Special Sections : Walmart

Wednesday, May 11 2011 02:44 PM

Walmart environment report 'worst case:' grocery store, Kmart may go out of business

The Draft Environmental Impact Report on the planned 165,000-square-foot Tehachapi Walmart Supercenter acknowledges that the retail establishment will bring economic hardship upon some existing stores.

The Supercenter, which includes 34,293 square feet for grocery sales, may draw away so much business from Albertson's and Save Mart that one will go under, said the report, prepared for the city by the Natelson Dale Group, Inc., of Yorba Linda, Calif.

“The Walmart grocery component will potentially cause one of the existing supermarkets in Tehachapi to close,” the report states. 

Tehachapi's Kmart also is likely to close, not as a result of competition from Walmart, according to the report, but because the chain of Sears-owned stores has been badly managed on the corporate level.

“(T)he existing Tehachapi Kmart store is likely to be vulnerable to new competition,” the report said. “This vulnerability primarily stems from the well-known financial weaknesses of the Kmart chain and is not specifically an impact of the proposed project or an indication of insufficient market support for new GAFO (general merchandise) stores in Tehachapi.”

The report concludes that the proposed Walmart would not have substantial economic impacts on existing restaurants in the trade area, which is a circle with a 15-mile radius from the proposed store site on Tucker Road.

Existing drug stores, the report says, should be OK and not face closure. The new Walmart will feature a drive-through pharmacy.

Walmart disagrees

“We disagree with the finding of the EIR when it comes to store closures,” said Walmart Senior Manager for Public Affairs Amelia Neufeld, speaking from Sacramento. 

“Studies have shown that the presence of Walmart provides positive economic benefits to the cities, the local economy and to neighboring businesses,” she said.

Neufeld said the store will create 300 new jobs, “the majority of them full-time.”

“Our full-and part-time associates have access to health and dental, 401Ks, profit sharing and also a discount card,” she said.

“We are excited to be able to bring new jobs, tax revenue and one-stop shopping to Tehachapi.”

The local store managers of Albertsons, Save Mart and Kmart referred questions about the planned Walmart to their respective corporate offices.

“Retailing is a competitive business,” said Kimberly Freely, spokesperson for Chicago-based Sears Holding Company, which owns Kmart. “We are always in proximity to each other (Walmart and Kmart).”

She said that Kmart “has its own brands and different labels” that loyal customers seek out.

Kmart, Freely said, does not comment on statements made by a third party on the company's future growth.

“We don't comment on our competition,” said Lilia Rodriguez, external communications manager of Fullerton-based Albertson's. “We keep focused on what we have to do for our customers every day.”

“We encounter new competition all the time,” said Save Mart Supermarkets Director of Public Affairs Alicia Rockwell in Modesto. “A Supercenter Walmart is a significant competitor.”

“We will continue to do the things we do best, serving the Tehachapi community. We are hopeful they will continue to support our business.”

She said Save Mart operates successfully in areas where there are Supercenter Walmarts.
Local reaction

Tehachapi small business owners are not quite as subdued in their reaction to the looming retail giant.

The effect of Walmart's arrival will be “drastic,” said Radio Shack owner Ted Kitzmiller.

“You'll see a lot of empty buildings. It will have a big impact on business in this town,” he said.

“Radio Shacks have survived Walmart but they really put a dent in business. They ran the one in Ridgecrest out.”

On the other hand, “The people of Ojai fought and kept Walmart out,” he said.

It's probably a done deal, Kitzmiller said.

“Kmart will be gone. Kmart has been great for the town.”

Marie Curiel, owner of M&M's Sports uniform and embroidery store, sees the upside and the downside of the Walmart.

“What we love and why we're all here is the small community,” Curiel said. 

A big Walmart would make shopping more convenient, she said, and “We need the sales tax revenues. We're kind of confused.”

(The city estimates the annual tax revenue may be $500,000).

“Yeah, it's going to kill us, like a lot of businesses in town,” said R.J. Butch Hearn, owner of Southern Shooters Supply on East F Street downtown. 

“We're still trying to decide what we're going to do. Walmart is the kiss of death for any small business in a small community. Look at the drug stores, the grocery stores, Radio Shack. They're (Walmart) going to undercut us all.”

Urban decay

The report preparers, following the California Environmental Quality Act requirements regarding urban decay, appeared more concerned with the potential impact of empty buildings in the community than in the businesses that might be killed off in a competitive slugfest.

If a business goes under and the building deteriorates, the Act considers the urban blight created by that empty building a significant impact, “but not the substantial economic effect and ensuing chain of events that caused it.”

The report concluded that closure of one of Tehachapi's supermarkets and Kmart would not result in urban decay, asserting that there is enough demand for retail space to “support reuse of any vacated space.”

The Economic Impact/Urban Decay Study is but a fraction of the report, which also includes analyses of and mitigation proposals for traffic, cultural elements, law enforcement, air pollution, energy efficiency, waste, employment, lighting, air quality, noise, drainage and more.

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