Tuesday, September 4, 2007

Big Box Theory: Attacking Mall-Wart

I've cooled off a little since losing this battle, but not enough to forget the lasting after effects that will likely come to haunt us in the years to come.

This was a missed opportunity, pure and simple. And, collateral damage was done to 'Big Box' stores that happened NOT to be named Wal-Mart, like Costco, a thriving business headquartered in Washington, with a proud record of living wages and benefits, that also demonstrates efficiency in its business practices.

Since the Big Box debacle, I came across a book, titled 'The Wal-Mart Effect', written by Charles Fishman, a former business reporter for the Washington Post. Fishman had been curious about Wal-Mart and decided to investigate, but was stone-walled by that company's habitual secrecy about its operations.
That just intrigued him more, so he spent the next 2+ years interviewing Wal-Mart suppliers, competitors, former employees and members of communities who had experienced impacts from Wal-Mart coming to town.
The results were fascinating! Some were as you might expect, others cutting edge know-how, particularly in inventory control and supply chain logistics.

All these results were motivated -spawned and continuously reinforced- by Sam Walton's no-nonsense drive to succeed in a very competitive environment. Nothing wrong with that! Good old American values, born of necessity and free markets.

But relentless emphasis on a bare-bones operations, coupled with phenomenal growth of the company changes things, as has happened with Wal-Mart.
The company is now so huge that when it sneezes, the economy catches a cold!
There is now a Wal-Mart for every 74,000 US citizens, which means room for further rapid expansion is already severely cramped. They are literally bigger than the next 10 corporations combined!

Anyway, Fishman's book is about the most complete and authoritative that I have yet to come across.
It's conclusion is that Wal-Mart has a huge effect, whether for good or bad, but that this same effect can be used to help communities better deal with Wal-Mart to get changes considered beneficial to them.
Some communities and other organizations are already doing this.

Just a few examples:

NRDC persuaded Wal-Mart to switch to selling energy efficient light bulbs, and already this has become accepted practice, which has also saved Wal-Mart 30% on its electric bills.

Wal-Mart was persuaded to use bio-diesel fuel for its enormous fleet of trucks, saving 20% in those costs.

Other communities have been able to change Wal-Mart's design standards and marketing practices.

Here, in the Pacific Northwest, we might insist that Wal-Mart stop selling Chilean farmed salmon, and substitute wild salmon instead. That might also get some other stores to do the same thing.

We might insist that Wal-Mart carry a substantial proportion of its farm products from local sources.

The point is, if Wal-Mart wants to expand, we can have the leverage to negotiate some changes in return.
If we don't use that leverage, we lose it. And, if we use it and win, that sets a new precedent for other areas to also follow as they will.

That is also Fishman's point. The Wal-Mart Effect cuts both ways. And, we can use the Wal-Mart Effect to our advantage, but only if get them to the table!

Big Box sprawl is a problem, but it is already with us. Running Wal-Mart off to the Lummi Reservation will likely have some very serious repercussions, that will be felt in the years to come. Maybe, even after those who were responsible are safely out of office. That's the way history happens.

Watch out for what you ask for, because you might get it!

Whatcom Independent Guest Editorial - Circa February 2007:

Every City Council member supports the goals embodied in our Comprehensive Plan.
Each especially supports the twin concepts of a strong local economy - fueled by good jobs, and compact well-planned growth that alleviates congestion.

Five current Council members believe that the presence and proliferation of Big Box stores constitutes such a serious problem that they consider it their duty to ‘resolve it’ by force, with a Council directed mandate, even though no economic impact analysis has been done, or required. I do not agree with this irresponsible approach, and neither do many others, especially taxpayers!

First, we need to define the ‘problem’ that needs alleviating then try to resolve it in a reasonable way that incorporates the input of citizens, businesses and others impacted. If local government really cares about what people want and need, it will not ignore them! Why not involve other regional jurisdictions whose help and cooperation will be needed for a broader and more effective action plan that will inure to the entire community's overall benefit?

Better solutions to complex problems are always reached by full and fair discussion involving many stakeholders, not just a few. The Big Box ‘debate’, while useful, has turned out to be a sham that drastically over-simplifies both the ‘problem’ and the ‘solution’. It was a Ready, Fire, Aim approach, except the conclusion was decided before the ‘debate’ began.

The ‘Big-Box issue’ was really a 'spontaneous arising' that exactly coincided with WAL-MART's plans to add a 40,000 SF grocery addition to its existing 151,000 SF store, both located in an area specifically zoned for that purpose. This exact area was annexed by the City because developed Commercial zones return revenues that more than 'pay their way', just as residential developments do not.

The Big-Box measure was initiated and pushed through the City Council by organized labor as a means to continue –locally- its much broader attack on WAL-MART. Of course, the idea had to also be cloaked in a few Comp Plan arguments to give it better sales appeal to the public, as well as cover for its supporters. No one complained about any of WAL-MART’s Big-Box rivals, like Fred Meyers, Costco, Target, Home Depot, K-Mart, Sears, Lowe’s, Albertson’s, or others that are also directly affected by this ban.

Positive impacts are claimed, like ‘support of local business' and 'alleviating unsightly sprawl and congestion'. These problems already exist and won’t likely be much helped by the ban. But, looking at the assumed positives is only half the issue.
What about the adverse impacts on economic development that will happen as a result of Bellingham's action?

Traffic problems exist because the area has already been zoned and developed for concentrated commercial business. These problems will continue wherever WAL-MART and any other big-boxes are, or where they decide to locate.

Citizens, particularly those with limited financial means, prefer shopping at WAL-MART and other big-box discount stores. Are their voices being heard?

Significant fiscal impacts on the City budget are very likely, rising over time. An estimated $3.5 million per year in sales & B&O taxes is currently being paid to the City from big-boxes of over 90,000 SF alone, about 14% of the total. This is equivalent to over 20% in City property taxes. For all stores of over 60,000 SF, the amount rises to $4.3 million.

Some type of financial analysis is absolutely necessary in order to even imagine the potential impacts of the Big-Box ban. I am astounded and appalled at the dismissive attitude that Council has shown regarding our community's overall best financial interest! Which future Council -or Mayor- will want to face this kind of deficit scenario?

Bellis Fair Mall illustrates the economic benefit of clustering stores together, so a single trip serves multiple purposes. Yet, this Big-Box ban also impacts the Mall. Bellis Fair has legitimate concerns about even expanding its existing stores. This mall has been a growing regional center for 20 years, helping to draw other Big-Box stores as well. Customers come from miles around. Big-Boxes already exist, and clustering them makes more sense than sprawling them!

If the Council is trying to address the cumulative actions of the past, isn't a regional approach necessary? We don't have to look far for examples of competing jurisdictions, like the scenario involving Mt Vernon and Burlington in Skagit County.

Where is the balance in this discussion? What is the urgency? Is the ban a silver bullet?

Why disregard the Planning Commission recommendations to study this issue further, without extending the moratorium?

Why exclude the business community and trained economists in the discussion?

Council seems to have acted as the sole 'decider' on this issue, using WMD [Words Meant to Deceive] to justify –or cloak- its action. We need more election year sunshine on this matter!