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Putting on the Brakes

By Michael Barbaro
Washington Post Staff Writer
Monday, May 23, 2005

At first glance, the numbers seem arbitrary.

Legislation before the D.C. Council would ban new stores with more than 80,000 square feet that devote 15 percent of their space to food and other nontaxable merchandise.

A bill passed by the Maryland General Assembly would require companies with more than 10,000 employees to spend 8 percent of payroll on health care.

A zoning rule approved in Montgomery County restricts the location of outlets larger than 120,000 square feet with a full-service grocery and pharmacy.

But behind the hodgepodge of figures is a very specific goal: Keeping out Wal-Mart Stores Inc. As the discount giant shifts its focus from the Washington region's fast-growing fringes to its dense urban center, it has become locked in a bitter behind-the-scenes struggle with the local unionized grocery industry, which is scrambling to erect legislative barriers to the chain's growth.

The fight is taking on national significance. Wal-Mart, which has conquered rural America with more than 3,000 stores, desperately needs to break into the urban market to maintain its phenomenal growth. So far, it has been rebuffed in Chicago, New York and Los Angeles, and the retailer views Washington as an important frontier for expansion.

The Bentonville, Ark., company has already made strong inroads here. Since its arrival in the region 13 years ago, Wal-Mart has quietly planted 147 stores in Maryland and Virginia, including 32 in the greater Washington area. It is now the No. 1 private employer in Virginia and one of the top 10 in Maryland, with 52,000 workers in both states.

But the company has succeeded in such places as Prince Frederick and La Plata in Maryland, and Warrenton and Burke in Virginia, far from the region's center.

Company Labor Costs: Average Amount Spent for each full-time employee in the region by Giant, Safeway and Wal-Mart
Across the area, big-box stores are facing growing resistance from communities worried about increased traffic and environmental impact. But Wal-Mart's inability to open a store in the inner suburbs is unique. Both Home Depot and Best Buy have stores inside the Beltway and the District. And Target, Wal-Mart's closest competitor, has seven stores inside the Capital Beltway. Its first location in the District is scheduled to open in 2007. "We'd like to be a part of that success," said Mia Masten, Wal-Mart's head of corporate affairs for the East Coast.

Although Target, Home Depot and Best Buy have no union, and Target is moving into the grocery business, local unions are giving those chains a pass to focus their energies, and cash, on a single foe.

"Wal-Mart is the biggest threat to our members' way of life," said C. James Lowthers, president of United Food and Commercial Workers Local 400, which represents local grocery workers at Giant, Safeway and Shoppers Food Warehouse.

Local unionized grocery chains, which dominate the area's closer-in suburbs, fear they cannot compete with Wal-Mart's rock-bottom prices, technology-driven efficiencies and cheaper, non-union labor force. Wal-Mart is now the nation's largest food seller, and although it operates few of its full supermarket formats in the Washington area, the chain says it wants to build the more profitable stores wherever possible.


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