When Wal-Mart Comes to Town

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Bob Reny, like any entrepreneur, loves to turn a buck. But he also has a thing about stores' being open on Sunday. To him, Sunday is for church, rest, and family -- not to mention ice fishing and berry picking. For 28 years Reny had successfully fought the repeal of state blue laws that denied major stores Sunday hours. Says Reny, "I believed that if you rescinded those blue laws, you would irrevocably change the face of Maine." Finally, two years ago, Reny lost the blue-law battle when his opponents, backed by $600,000 from large retailing interests, won a referendum by only two percentage points, having outspent Reny's side 12 to 1.

Earlier, on the New Hampshire side of the border, Wal-Mart had built a distribution center and readied to open up in Maine, if and only if the state's blue laws were rescinded. Bob Reny says that 100,000 Mainers work in retailing, "and a lot of those people have families. Now some of them will have to work on Sundays." He notes that this puts the squeeze not only on people working for large retailers who can afford to pay their employees time and a half to work on Sundays but also on small retailers like him who are forced to keep pace.

The repeal of the blue laws was the first example of the muscle large interests like Wal-Mart could bring to bear when they entered a market. The second occurred in Augusta, the state capital, when the legislature voted to allow the newly built Augusta Mall -- to be anchored by a Wal-Mart -- to use $7 million in sales-tax receipts it generated for improvements specifically around the mall. Reny was fighting that measure until he went away one weekend -- and it was summarily passed. He considers such a tax break outrageous, since it uses public dollars to give further advantage to the mall against downtown merchants, who are already reeling from the flight of business to the mall.

In November 1992 Wal-Mart opened its second Maine store, in Rockland, 45 miles north of Bath. In one week it received 2,800 applications for work and hired 200 people. Some left their existing jobs to work for Wal-Mart, believing it would offer steadier employment. After the Christmas rush ended, the store laid off some newly hired workers. In December, the Rockland Wal-Mart's first full month of operation, Rockland showed a 55% gain in retail sales. The four surrounding towns showed declines ranging from 6% to 17%.

Some of that big gain could doubtless be chalked up to initial curiosity about the new Wal-Mart store, but it also pointed out the two-edged sword that Wal-Mart represented. Wal-Mart, in industry jargon, had "pulling power." It also stanched "leakage." Before Wal-Mart arrived, Rockland's leakage rate was about 50%. The city lost half its retail business to neighboring towns: for every $1 Rockland consumers spent in Rockland, they spent another $1 somewhere else. And that spoke directly to the quandary Wal-Mart created for small towns wherever it went.

If your town doesn't attract a Wal-Mart, then a neighboring town might, translating into increased trade and tax revenues for your neighbor -- and less for you. Your neighbor's pulling power creates your leakage. That was the problem faced by Amy Naylor, the town planner in Brunswick, when Wal-Mart bought property in Cook's Corner, an area about two miles east of Brunswick and four miles west of Bath. Recalls Naylor, "We had just finished a townwide plan that really brought home citizens' desire to create neighborhoods, keep the town livable, and have a human scale. That came over clearly."

Wal-Mart entered on the heels of that debate. "People were knocking on my door for two weeks, asking, 'How can Wal-Mart come in after we've just been through this process? This is not what we want,' " Naylor says.

She was leery of Wal-Mart's site plan. "I tried to call Wal-Mart and see if its people would come up and talk to us about it," she recalls. "They wouldn't set foot in the state until they had gotten all the approvals." In other words, Wal-Mart's message to Naylor was, Talk to our hired guns in Maine.

Second, she worried that Wal-Mart would accelerate the drift of business out of downtown Brunswick to Cook's Corner, where a new courthouse complex, a hospital, and a new mall were going in, creating what Naylor called an "economic vortex." "Wal-Mart is not going to generate new sales," says Naylor. "It's going to earn its money from existing stores. It's not providing great jobs with a future. Wal-Mart will not do its banking in Brunswick or in Maine. We are a colony market to it. It will use our consumers and our labor as its raw material, and everything except the low wages and the tax revenues it provides will be pumped out of state."

Yet no matter what Naylor thought, she had little choice, as the issue boiled down to the realities of pulling power and leakage. "If I had gone to my town manager and said, 'We have to stop Wal-Mart because these are low-income jobs, Wal-Mart does all its banking out of state, and it will put a real strain on services,' I'd be told, 'It's 200 jobs, we'll get tax revenues, and if we don't take Wal-Mart, Bath will.' I couldn't go to the town council and say, 'I lost Wal-Mart.' If I did, I'd be out of a job."

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