Large supermarkets have long been a staple of life in U.S. suburbs, offering better deals and more selection, but they are less common in cities. There is still no Walmart in New York, Boston, Detroit, San Francisco or Seattle. In the 2010s, Walmart experimented with a smaller model targeting urban neighborhoods, but the results were poor. And recently, large chains that usually have better penetration in cities have been closing. The reason for this poor performance is partly economic, but may also be due to the anti-regulatory and other evils of the old local governments.
Walmart has a smaller store concept known asS Neighbourhood marketThere are 800 of them, which give the impression of a grocery store and not the wholesale market character of the 16,000 square meter “supercenters”.
The company previously operated a sub-chain of similar stores called Walmart Express, which sought to challenge low-cost grocery stores such as Aldi or America’s many dollar stores, but these were forced to close in the mid-2010s.
The biggest challenge, industry observers say, is a supply chain that is not tailored to the needs of smaller grocery stores. Walmart and other large chains achieve economies of scale through their high sales volume. Walmart Express, whose stores typically covered 15,000 square feet, did not have the ability of regular Walmarts to offer many goods at low unit costs. Reports Money.com. They also used the same warehouse facilities as Walmart Supercenters, which led to inefficiencies.
“Their supply chain system is optimized for supercenters. It can work quite well for a neighborhood market of 38,000 to 42,000 square meters,” said Dave Marcotte of Kantar Retail Money.com“But if you keep reducing the size, it will eventually become a problem.”
Other big-box stores are also struggling in urban markets — including Costco, CVS and Rite Aid. Amazon Fresh, which sought to offer a “cashierless” checkout experience, grew from 1 to 28 stores in four years — not exactly a breakneck pace — and most of them are in suburban areas.
In addition to supply chain problems, these urban stores struggle with high land and labor costs and shoplifting due to lax law enforcement policies. Delivery is more difficult in cities than in suburbs because more cars compete for a relatively limited road space. Taken together, this undermines the entire “big urban retail” model.
But these market challenges do not even take into account those imposed by the government. namely, in cities run by Democrats, where the attitude is that big-box stores are huge, evil corporations that underpay their workers and rip off their customers (just look at the recent rhetoric about “price gouging” in Kamala Harris’ presidential campaign).
Walmart, in particular, has long been criticized by lawmakers for paying the minimum wage or anything close to it. This prompted lawmakers in cities like Washington, DC to try to control wages, which caused Walmart to abandon a plan to build six stores (there are currently two in the city).
Another reason for the rejection is the belief that wholesalers have unfair advantages over locally owned retailers. A planned Walmart Neighborhood Market in Boston was abandoned in 2011 after objections from local authorities. And this despite the fact that the stores in both Boston and DC supplied poorer neighborhoods.
Anti-Walmart Nimbyism sounded just the idea that a Walmart could locate in Seattle, which may explain why there is still no Walmart in the city, even though there are many Walmarts in Seattle’s suburbs.
Target was similarly criticized, although the opposition was less successful– presumably because Target, more than Walmart, appeals to the lifestyle brand of wealthy liberals who hold decision-making power in major U.S. cities.
If left-wing politicians could look past their disapproval of big-box stores—including the ultimately aesthetic disapproval of their large advertising signs and parking lots—there would be a real opportunity for innovation. Stores could make up for the lack of horizontal space by building taller. This would help the shrinking commercial real estate sector, but would likely require changes to zoning plans to allow for multi-story retail. Target is already doing this in some locations.
Large retailers could also do more to merge their warehouse and retail space to reduce traffic, which would also require rezoning to create more “flexible industrial space.”
Finally, there could be more housing near these shopping facilities. A Costco planned in Los Angeles will include 800 apartments on site, thanks to a deregulation measure that made this mixed use possible.
Yet in some ways the big-box model is one that is best suited to suburban areas, where land prices are low and political opposition is far away. It has resulted in the “weekend shopping trip to the suburbs” becoming a regular part of many city dwellers’ daily routine. Where there is actual demand for urban big-box retail, such as in low-income communities with fewer car owners, there is enough resistance from unions, local NIMBYs, politicians and “community groups” wanting their share that many of these projects fail.
The end result is urban retail deserts and more purchases online to companies like Amazon – a corporate giant if ever there was one. Perhaps politicians should not be so hostile to such businesses, big and small, just because they do not conform to every progressive ideal.
This article contains additional reports from Market Urbanist Content contributor Ethan Finlan.
Use of the cover image is authorized under the Creative Commons 2.0 Generic License.
