Wal-Mart got dumped from a city they wanted in Virginia, so now they are moving on to a second tier site. But their second choice makes no sense at all. The city of Newport News,Virginia is surrounded by Wal-Marts. There are 13 Wal-Mart stores within 21 miles of Newport News, including a Wal-Mart superstore 5 miles to the northeast in Hampton, and 6 miles to the south in Suffolk. Any resident of Newport News who is addicted to cheap, Chinese imports is only minutes away from a China-Mart. But according to the Newport News Daily Press, Wal-Mart is looking for even more market share in the area, and wants to build a superstore on Jefferson Avenue in Newport News. The Mayor of Newport News, Joe Frank, says his discussions with the giant retailer went cold several months back. “I have not had a conversation with the Wal-Mart folks in, I’m guessing, three months,” the Mayor told the newspaper. “They had an interest in a property in Newport News, and they had an option on the property at that time, and I had some discussions with them about the project and certainly encouraged them. Where all that stands right now, I frankly don’t know because I haven’t talked to them in quite a while.” Wal-Mart did not return calls from the newspaper to confirm their interest in the 26 acre site. The heavily-traffic intersection Wal-Mart covets has several small businesses on it, including a plumbing supply store, a building materials store, a mobile trailer business and a welding business. Wal-Mart was spurned in nearby Isle of Wight County, because small businesses and county residents kept them out. On February 23, 2008, Sprawl-Busters reported that a developer working on a Wal-Mart supercenter had to apologize to the Isle of Wight County Board of Supervisors. The developer, Armada Hoffler, dropped its much-heralded plan to build a Wal-Mart supercenter. “It’s not a decision we took lightly,” said Armada Hoffler Development’s president. “Financing, with the collapse of the credit market, is at this point, in the near term, shaky at best,” the developer’s CEO said. Armada Hoffler asked the landowners for an extension on their contract to acquire the land, but they “did not feel they were in a position to accept that,” the developer said. A Wal-Mart spokesman told the Daily Press that without Armada Hoffler, there’s no Wal-Mart. “Our contract was with Armada Hoffler,” the Wal-Mart official explained. “That means that Wal-Mart is also withdrawing from the application at this time. We’re still committed to better serving our customers in Isle of Wight County. We will continue looking for opportunities in the area. We’re looking to grow across the Hampton Roads area.” Roughly one year later, the company turns up in Newport News. Mayor Frank claims that he encouraged Wal-Mart to build in Newport News, because he assumed a big box retailer means economic good news for his city. “They provide a service to lots of people who like to shop at Wal-Mart, and they generate a lot of tax revenue,” the Mayor guessed. “They serve a need in the community and pay taxes. And they create jobs.” Mayor Frank cannot be blamed for his lack of understanding of Wal-Mart’s voodoo economics. After all, he’s a politician, not an economist.
The Newport News trade area clearly does not need two Wal-Mart superstores 5 miles apart — and this is the kind of cannibalization that Wal-Mart told Wall Street it was aiming to avoid. Packing stores this close to one another merely causes a drop in same store sales at both outlets. Even though total sales will increase with two stores, each store becomes less efficient as a money maker. This Newport News site makes little sense, because it’s a completely new construction, and Wal-Mart has said it wants to focus on expanding existing stores, not new store construction. Mayor Frank certainly realizes that sales from Wal-Mart supercenter in his town will be drawn, in part, from the Wal-Marts in Hampton and Suffolk. But the superstore will also cut into the margin of the existing grocery stores in Newport News such as Farm Fresh, Food Lion, and smaller grocers. Newport News has more than 179,000 people, and its population has grown 5% since 1990 — but the area also has an ample supply of grocery stores that will feel the impact of another large grocer. The three Wal-Mart supercenters in this area are simply packed too closely together. Readers are urged to contact Newport News Mayor Joe Frank at: [email protected] with the following message: “Dear Mayor Frank, Newport News is slated to get the Isle of Wight’s Wal-Mart supercenter. Is this really good news for your community? You have said this new project on Jefferson Avenue will mean ‘a lot of tax revenue’ and ‘create jobs.’ But what evidence do you really have about the NET impact of this kind of store — which largely transfers sales from existing businesses? To some degree, a third Wal-Mart supercenter in the immediate trade area will merely steal sales from the superstores in Hampton and Suffolk. Is this economic development, or retail musical chairs? In the meantime, more valuable land is gobbled up for a company that makes nothing. Even the jobs are nothing to write home about. In Virginia, the average wage of a Wal-Mart worker (which means there are people who make less) is $10.96 an hour. There are 29 other states in the U.S. where Wal-Mart pays its people more. You also know that people in Newport News can travel 5 miles to the nearest Wal-Mart. Stores this size are meant to be regional — not every 5 miles. Your existing merchants will tell you privately that this will be a painful process for them, and they are still your constituents as well. In the end, you will see little new growth, just shifted jobs and revenues. But there are two things that will rise: crime, and traffic. For both of these problems, it is your office which will end up dealing with the headaches. Better to just put a cap on the size of retail stores, and stop inviting the cannibals to dinner. This project is an economic mistake of major proportions. As an active Democrat, how can you support a company that counseled its workers to vote against Barack Obama? As the son of small business owners, how can you support the saturation of your community with national chain stores? I urge you to oppose the Wal-Mart supercenter.”
