Wal-Mart's California Strategy

Some communities have courted the company's stores because retailers bring sales tax revenues to California cities, which have been struggling with budgets in recent years, but other cities have spurned Wal-Mart and have adopted or proposed regulations designed to curb the company's growth. In the process, the Bentonville, AK-based company has become arguably the most talked about retailer in the West Coast, especially in California, where it plans to open 40 Superstores.

On one end of the spectrum, Wal-Mart has drawn accolades from the likes of the University of California at Santa Barbara, which hosted a conference in April to discuss Wal-Mart's place in modern business and society. The university's announcements promoting the conference said, "Just as General Motors and Microsoft set the standard for innovative enterprise in the 20th Century, many scholars feel Wal-Mart has become the model for global capitalism in the 21st Century." On the other end of the spectrum, the company has been named in class action lawsuits like one filed in Seattle by current and former Wal-Mart workers who claim the company forced them to work overtime without pay and committed other labor law abuses—accusations that Wal-Mart denies. This summer, the U.S. District Court for the Northern District of California granted class action status to a suit claiming that Wal-Mart has discriminated against women employees, a claim that Wal-Mart denies.

Wal-Mart, in pursuing its West Coast expansion, has employed strategies and tactics not usually associated with retailer roll-outs. It spent more than $1 million earlier this year to sponsor a ballot initiative that would have allowed it to build a 60-acre center in the Los Angeles County city of Inglewood after city officials there rejected the proposed development. Voters defeated the measure, 60% balloting against it and 40% for it, with Wal-Mart foes saying the project would push local retailers out of business and undermine the city's power to regulate development.

The retail chain faces other challenges, including proposed ordinances in Los Angeles and other cities that would restrict the development of large retail operations, and it has been the target of TV advertisements for Proposition 72 on the Nov. 2 ballot in California. Wal-Mart recently announced a $500,000 contribution to Californians Against Government Run Health Care, a group that is fighting Proposition 72 and whose supporters include Gov. Arnold Schwarzenegger. Among other things, the measure would require that businesses employing 200 workers or more must pay at least 80% of the cost of health care coverage for their workers, beginning in 2006. Opponents say the proposition that would hurt California businesses and their employees by mandating what kind of health care coverage businesses should provide for their workers. Wal-Mart says it previously "made the decision to stay out of this issue," but with "false accusations being levied against the company," it says, it was forced to defend itself. Ads supporting Proposition 72 attempt to make Wal-Mart a scapegoat by claiming that it does not provide affordable health care, the company says, countering that it offers medical coverage to both full- and part-time employees.

In the midst of these polar opposites of welcome and rejection, Wal-Mart opened its Hemet Supercenter Oct. 28 to huge crowds. The new store follows Supercenters in the Southern California community of La Quinta and in the Northern California city of Stockton. The 224,168-sf Hemet Supercenter is at 1231 Sanderson Ave. and will employ approximately 850 workers. Wal-Mart, which argues that its operations bring needed jobs and other economic benefits, says it received 4,078 applications for jobs at the new store.