| 9/15/99
- California might ban superstores -- The Legislature approves
a bill outlawing "big-box stores such as Wal-Mart and Costco, which are
called bad for competition. Some supermarkets and labor leaders
in California trying to outlaw giant retailers such as Costco and
Wal-Mart -- and they're close to succeeding.
The (California) state Legislature has approved a bill that would
halt the construction of stores larger than 100,000 square feet, the
size of 2½ downtown Portland blocks, if more than 15,000 square
feet are to be used to sell food and drugs. That would ban most new stores
built by Costco Wholesale Corp., Kmart and Wal-Mart, companies that together
operate hundreds of California outlets. Costco is based in Issaquah, Wash.
Unless California Gov. Gray Davis vetoes the "Big Box Bill" by Oct. 10,
it will become law. The governor's office said Davis hasn't decided what
he will do.
The bill is one of the most aggressive counterattacks yet by traditional
retailers who fear the
nationwide expansion of superstores. Giant retailers, who say
they've only been aware of the bill for about a week, are scrambling to
try to kill it so that one of their hottest markets is not closed.
Allies including California county and municipal groups they're lobbying
Davis to veto the bill as anti-competitive and bad for consumers. They
say the bill usurps control over land use and may place an arbitrary, unconstitutional
ban on certain kinds of businesses.
"This bill is unprecedented, and it raises a number of unprecedented
issues" legally, said Cynthia Lin, a spokeswoman for Wal-Mart Stores Inc.,
which is based Bentonville, Ark., and has 134 California stores.
"The bill clearly has a serious impact on the way we do business
in California." The big retailers worry that business in other states
may be hurt, too, if the law passes. "That's the scare: As goes California,
so goes the country, said Jonathan Ziegler, a Salomon Smith Barney supermarket
analyst in San Francisco. "A lot of things start out here in the West."
The big-box retailers are accustomed to opposition. Local, independent
stores often fight against the construction of Wal-Marts and other giant
stores. For example, Tucson Ariz., and Clark County, Nev., in which Las
Vegas sits, debating whether to ban giant stores, said Dale Apley,
a spokesman for Kmart Corp. But this is the first statewide effort, he
said. About 160 of the 174 Kmarts in California are larger
100,000 square feet, Apley added. The company, based Troy, Mich.,
plans more large stores in large markets such as Los Angeles and the Bay
Area.
Backers of the California effort say giant stores end up killing competition
and hurting consumers. The big stores also tend to be less labor-friendly
than native grocery companies such as Safeway Inc., said Sharon Cornu,
spokeswoman for the AFL-CIO in California, which backs the bill.
"In California, the supermarket employees have chosen union representation
by a pretty large margin," Cornu said.
California-based supermarket chains, including Safeway and Stater Bros.
Markets, which have stores smaller than 100,000 square feet, back the bill.
Fred Meyer Stores, now owned by Kroger Co., wouldn't be affected because
it plans no new superstores in California spokesman Rob Boley said. The
Portland chain pulled out of California in 1995.
"If (the bill) did pass, it's a positive for the people operating conventional
supermarkets . . . because it's less new competition from warehouse clubs
and supercenters," said Laura Richardson, an analyst with Pacific Crest
Securities in Portland.
Traditional supermarkets have faced increasing from giant stores such
as Wal-Mart, which offer
one-stop shopping with food, hardware and other household goods.
Big-box retailers say that is what motivates the bill, which they noticed
after the state assembly approved it Wednesday. "Some select
business interests decided to concoct their sweetheart deal in the middle
of the night," said Kmart's Apley. "I see it as some of the larger, existing
grocery chains in California that are instigating the legislation."
Although some claim big-boxes kill competition, Wal-Mart's Lin pointed
out that consolidation
among supermarket chains is also limiting competition. "This
bill chills competition in the grocery
arena," she said "We think it takes choice away from the California
consumer." Source: 9/15/99 The Oregonian, by Andy Dworkin. |