Economic Development

Food Fight

Los Angeles takes on the 'big boxes'
by | November 2004

Los Angeles is opening a new front in the war over big-box retail. The city won't approve most new mega-stores unless the developer pays for an economic impact analysis first.

Cities commonly ask retailers to do traffic analyses or meet design guidelines. L.A. is the first to look at whether the stores are a net plus or minus for the local economy. The new policy was directed at Wal-Mart, which is in the midst of putting 40 of its supercenters in California. But it would also apply to Target, K-Mart or almost any retailer that wants to build a store larger than 100,000 square feet and devote more than 10 percent of it to groceries.

Grocers' unions in California complain that Wal-Mart's supercenters are driving down wages and benefits. There is also a widespread perception that big-box stores drive mom-and-pop shops out of business. L.A. Councilman Eric Garcetti says cities should weigh those negatives against the benefit of Wal-Mart's famously low prices. "If you don't go into these decisions with your eyes wide open," says Garcetti, the law's sponsor, "there's potential to pay much more through higher taxes and greater welfare benefits."

A few towns in California have tried banning mega-stores entirely, a strategy that Wal-Mart has successfully fought in court and at the ballot box. L.A.'s approach--which applies only in enterprise zones and other economically depressed neighborhoods that receive development subsidies--may be more defensible, both legally and politically.

The ordinance won't stop Wal-Mart's California expansion plans, says Wal-Mart spokesman Peter Kanelos. "Californians have spoken time and time again--they don't want government dictating where they can shop."


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