Wal-Mart Stores Inc. is close to a deal to build a store in the District, a transaction that would bring the world's largest -- and perhaps most controversial -- retailer into the nation's capital, people familiar with the talks said yesterday.
The Bentonville, Ark.-based chain is negotiating with developers to build a 100,000-square-foot store at the Rhode Island Place shopping center in the Brentwood neighborhood of Northeast Washington, these people said.
Proponents said the discount chain would create hundreds of jobs, generate higher tax revenue and provide residents with lower-priced merchandise that they already purchase outside the city. Critics, however, assail the chain, saying it pays low wages, hobbles its unionized competitors and destroys small businesses.
The proposed site, near the Rhode Island Avenue Metro stop, already contains a Giant Food supermarket and the District's only Home Depot hardware store. Wal-Mart would go on a site originally planned as a Kmart store, a project that was scuttled when the chain filed for bankruptcy in 2002.
Barry F. Scher, a vice president at Giant Food LLC, said the grocer has been notified by its landlords that they are "trying to finalize" a lease agreement with Wal-Mart. Two people with direct knowledge of the negotiations, who refused to be identified because the deal is not yet done, said an agreement could come within weeks but still faces several hurdles and could fall apart in final talks.
Senior executives of Wal-Mart have not yet given the project their final approval, and the company must obtain building permits from the city to build its store. If a lease is signed and permits issued, construction could move quickly because the land is already zoned for retail development and is physically prepared for construction.
The store would be a conventional Wal-Mart, not one of its supercenters -- the 145,000- to 210,000-square-foot stores that include full grocery operations and thus compete directly with unionized supermarkets like Giant and Safeway.
Mia T. Masten, a Wal-Mart spokeswoman, declined to comment on the negotiations. "Wal-Mart is interested in becoming part of the Washington market," she said.
Executives of Graimark/Walker Urban Development LLC and Mid-City Urban LLC, the developers that control the project, did not return calls yesterday seeking comment. A spokesman for the District's economic development office said the city has been marketing the site to retailers but declined to comment on the possibility of a Wal-Mart.
A store in the District would be the latest step in Wal-Mart's expansion into America's cities, which had largely been passed over in the company's remarkable growth from a small chain in Arkansas to an international retail behemoth. Urban locations, with their expensive real estate, complicated zoning restrictions and often strong labor unions, have been one of Wal-Mart's last frontiers as it seeks an ever larger share of America's shopping dollars.
Wal-Mart has just one store each in Los Angeles, Chicago and Philadelphia, according to Deutsche Bank AG. It has none in New York City. "It's an untapped market for them," said Bill Dreher, an analyst at Deutsche Bank Securities Inc., a New York brokerage house. "They need a place to grow."
In some large cities, Wal-Mart's efforts to build stores inside city limits have encountered fierce opposition from unions, community groups and small businesses. The Los Angeles City Council has given preliminary approval to and plans to vote today on an ordinance that would make it difficult for Wal-Mart and its competitors to open supercenters within Los Angeles city limits. In response to the attacks, Wal-Mart has spent millions of dollars to lobby city councils and residents of places such as Los Angeles and Chicago.
Until four years ago, the 23-acre Brentwood site was a derelict lot for impounded cars surrounded largely by townhouses and apartment buildings inhabited by middle-class and poor residents. City officials cited its development into a bustling retail center as one of their top achievements in the pursuit of retail in the District. Its Home Depot draws shoppers from all parts of the District and from nearby Prince George's County, according to city officials.
Wal-Mart already has 27 stores in the Washington region, all of them outside the Capital Beltway. Those stores collected about $442 million in revenue in 2004, up 17 percent from 2003, according to Food World, a Baltimore trade publication. Target Corp., another big-box store and major Wal-Mart competitor, also plans a store in the District, on a new development in Columbia Heights. Under Giant's lease for the Brentwood land, no other tenant on the space can devote large percentages of their stores to groceries, meaning that a Wal-Mart would have to focus on general merchandise instead of food.
To supporters of a Wal-Mart in the District, the store would add discount shopping and help keep millions of D.C. residents' dollars from flowing to the suburbs. "We need this kind of store in the city so that District residents do not have to do their shopping in Virginia or Maryland," said Gregory H. Leisch, chief executive of Delta Associates, an Alexandria-based real estate research firms. "It's a win for the District."
"It would be a great addition to the Brentwood retail complex," said D.C. Council member Vincent B. Orange Sr. (D-Ward 5), who represents the surrounding area. "It will be a place where, once again, consumers in Ward 5 will be able to shop at discounted prices."
Others argue that whatever benefits Wal-Mart offers in the way of low prices are canceled out by other corporate practices.
"The community does not want a Wal-Mart," said Dominic Moulden, executive director of Manna Community Development Corp., who called the company's business model "immoral." The outfit was part of the development team on the site but backed out earlier this summer when it learned discussions were underway with Wal-Mart.
Manna, a nonprofit group that works to develop long-depressed D.C. neighborhoods, is worried that a Wal-Mart would drag down wages in the neighborhood and drive smaller, locally owned stores out of business. "We think it's wiser to hold out for a better company," Moulden said.
For unions, the arrival of Wal-Mart in the District could have a symbolic as well as practical impact. The District-based United Food and Commercial Workers union, which represents grocery workers, has blamed Wal-Mart for the loss of thousands of member jobs.
"This is not an employer you want anywhere, particularly in the nation's capital," said C. James Lowthers, president of the union's Washington area chapter.
Staff writer Margaret Webb Pressler contributed to this report.