Low Prices, Blighted Suburbs 

Contra Costa County wants to ban Wal-Mart's biggest store. The future of retailing and a new kind of poverty are at stake.

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Consequently, Wal-Mart watchers expect the retailer to wage a particularly aggressive campaign. That's just fine with Gioia, who is in no mood to compromise. He says that when he watched professional signature-gatherers hit up people outside the company's Contra Costa stores, he also saw them collecting names for California's gubernatorial recall petition. For Gioia, that summed up an exasperating irony about this election: Once again, a populist reform mechanism had been hijacked by interests with enough cash to make it serve their own agenda. Gioia figures Wal-Mart will spend at least $1 million on the campaign, so he'd better get those union members walking precincts pretty soon. Because make no mistake about it, Amy Hill is right -- this fight is about the unions.

Whatever the merits of Gioia's traffic argument, from day one he's been working with UCFW Local 1179 president Barbara Carpenter on how best to run this campaign. Both Gioia and Carpenter know that voters will be more irritated by long commutes than inspired by appeals for labor solidarity, so they're staying on-message and steering well clear of union issues. Carpenter, whose union represents 5,000 retail clerks in Contra Costa, even goes so far as to make the ludicrous suggestion that her members are actually more incensed by traffic jams than the potential loss of their jobs -- "We're looking at the well-being of all our members, not just their working conditions," she says. "The traffic here is atrocious." At least Gioia is forthright enough to acknowledge the obvious labor connections, however obliquely: "There many others who have issues with Wal-Mart, so I think there's been a convergence of issues here."

Not that I have any problem with organized labor kicking Wal-Mart in the ass. Gioia claims that unionized retail clerks make an average of $10 more an hour in wages and benefits than Wal-Mart employees. I don't know about that, but it doesn't take a genius to see that if anyone could use a union, it's the cashiers and stockboys at major retail chains. But there's another player in the anti-Supercenter campaign, one that has stayed behind the scenes but conferred with Gioia throughout this process. And if its involvement were widely known, it could diminish any argument Gioia might make. That player is Safeway, whose corporate headquarters is located just across the border in Pleasanton, and whose executives and middle managers live in the gated communities of Contra Costa and Alameda counties.

That's the funny thing about Wal-Mart: Its business is so successful and the scale of its operations so vast that it makes instant allies out of longtime adversaries. Less than ten years ago, Safeway and its unions were locked in bitter strikes and contract battles, and its history of redlining has so angered neighborhood activists that they spat whenever they said the company's name. Now they have teamed up against the beast from Arkansas, and no one is more grateful for its new friends than Safeway.

Now that Wal-Mart has opened more than 1,300 Supercenters, rival grocery chains have watched their business gradually stall out, withered by the stiff new competition and an overcrowded marketplace. Like almost every other competitor to come before them, grocery retailers just can't compete with Wal-Mart's strategy of enticing customers with its sheer size, product volume, and hefty discounts. So far, Southern firms such as Kroger have taken the brunt of Wal-Mart's charge, as the Arkansas-based discounter invariably grew close to home before expanding into the rest of the country. But now that the Supercenters are coming to California, the heart of Safeway's retail empire, the local grocery chain can't help but glance nervously over its shoulder.

Safeway spokeswoman Vanessa Kingsborough didn't return numerous calls seeking comment. But according to Dave Novosel, a retail industry analyst for Banc One Capital Markets, the Supercenters are likely to hit Safeway square on the chin. "The reality is, it's a big threat," he says. "Wal-Mart's very clear that a big part of their expansion strategy isn't just domestic sale of general merchandise, but increasing food sales. ... Wal-Mart's just getting going in California. If you talk to Safeway, they'll tell you that it's too soon to conclude anything definitive yet. My guess is it'll definitely hurt them, it's just a question of degree."

After all, Wal-Mart always follows the same formula when it decides to penetrate a regional market. First comes the "spread out and fill in" phase, in which Wal-Mart places a store on the outskirts of town, tracks the zip codes of its most prolific shoppers, and plans the next phase of expansion. Then comes the "cannibalization" phase, in which Wal-Mart sets up so many stores that they cut into one another's business. By the time the bloodletting is over, Wal-Mart even will have closed some of its own stores, but it also will have gained a dominant share of the market. "Sam Walton himself said he wanted to be his own competition, because it's better than to pick your own pocket than have someone else do it," antisprawl activist Norman says of the retailer's legendary founder.

Of course, Safeway has a few options left. Many shoppers won't brave endless traffic jams and walk through a retail complex the size of five football fields just to stock up on food. So Safeway's smaller, more convenient stores will always have a niche. The grocer can also distinguish itself from the discounter by emphasizing quality over price. But with Wal-Mart's arrival a virtual certainty, as well as news that Safeway's profits plunged 48 percent in the second quarter of this year, is it any wonder it is dipping its toe into the retail politics (ahem) of Contra Costa County?


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