Falling sales-tax revenues. An onslaught of vacant storefronts. When your state economy is based on growth, and the national economy goes in the tank, these are the dangers. According to yesterday’s Arizona Republic:

By late next year, more than 75 stores are expected to close, resulting in a loss of nearly 2,000 Arizona retail jobs. The turnover likely will offer shoppers bargains at various going-out-of-business sales and could eventually inspire an influx of newer, trendier stores. But the closures also have city officials scrambling to cover revenue shortfalls and deter commercial blight.

While Wal-Mart may be able to absorb the cost of closed stores and their leases, cities and towns are left dealing with empty buildings that can lead to a rise in crime and vandalism, the lowering of property values, and depressed sales for neighboring retailers when the closed store is the anchor for a strip mall. And for states like Arizona, a drop in sales tax revenue. The Institute for Local Self-Reliance has pointed out that some cities, such as Oakdale, California, or Wauwatosa, Wisconsin, require retail developers set aside money that can be used by the city to either demolish or maintain the site should the store or shopping center become vacant.

Some cities, like Mesa, Arizona, aren’t so lucky.

The shell of a former Walmart sits 2 miles from a Kmart that will close in January. A Mervyn’s and Circuit City will soon depart the area. Such losses this year contributed to Mesa’s $62 million budget shortfall. The city announced 315 layoffs last month.

Cities try to cope with shortfalls in sales taxes, blight left by shut stores [Arizona Republic]

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Check out this week’s issue of the Wal-Mart Watch Weekly Update for Elected Officials – a compilation of Wal-Mart news from across the country and beyond.

This week’s issue begins on Wal-Mart and the economy, and whether Wal-Mart sales statistics can be used as a new barometer for the U.S. economy. You’ll also find stories on changes in shopper behavior, now that consumers are faced with less disposable income. And, you’ll find stories on Wal-Mart’s slowed growth, and the switch to smaller store formats by retailers across the country.

In addition to the economy, you’ll find stories related to next week’s election. Barack Obama highlighted the story of a 72-year-old man forced to go back to work for Wal-Mart in his half-hour special this past Wednesday night. Meanwhile, according to Reuters Wal-Mart vows to remain non-partisan in the 2008 election season, while the Financial Times reports on the candidates attempting to woo the so-called “Wal-Mart Moms.” Plus, there are suspicions that Wal-Mart is behind a new grassroots group recently set up to fight the Employee Free Choice Act, as reported in The National Journal.

Also: Find out whether a Wal-Mart case in Montana could lead to changes in that state’s campaign finance law.

And finally, check out our “Stateside” and “Wal-Mart International” sections to find out what’s going on with Wal-Mart around the country and across the globe. A California ballot measure could lead to increased demand for more humane animal products, while citizens in Virginia continue to fight Wal-Mart’s attempt to build near an historic Civil War battlefield.

Wal-Mart Watch Weekly Update for Elected Officials [October 31, 2008]

The biggest oil company in the world and the biggest retailer in the world are loving life as the economy sinks.

Wal-Mart stock has risen 20% since the start of the fiscal year. Exxon Mobile just posted the largest quarterly earnings in American history- to the tune of 14.83 billion dollars.  The recession has done wonders for both companies; the volatile price of oil, puts Exxon Mobile in the position to capitalize on futures from supply-wary market analysts, while Wal-Mart continues to post double-digit profits because of the high number of price-conscious consumers who are forced to trade down - even if it’s against their will.

Many more-upscale retailers, such as Target, are not doing quite as well during the recession.  BusinessWeek reports that looking at the most recent quarter over the past year, Wal-Mart’s same store sales are up 5% while Target’s are down 0.4% and K-Mart’s are down 5.6%.

But these days are numbered. Wal-Mart knows that the recession won’t last forever. This week, they unveiled plans to focus more on renovating existing stores next year than opening new stores. Wal-Mart realizes that when the economy turns up again, many of its new customers will want to shop elsewhere - and they’re trying to stop it. The question is: will it work?

Wal-Mart Wins Big During Downturn [BusinessWeek]

These are heady times for Wal-Mart (WMT). The Bentonville (Ark.) retailer has been enjoying double-digit profit growth and strong sales as bargain hunters crowd its aisles. Its stock is up about 20% since the start of the year. And shoppers like Sal Garcia of Downey, Calif., are joining the growing ranks of loyal customers. “Look,” says Garcia, 52, putting the last of 10 shopping bags into the trunk of his Lexus, “all that for $54!”

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FOR IMMEDIATE RELEASE

Contact: Stacie Lock Temple, 202.557.7482 or 202.739.1020; Al Norman, 978.502.3794

Date: Wednesday, October 29, 2008

Wal-Mart Watch and Sprawl-Busters Declare Victory as Wal-Mart Slows Growth

Americans across the country are defeating Wal-Mart’s super-sized plans for their communities in record numbers

Washington, D.C. - Wal-Mart Watch and Sprawl-Busters today declared a victory as Wal-Mart announced plans to slow its growth in the U.S. and focus its business on existing stores. While the company claims a weak economy is the reason for reducing capital expenditures, Wal-Mart Watch and Sprawl-Busters also cite increasing opposition from local communities – which have fought and defeated Wal-Mart plans in record numbers this year – as another impetus for the change.

From big cities to rural townships, communities across the country have rejected Wal-Mart. Chicago may have been the most high profile defeat for Wal-Mart when in May of this year the city ended talks with the company once and for all after it refused to budge on its low-wage, low-benefit policy for employees.

In Monsey, New York, a local orthodox Jewish population made national headlines when they fought and defeated a proposed Wal-Mart to preserve their local business and small-town way of life. Only a week ago, Cordova, Tennessee rejected a controversial Wal-Mart plan after hundreds of residents spoke out against the traffic and other problems that the store would bring to their community.

Sprawl-Busters, an organization led by Al Norman, the nation’s leading guru on fighting Wal-Mart, estimates that three out of every five new Wal-Marts run into forceful citizen opposition. Sprawl-Busters has counted over 80 Wal-Mart projects that have either been defeated by citizens or abandoned by the company since February 1, 2008, the highest annual number of lost projects in the history of Wal-Mart.

“Wal-Mart has built far too many stores already, and is cannibalizing its own sales,” said Sprawl-Busters’ Al Norman. “Communities across the country are standing up to – and winning – against Wal-Mart and its high-priced lawyers. Ten years ago, Wal-Mart was waltzing in anywhere it wanted, but not anymore.”

On Tuesday, Wal-Mart not only announced plans to slow growth, but also to grow with smaller stores.  The company’s new Marketside stores, recently launched in Phoenix, Arizona, are about one tenth the size of a supercenter and – perhaps intentionally - don’t include any mention of the Wal-Mart name. The company said it plans to open 166 new U.S. stores in fiscal year 2009 and between 125 and 144 in fiscal year 2010. Those numbers, while still high, are significantly down from several years ago when the company was opening over 300 new stores a year.

“That Wal-Mart was forced to slow growth and focus on its current stores should be celebrated as a small victory for communities across the country,” said Wal-Mart Watch Executive Director David Nassar. “This will be a good time for America to catch its breath and start to have a conversation about whether the low-wage, low-benefit Wal-Mart model is really the type of economic growth the country needs.”

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Apparently, the highly-publicized annual Wal-Mart analyst’s meeting served a purpose other than announcing that Wal-Mart plans to: scale-down domestic expansion, improve existing stores, and embark on foreign conquest.  They also announced a new venture from Sam’s Club, slated to debut in Houston next year. It is a new club-format store, geared toward Hispanics, creatively titled: Más Club ("More Club” in Spanish. They could name every Sam’s this, no?).

The clubs will feature an expanded selection of Hispanic foods and products produced in Mexico and Latin America.  The Houston Chronicle reports that the Selig Center for Economic Growth at the University of Georgia, has estimated that the Hispanic population will account for 1.2 trillion dollars of spending power by 2012 - and Sam’s Club wants a piece of the action. 

The store looks to drape itself Hispanic culture, featuring a cafe that sells ‘fresh’ tortillas (sounds delicious) and branding itself in the red, green and white of Mexican flag. Doug McMillon, president and CEO of Sam’s Club is quoted in Reuters:

“Our objective is to create an additional shopping choice that provides currently unavailable value for families, restaurant owners, convenience stores and more...”

McMillon chose not to discuss Mas Club’s suppliers. Given that it will be carrying mostly Hispanic products, “Mas Club” might actually break a new Wal-Mart record for percentage of products not made in the U.S.  But Latin American suppliers beware. Wal-Mart Stores, Inc. is notorious for bullying down their suppliers to sell products at a price they can barely afford (Vlasic, Levis). 

While the first store is to serve as a prototype, The Northwest Arkansas Morning News said McMillon is ”pumped” about the new chain, which will also feature gas stations…

Lee Scott and Eduardo Castro-Wright have spent the past two days in New York City, detailing Wal-Mart’s business plan to financial analysts. There’s a lot to run down here, but the big (and good) news: less new Wal-Marts. The company is continuing to cut down on capital expenditures and build less stores, focusing instead on remodeling and driving up sales at its current stores.

AP:

As a result, capital expenditures will come in at $5.8 billion to $6.4 billion for fiscal 2009 and $6.3 billion to $6.8 billion in fiscal 2010. That’s down from the $9.1 billion the company had in capital expenditures in its last fiscal year.

The Wall Street Journal tells us what that means in terms of store numbers.

Mr. Castro-Wright also said the discount retailer plans to open 142 to 157 new U.S. stores in the fiscal year ending January 2010, down from an earlier projection of 165.

150 stores is still a heck of a lot, but any decrease is a good thing. Remember that growth in 2008 had dropped from 2007, and that only several years ago Wal-Mart was opening 300+ new stores a year.

Some other tidbits from the analyst meeting below the jump-

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Allegations of campaign violations are rising in the Big Sky State, and a recently-released decision on a 2006 complaint might lead to changes in Montana’s campaign finance law.

Complaints of violations flowing in at the rate of about 30 per day to the state’s Commissioner or Political Practices, have of which are coming from Ravalli County in southwestern Montana. According to the Ravalli Republic:

The state’s most pressing investigation in Ravalli County concerns the Higher Ground Foundation, a nonprofit group that is urging voters to repeal the county’s growth policy in an effort to prevent zoning and streamside setback regulations from being adopted later.

The group formed as an “incidental committee,” which are defined as a group that makes political contributions but whose primary purpose isn’t to influence elections. But it has become clear to many that Higher Ground has a higher purpose than simply contributing funds, and is instead directly promoting the repeal of the county’s growth policy. Complainants are urging the state to force the group disclose the sources of its funding, and its expenditures.

So how does this tie into Wal-Mart? Well, just over a week ago, Montana Commissioner of Political Practices Dennis Unsworth released his opinion regarding a 2006 complaint against a group called Ravalli County Citizens for Free Enterprise. The group supported construction of a Wal-Mart Supercenter and the successful repeal of a zoning ordinance that blocked big-box stores. Unsworth ruled that RCCFE was nothing more than a Wal-Mart front-group that violated financial reporting and record-keeping laws. He said that Wal-Mart appeared to have bought a campaign in order to influence an election, and that the case could lead to Third party campaigning is growing in the state [The Missoulian]” title="changes in Montana’s campaign finance disclosure laws">changes in Montana’s campaign finance disclosure laws. It turned out that only $90 of the PAC’s money came from local residents, whereas $115,000 came from Wal-Mart.

“It’s absolutely critical,” Unsworth said, “that voters know who’s behind these groups, in order to make informed decisions.”

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