The D.C. planning department is moving forward with allowing Walmart to set up four new stores within the district. According to a panel at the National Building Museum, there may be some positive and negative impacts with this. Positives: There are food deserts within the district and the new Walmarts, which will emphasize groceries, will increase the supply of fresh produce. There’s a significant untapped market: Harriet Tregoning, D.C. planning director, says D.C. residents spend $1 billion annually in neighboring districts. That money could be spent here instead. Also, the inner-city is a significant “emerging market” with underserved populations, but one that few big retailers are ready to tap. Negatives: Walmart’s labour practices haven’t really changed. In instances where they have moved into downtown areas (such as Chicago), there were increased small store closings and job losses in a four mile radius of the new Walmart. Walmart often picks up and leaves if it doesn’t see a market in a community, meaning that huge stores could become vacant, acting as a drain. Lastly, these large stores may encourage more driving, and may not be environmentally or economically sustainable.
D.C. Focuses on Groceries and Good Design
Harriet Tregoning said D.C. only has 8.6 square feet of retail per capita, far lower than the national average, which is 23.3 square feet per capita. As a result, D.C. residents spend $1 billion in neighboring districts each year. To remedy this, the D.C. planning department is trying to bring more retail to the city. “Many neighborhoods have unfilled retail potential, with an unbalanced mix, and a lack of basic services.” She added that the “perceived weaknesses” in the D.C. market have limited retail growth in emerging areas. Still, she thinks D.C. is a great market: “We have a population of 600,000 that grows to 1 million during the day. We have 14 million visitors annually. Our density is eight times the national average. There is spending power here.”
D.C. wants these four new Walmarts to focus on groceries because there are many food deserts within the district. “There’s been a dearth of supermarkets, although a dozen have come in in recent years.” However, the district wants to protect the growing “clusters” of small retail businesses that have taken root, such as those around 14th street and H streets. Also, she pointed to young entrepreneurs who have “taken advantage of regulatory loopholes” and started food trucks. “There are dozens now, many associated with bricks and mortar stores.”
There is some precedent for bringing in Walmart. The Columbia Heights project, which brought in Target, has been a “major success” for the city. There has been $1 billion in investment in a one-square mile area, including 81 projects, 4,000 units of housing, and 800,000 square feet of retail. “This is one of Target’s best stores.” However, she pointed to missteps with the project: At a cost of $42 million, the city built 1,000 parking spaces into the main shopping center that houses Target. “We built more than was necessary. A whole level hasn’t even opened.” To make back some of the debt payments, the city is now leasing out many of those parking spaces for daily or monthly use. D.C. learned its lesson and is now “getting rid of our parking requirement, and allowing shared parking.” This enables stores to contract someone else’s spaces.
Tregoning concluded that what people want is a good “shopping experience,” an urban form for retail, and stores accessible to transit. As a result, the “location and form of big box retail in D.C. needs to be different.” For example, she pointed to the Home Depot on Rhode Island Avenue, which is not doing well because it can only be easily accessed by car and “could be in any suburbs.” She added that “having existing activity at big box destinations is important.” In an effort to ensure the city’s experiment with Walmart succeeds, the city has required Walmart to up the ante on its design and fit within the district’s strong urban design guidelines.
Mitigating the Neighborhood Impacts of Walmart in Cities
Kennedy Smith, principal, the Community Land Use and Economic Group, argued that all communities want “good jobs, good retail variety, increased tax revenues from stores, and good schools, services.” She wondered whether there is market demand for four new Walmarts in D.C. Based on her calculations, the proposed stores in Union Square, Brightwood, New York Avenue, and 58th and East Capitol, would bring in around $183 million a year, and “may capture a chunk of some of that $1 billion lost.” The big question, though, is whether these new Walmarts will kill off existing businesses.
On the west side of Chicago, Walmart opened a store in 2006. A study Smith summarized surveyed businesses in 2006 (before Walmart moved in), 2007, and then 2008. The study found that 28 percent of businesses within a four mile radius of the store failed after Walmart took hold. Also, the number of jobs that were lost were equal to those brought in by Walmart (around 300). Overall, though, Smith said finding accurate data on the economic impacts of Walmart is very hard. The government categorizes data into categories based on store type. However, as an example, someone could buy toothpaste from a number of different types of stores so it’s hard to determine how people are shifting their spending to Walmart on specific items.
She said D.C. has a chance to mitigate some of the negative neighborhood impacts of Walmart because it’s requiring the company to focus on groceries. Also, the city is serious about ensuring good urban design. She recommended the district carefully measure the impact of the first few stores before letting others in. Smith says Walmart will need to hand over “transparent data.” To guard against any negative impacts, district policymakers will need to “act quickly to bolster local businesses.” She pointed to new models, such as community cooperative supermarkets, community investors and venture capitalists, and innovative stores that have raised funds by paying in products instead of interest.
I Live on Top of a Walmart
Jay Klug, principal, JBG Rosenfeld Retail, will be building the world’s first mixed-use Walmart development, including hundreds of apartments and condos on top of the actual store. When asked by an audience member if someone spending half a million on a condo is going to want to shop at the Walmart downstairs (or will even want to live above one), he laughed and said “this is something we’ve obviously been thinking quite a lot about giving we are investing millions in this.”
The new Walmart on H street will be “architectually contextual,” and include a relatively small store space (at least for Walmart), with an “energized front.” The energized front includes space for an indoor/outdoor cafe or restaurant, and spots for smaller local stores. There’s a significant glass element and modern design features. The entrance for the condo will be off on another street, away from the heavy foot traffic, which will help further differentiate between the store and apartment complex entrances. In addition, the loading dock, which will be on a level plane, will be in back.
Klug pointed to other successful examples of enlightened big box developments his firm has done, including two developments that mix Whole Foods and condos in North Bethesda, Maryland, and Alexandria, Virginia. He said both those mixed-use big box retail models are doing extremely well. Only time will tell if the Walmarts are as successful in this model. “The one thing I’ve learned is that everyone has an emotional reaction to Walmart.”
Smith still thinks the Walmart projects could be risky but thought it was good the stores are on the smaller side so another store could be swapped in if it didn’t work out. Tregoning argued the fact that Walmart is “embedded” into these mixed-use developments is a good thing. If these Walmarts do actually offer lots of fresh produce in locations that are food deserts, it may be worthwhile: As she noted, D.C. has some of the highest obesity rates in the country, particularly among children.
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Image credit: Rendering of H street Walmart / JBG Rosenfeld