An NYC Wal-Mart would produce winners and losers

While the possibility of a Wal-Mart opening up its first New York City store in East New York has local retailers scared, some residents welcome the change.

The retail giant, by far the largest corporation and largest employer in America, has been conspicuously absent from the five boroughs despite numerous attempts to break into the New York City market.  This year, Wal-Mart is trying again.  This time, the company has launched a large public relations campaign to counter the vociferous opposition of unions and trade groups.  Wal-Mart has bought ads in local newspapers and radio stations and even set up an advocacy website specific to New York City.

The company’s message isn’t easing the fears of East New York retailers, however.  Eddie DiBenedetto, a restaurant owner and an active member of a local merchant’s association fears that his neighbors might not be able to compete with the big-box retailer, reducing foot traffic in the commercial corridors.

“Special interests and ads for Wal-Mart say competition is great and here is what I say to that. Competition is great, but only if you have an even level playing field,” he says.  “Me compared to Wal-Mart for example would be like challenging LeBron James to a one on one game.”

East New York, a neighborhood plagued by some of the worst rates of unemployment in the city, has already experienced the influx of big-box retailers like Wal-Mart.  The Arkansas-based company has been eyeing a place in East New York’s second suburban-style shopping complex, the planned Gateway II development.  The neighborhood is already home to the Gateway Center Mall, a complex that includes Target, Best Buy, and Home Depot stores.

Some small business owners in the area blame the Gateway Center for their declining sales.

“When Home Depot opened, they affected us because we used to make more business before that,” says Vicente Torres, a struggling hardware store owner in the area.  “Business is already so bad here, if have to compete with a Wal-Mart, that will be the end of me.”

“I had a business a couple of years ago and when the Gateway Mall opened it put me out of business,” says Tyrone Durham, the manager of a small East New York electronics store.  “And now I am working for someone else and they’re going through the same thing right now.”

The City Council held a hearing last Thursday where city politicians, trade unionists, and small business owners voiced their opposition to the mega-chain opening up in Brooklyn. Prior to the hearing, several members of the council, including Speaker Christine Quinn spoke at a rally against the company at City Hall.  One of the most vocal opponents of the store was East New York’s Councilman Charles Barron who called the store a “roving plantation.”

At the hearing, University of Illinois Professor David Merriman addressed the Council by videoconference, explaining his analysis of Wal-Mart’s impact on the local economy in Chicago. Merriman concluded that Wal-Mart’s arrival did not lead to a net increase in jobs, and businesses in the immediate proximity of a new Wal-Mart stood a 40% chance of closing down.

Wal-Mart did not send a representative to the hearing, but Wal-Mart spokesman Steve Restivo discounted the study in an email.

“Randomly selected statements from a handful of flawed studies don’t measure up to real people whose lives are better because they have a good job and access to fresh food to feed their families,” he said.

While many storekeepers’ and workers’ interests are threatened by Wal-Mart coming to town, consumers in the area seem to be enticed by the low prices that the store offers.

East New York resident Kimberly Gray welcomes the chain store.  She says that she is already a customer.

“We never had a Wal-Mart so why not? We go far out to Long Island just to go to Wal-Mart, so this will be a good idea,” she says.

Ms. Gray doesn’t seem to be alone.  In an op-ed in the Queens Chronicle, city councilmen Peter Koo and Eric Ulrich address the city’s loss of tax revenue to suburban areas.

“Last year NYC residents spent more than $165 million at Walmart stores located outside the five boroughs or online at the company’s website,” they write.  “Of that $165 million, $80 million was spent by Queens residents, with the majority of that money flowing to Long Island.”

Noemi Benitez, a Bronx resident, says that she would gladly come to a Brooklyn Wal-Mart.

“It’s cheap.  Wal-Mart needs to come here so that poor people can take advantage of it,” she says.

Mayor Michael Bloomberg, unlike Speaker Quinn and company, has spoken in favor of the store’s entry into New York City.

A spokesperson for the City Council says that at the moment, the Council is exploring the legal avenues available for them to block the chain store from opening.

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