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Starting with its new big-box store
under construction in
Chicago
, Wal-Mart Stores, Inc. said it will build 50 stores in
urban neighborhoods distressed by high unemployment and
other social problems in cities around the country.
Lee Scott, the
company’s chief executive, made the announcement Tuesday
at the
Austin
neighborhood construction site of
Chicago
’s first Wal-Mart Store.
He said the
new stores planned for inner-city neighborhood over the next
two years would create 15,000 to 20,000 jobs.
“We will be
bringing back about 400 jobs in this store,” Scott said.
He said the
Austin
store, like some urban stores elsewhere in the country, will
have special programs to benefit local businesses, such as
help with selling to Wal-Mart.
Local minority
and women-owned businesses will be sought out for
construction work on the new stores, Scott said.
The general contractor for the
Austin
store is an African-American woman, and minorities and women
were among those hired as subcontractors.
The store is to open this summer.
Wal-Mart said
it has not decided where it would locate the new stores.
“We have
been approached in the past by
Detroit
,” said John Bisio, spokesman for Wal-Mart.
“You could also look at communities in parts of
Houston
.”
He said
Philadelphia
might also be a candidate.
Economists say an increasing number of businesses are
recognizing that while residents of some urban neighborhoods
may be poor, the density of population makes for substantial
buying power.
As evidence, outlets for Staples, Old
Navy, Harris Bank and Walgreen’s are located a short
distance from the
Austin
store site.
Wal-Mart, the world’s largest retailer, has faced
obstacles to its plans for stores in
Chicago
,
New York
,
Los Angeles
and elsewhere.
In
Chicago
, for example, organized labor and other opponents helped
block construction of a Wal-Mart on the South Side.
The retailer responded by opening a store in
Evergreen Park, just outside the
Chicago
city limits.
Unions accuse Wal-Mart of paying too little and
charging too much for health insurance.
Scott said the average starting wage at the
Austin
store will be $10.98 per hour.
Critics say small merchants cannot compete with
Wal-Mart’s prices, and that many of its employees end up
on Medicaid because of low incomes and high insurance costs.
Until recently, Wal-Mart stores more likely were to
be found in rural areas or suburbs than in the heart of
major cities. But
analyst say the company is intent on locating in densely
populated city neighborhoods, even those where household
incomes are low and crime is high.
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Joseph Beaulieu, stock analyst with Morningstar, said
Wal-Mart realizes it must remake its image if it is to be
welcomed by cities.
“They have had a hard time working with
municipalities,” Beaulieu said.
“Over the past year and a half, they have shown
increasing flexibility.
They are going to have to change their reputation.”
In recent months Wal-Mart has begun promoting organic
foods and announced it would hire a director of global
ethics.
Scott said Wal-Mart will work on job creation and
economic improvement in the neighborhoods served by the new
stores. Wal-Mart
will feature small businesses in advertisements in local
newspapers, for example, and broadcast free advertising for
them on its in-store radio network.
“I don’t like to think it’s about image,”
Scott said of the initiative.
“What we want to do are things of substance.”
However, not everyone is convinced that
Wal-Mart belongs in low-income neighborhoods or anywhere
else.
“You are talking about a company that has more
devastating effect on communities than any other in
America
,” said Chris Kofinis, communications director for Wakeup
Walmart.com, an organization sponsored by the United Food
and Commercial Workers union.
The union has tried and failed to organize Wal-Mart
stores.
Kofinis said the company offers poverty-level wages
and health insurance so expensive that few employees can
afford it. He
said Wal-Mart’s focus on low-cost products has helped
outsource American manufacturing jobs to other countries
where labor is cheaper.
But some Chicagoans don’t seem put off by Wal-Mart
coming to town.
“This was a good job for us.” Said Leona Thomas,
president of Thomas Mechanical Corp., which is handling the
plumbing work.
“We are a union contractor,” said Thomas, who is
black. Her
company is located a few blocks from the Wal-Mart site and
her business card includes the phrase: “A
Minority/Women-Owned Business.”
Wal-Mart said it has received 2,800 applications for
jobs at the
Austin
store.
Among those filling our application forms Monday were
Geraline Brown and Linda Norwood, both
West Garfield
residents and employed part time as city crossing guards.
“We need more money,”
Norwood
said.
She said the city offers her benefits but not enough
hours. Wal-Mart
offers many part-time jobs.
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