Wal-Mart’s Ambitious Washington, DC Growth Plan Facing Construction Delays

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Wal-Mart’s ambitious project of building six new stores in the District of Columbia over the next three years will not happen as planned. In fact, of the six sites that the Bentonville, AR based retailer announced would be built in Washington, DC only one – at Georgia and Missouri Avenues NW – has been issued a permit to begin construction. Work has begun on that location (the site of the former Curtis Chevrolet dealership) and the Georgia Avenue store is slated for a late 2013 opening.

However, three of the original four stores that Wal-Mart announced in November 2010 would be constructed in the District – Riggs Road and South Dakota Avenue NE, New Jersey Avenue and Bladensburg Road NE and 801 New Jersey Avenue NW – have not yet received approvals from the DC Office of Planning to begin work.

A year later, two more stores were added to the District ledger – E. Capitol Street and 58th Street NE and Good Hope Road and Alabama Avenue (Skyland) SE. All stores are slated to be in the 80,000-120,000 square foot range.

A Wal-Mart spokesman has been quoted as saying that the company will be using the extra time to further engage with the neighborhoods that surround its stores and build even more support for Wal-Mart.

However, after talking to about half a dozen industry and political sources familiar with Wal-Mart’s DC strategy, most were skeptical as to whether Wal-Mart would ever reach the six store target.

Some of those sources acknowledge that pressure from neighborhood activists, labor unions and other opponents are the primary reasons for the delay, while others believed that Wal-Mart’s overall national program to open urban and smaller units has been slow to develop.

“For more than two years, we’ve been hearing about Wal-Mart’s new format initiatives and what we’ve essentially seen thus far is a few stores in Arkansas and two Urban Express stores and a SuperCenter inChicago. Progress has been slower than many of us thought,” said one retailer whose company competes with Wal-Mart in many markets.

“I was skeptical from outset when the new urban model was announced,” said a former Wal-Mart executive. “As you may recall, there was a lot of hype surrounding the early days of Neighborhood Markets more than a decade ago, too. As it turned out, the company was ill-equipped to become a supermarket operator. I wouldn’t be shocked if only about half of these projects in Washington, DC get completed.”

And one analyst who has covered DC politics for many years noted: “There is significant pushback from local communities in DC that they don’t want to see a Wal-Mart in their backyard, even if some of those neighborhoods are underserved and new jobs will be created. Then there are political issues, too. Take the Skyland project as an example. Safeway (with a limited non-compete) has some influence about the destiny of that site. I’d bet that project never opens as a Wal-Mart. It seems to me that Mayor (Vincent) Gray, who has a political need  to fulfill, wants this to happen even more than Wal-Mart.”

Wal-Mart has said that six new stores in the District of Columbia would yield 1,800 new retail jobs, 600 construction jobs and provide about $15 million in annual sales taxes to a jurisdiction that, like many other cities that is dealing with less federal money and significant budgetary pressures.