Walmart’s long Chicago journey

It hasn’t been an easy task for Walmart to significantly penetrate the Chicago market, but after a long courtship, involving disputes with local labor forces and community advocacy groups, the mega retailer is ready to become a mainstay in the city’s retail landscape.

“It’s been quite a journey,” Thomas Mars, executive vice president and chief administrative officer for Walmart, told a packed ballroom at the Hyatt during the Metropolitan Planning Council’s annual luncheon on Monday.

Walmart made its first foray into the Chicago market in 2006 with a Supercenter concept on the city’s west side. Since then, the firm has been in a holding pattern, fighting to get approval for other projects. That wait is over.

After agreeing in June of 2010 to offer a minimum wage of $8.75, appeasing advocacy groups and unions that wanted to see a wage above the current $8.25 an hour, Walmart announced a flood of deals, ranging from the traditional Supercenter concept to its new Walmart Express and Walmart Market concepts. In total, the retailer will add six stores to the city by 2013.

Walmart has implemented stores into urban areas such as Dallas, Houston, and Phoenix, but Mars proclaimed Chicago to be “the most critical” market for the firm to date.

“This is not the first urban market for us, but no venue presents a better opportunity for us right now than Chicago,” said Mars.

This may be because Walmart touts itself as a low-cost provider, with its latest slogan proclaiming “Save Money. Live Better.” By targeting some of the city’s most underserved areas that support a significant population of low income residents, the retailer will be putting its ideas to the test.

“We saw the need to serve customers in underserved areas,” said Mars. “We are in the unique position to provide a lower cost of living.”

Walmart has committed to supercenters in the Chatham and Pullman neighborhoods that will open in 2012 and 2013, respectively.  Two Walmart Market concepts are planned, with a location in the West Loop at Presidential Towers to open later this year, and a store in the West Englewood neighborhood to open 2012. The Walmart Express concept, featuring stores less than 30,000 square feet, is scheduled for the West Chatham and West Englewood neighborhoods as well, with expected opening dates of 2011 and 2012 respectively.

According to Crain’s Chicago Business, the retailer recently signed a 14,086-square-foot  lease at 3636 N. Broadway in the city’s upscale Lakeview neighborhood. Walmart also has plans for mid-sized store at 2840 N. Broadway, but it has been met with resistance from community groups that want to keep the national chain out of the neighborhood on grounds that local businesses would be unable to compete.

The smaller store concept has proven a success for the retailer, as Mars noted that this quarter the company posted returns from its smaller format stores that are on par with its Supercenters, “which makes it that much more attractive to grow [the smaller] format at a faster rate.”

Mars has been impressed in his dealing with Chicago’s new mayor, Rahm Emanuel. He called the mayor “decisive” and said that he led a “classic example of a corporate-government partnership” by engaging Walmart and several of its competitors, including Aldi, to provide goods and services to food deserts and underserved areas in the city.

-Mark Thomton

*This blog was originally posted on 6/27. It was updated with new information on 6/29.

This entry was posted in Chicago Commercial Real Estate, retail and tagged , , . Bookmark the permalink.

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