvert
and Montgomery counties, have passed zoning rules that make it harder, if not
impossible, for the chain to open a supercenter, its most profitable format.
Several more jurisdictions, including the District, are considering such rules.
And in April, the Maryland General Assembly passed a bill backed by Giant and
Local 400 requiring Wal-Mart to spend more on employee health benefits. The
governor vetoed the bill, but some legislators have vowed to override it.
"Our goal is to block them out," Lowthers said. The union has circulated
sample zoning bills targeting Wal-Mart to local governments, rallied members
to speak out against the retailer at public meetings and called on state leaders
to support anti-Wal-Mart legislation.
It was a Local 400 official, for example, who first suggested the idea of a
big-box bill targeting Wal-Mart in the District, said D.C. Council member David
A. Catania (I-At Large), who sponsored the legislation. Catania said he agreed
to offer the measure because he believes Wal-Mart's employee health care benefits
are inadequate. As the bill was drafted, Catania said, the union was consulted
on the language.
Wal-Mart, which has traditionally balked at answering its critics, is fighting
back in hopes of showing it can find the formula for moving into urban areas.
When Montgomery and Calvert counties recently proposed zoning restrictions,
Wal-Mart commissioned opinion polls that showed residents opposed the rules,
gathered signatures on petitions supporting the chain and set up meetings with
Both counties eventually passed the anti-big-box regulations, but that has
not stopped Wal-Mart. In Calvert County, the chain proposed splitting one of
its large stores into two to skirt a rule banning stores over 75,000 square
feet, though it ultimately agreed in the face of community opposition to build
a single store within the limit.
In Prince William, the company is negotiating to put a store inside Manassas
Mall, which is exempt from the county's big-box bill. In another show of force,
the company has threatened to pull plans for a Maryland distribution center
that could employ as many as 1,000 workers if the General Assembly overrides
the governor's veto and turns the health care legislation into law.
At the same time, Wal-Mart is in talks to build two stores in Prince George's
County, one inside the Beltway, and it is scouring the District for potential
sites. Wal-Mart came close to selecting a location in the city's Brentwood neighborhood
last year but backed out at the last minute, saying the site was too small.
Wal-Mart, which opened its first five-and-dime store in Bentonville, Ark.,
in 1962, did not arrive in the Washington region until three decades later,
when it had already become the nation's largest retailer.
Its first local store, which opened in Prince Frederick in Calvert County in
1991, was the subject of so much consumer curiosity that employees taped paper
over the front windows before the grand opening. Over the next 13 years, it
continued to nibble at the region's edges, with stores in Waldorf, Bowie, Leesburg
and La Plata.
"People did not perceive them as anything but a good thing," said
Peter Framson, president of Greenlight Retail, a Bethesda retail brokerage.
That changed in the mid-1990s as Wal-Mart moved nearer to the Beltway and deeper
into the supermarket business.
Closer-in communities such as Montgomery County proved a harder sell for the
chain. Such communities, dense from decades of development and populated with
higher-income shoppers with upscale tastes, began to fight the retailer at zoning
meetings and planning sessions. In 1994, Wal-Mart said it hoped to build at
least four discount stores in Montgomery. Today there is just one, in Germantown.
Meanwhile, Wal-Mart was realizing that it could increase profit at its stores
by carrying a full line of grocery products, housed in a massive facility called
a supercenter. Buyers applied the same techniques used throughout the company:
purchase in bulk and negotiate the industry's lowest prices.
Unionized grocery chains do the same, but they simply cannot match Wal-Mart's
buying power or its lower labor costs. Wal-Mart's hourly wage in the Washington
region is $10.08, while Giant's and Safeway's is $13.19, the companies said.
With overtime, the figure rises to $16 an hour for the union chains. Giant's
and Safeway's health care plans cost the chains $12,249 for every full-time
employee, nearly twice what Wal-Mart pays for a typical family plan, the companies
said. Wal-Mart's cost for health benefits depend on the plan and deductible
chosen by employees. While Wal-Mart workers have a 401(k) plan, with the chain
matching up to 4 percent of employee contributions, depending on annual profit,
Giant and Safeway are required by the union contract to pay into a more expensive
The results can be seen at the cash register. At the Wal-Mart supercenter in
Spotsylvania County, which opened in March, a basket of 23 popular household
products, including such brands as Jif peanut butter, Maxwell House coffee and
Reynolds Wrap aluminum foil, cost $60.37. At the nearby Giant, less than a mile
away, the same 23 products cost $75.55, or about 25 percent more.
In the Washington area, Wal-Mart's grocery sales have grown to $442 million
in 2004 from $48.4 million a decade ago, according to Food World, a Baltimore
trade publication. It now sells nearly 4 percent of all groceries in the area.
During that same period, Giant's and Safeway's shares of the local grocery market
have fallen 12 percent and 9 percent, respectively.
Grover and Linda Wilson, both self-employed, drive 25 miles to the Spotsylvania
supercenter from their home in Rhoadsville, Va., passing both Giant and Safeway
on the way. The Wilsons don't mind that Wal-Mart workers have no union.
"You can't pay people $20 an hour and sell bananas for 33 cents a pound,"
Grover Wilson, 62, said.
In Spotsylvania, population 112,000, business leaders and economic development
officials actively courted Wal-Mart. The chain had closed its only county store
in 2001, and "we desperately wanted them back," said Bill Vakos III,
vice president of Vakos Real Estate, who helped develop the store.
The supercenter employs 500, will generate as much as $1 million a year in
county sales tax revenue and has already given $12,000 to local charities, according
to the county.
"Having Wal-Mart here," Vakos said, "is a big deal."
Lowthers, the union president, acknowledges that Wal-Mart has lower prices,
but he said the union's job is to show consumers there is a cost.
"When Wal-Mart comes to town, good jobs are replaced by bad jobs,"
Wal-Mart is unapologetic about its lower labor costs, and its chief executive,
H. Lee Scott Jr., believes it is the unionized grocery stores that must change.
"If you sell the same product and you sell it for 20 or 30 percent more
than your competitor, you've got an issue with your business model, Scott said
during a recent interview.
But those lower costs, and the growing belief that Wal-Mart's highly touted
efficiency is depressing wages throughout the economy, have snowballed into
an image problem that is making it increasingly hard for Wal-Mart to build stores
in the Washington region.
"I would not stand up in front of a zoning meeting and say, 'I am here
to bring you Wal-Mart,' " said one local developer, who spoke on condition
of anonymity for fear of jeopardizing future relations with the company. "This
is an anti-Wal-Mart hysteria in this area."
© 2005 The Washington Post Company