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Not in My Backyard

FAYETTEVILLE, ARK. -- Dallas just said no -- to the world's biggest company.<P>Wal-Mart's bid to build an urban SuperCenter near downtown Dallas was derailed on Thursday when the Dallas Plan Commission unanimously rejected the retailer's plans for...

FAYETTEVILLE, ARK. — Dallas just said no — to the world’s biggest company.

This story first appeared in the June 10, 2002 issue of WWD.  Subscribe Today.

Wal-Mart’s bid to build an urban SuperCenter near downtown Dallas was derailed on Thursday when the Dallas Plan Commission unanimously rejected the retailer’s plans for the radical two-story concept store, labeling it an “oversized gorilla.”

It’s a major blow to the retailer, which had ambitions of developing a smaller SuperCenter that would allow it to penetrate downtown areas. These locales are among the last places in which it hasn’t yet made a huge imprint.

A Wal-Mart spokeswoman said the company was “very disappointed” and was still evaluating its options on Friday, including redrawing the blueprints for the project yet another time in an attempt to placate neighbors and salvage the project, and then formally appeal the decision to the Dallas City Council. Overturning the decision requires at least three-fourths of the City Council’s approval.

The blueprint presented to the Plan Commission on Thursday was Wal-Mart’s 13th redraw since it announced the project about six weeks ago.

The defeat was fueled by a powerful grassroots coalition of neighborhood groups that was opposed to Wal-Mart’s mammoth plans to squeeze a 220,000-square-foot store onto an 11-acre tract of land that abuts residential developments. (That’s roughly half the land size of a typical SuperCenter.)

Even though the proposed store was just down the road from the busy and historic Love Field commuter airport, the activists feared that a Wal-Mart SuperCenter would cause massive traffic jams, increase auto accidents and cause overflow traffic to divert through private neighborhoods, increasing crime and endangering pedestrians.

Wal-Mart knew it faced a difficult journey heading into Thursday’s public hearing, which was required to approve necessary zoning and traffic changes before construction could begin on the store, a Spanish-style building with landscaped gardens and an underground parking garage on Mockingbird Lane near Lemmon Avenue and Inwood Road.

So the $218 billion retailer staged a direct-mail and Internet marketing campaign aimed at swaying public sentiment in favor of the store. The chain had fewer than 50 supporters from the Oak Lawn neighborhood at Thursday’s hearing, who wore yellow smiley-face buttons and made impassioned pleas before the 15-member Plan Commission asking that Wal-Mart be granted its wish.

But the Wal-Mart supporters were overwhelmingly outnumbered by several hundred citizens wearing big red or green “No” stickers on their shirts, who in turn blasted Wal-Mart’s ambition and bravado for trying to disrupt their neighborhoods. Several labeled the proposed store a “big box on stilts.”

“As a customer and a shareholder of Wal-Mart, I was appalled and disappointed by their flagrant disregard of a community that they wish to serve,” said Michael Singer, a resident of the tony Greenway Park neighborhood.

“I don’t like the way their corporate brain functions,” Singer said. “It seems to be Wal-Mart’s way or the highway. I think it was very fair of the Plan Commission to hear Wal-Mart out and still have compassion for the neighborhood and side with them. They understood that this neighborhood just doesn’t have the infrastructure to support the scale of this project.”

“The size of the project is absolutely out of control,” blasted Commissioner Bill Blaydes, one of 15 commissioners who each voiced disapproval of the plan, which city planners had estimated would bring between 11,000 and 18,000 additional vehicle trips to the area each day.

“As I see it, this case boils down to crime and traffic,” said Commissioner Neil Emmons, whose district includes the 11-acre site that’s now occupied by a Syms discount store.

Although Wal-Mart brought mountains of paper evidence before the Commission that the retailer claimed proved neighborhoods were in favor of the project by a 10-to-1 margin, it wasn’t enough to sway the commissioners and might even have harmed Wal-Mart’s case when its data-gathering techniques were called into question.

“I want to ask Wal-Mart to write a check to the reforestation fund for all the paper they wasted,” snapped Commissioner Lawrence Wheat, who labeled Wal-Mart’s towering stack of papers “crap” and ceremoniously dumped some of them on the floor.

Despite the proposed store’s stylized facade, formal gardens and unusual layout, some commissioners still blasted Wal-Mart for not making enough modifications to its historically suburban style of retailing. The urban prototype would be the size of nearly five football fields and have a front door that opens onto the sidewalk, instead of a sprawling asphalt parking lot.

“This case is proof how hard it is to take a suburban model and drop it down into a city setting,” said Commissioner David Spence.

Wal-Mart’s blistering defeat on Thursday was slightly assuaged by a festive shareholders’ meeting on Friday morning here. The pep-rally-style meeting drew nearly 17,000 shareholders and company associates, who were treated to a country-and-western concert by crooner Lee Greenwood.

The annual meeting, held at Bud Walton Arena on the University of Arkansas campus, started bright and very early at 6:15 a.m., with a salute to Wal-Mart’s international division, including a parade of country flags.

In fiscal 2002, Wal-Mart International sales grew 10.5 percent to $35.5 billion, while operating income increased 31 percent over the prior year. The division now has 1,186 stores, including 107 new stores opened in fiscal 2002 in multiple retail formats in Brazil, Canada, China, Germany, Mexico, Puerto Rico, South Korea and the U.K., noted John B. Menzer, executive vice president and president and chief executive officer of Wal-Mart International.

Wal-Mart’s overall net sales grew 14 percent in fiscal 2002 to $218 billion, making Wal-Mart the world’s largest company.

“A lot has been said about us becoming the world’s largest company,” noted H. Lee Scott, president and ceo at Wal-Mart. “Our goal was never to be the biggest, but rather to be the best as measured by our stakeholders, who are our customers, our associates, our suppliers, our communities.”

“Fashion is selling well for us, especially the Mary Kate and Ashley collection,” said Claire Walls, senior vice president of product development. “We’re on the trends and seek them out globally, more and better than ever. We travel to places that are design centers. We go to Paris and New York for apparel, to Tokyo for electronics and to California for home. We use color forecasters and trend analysts. Trends drive our new items.”

Wal-Mart’s goal last year was to grow earnings at a rate equal to or better than sales, which it did not achieve in fiscal 2002. Earnings for the total year exceeded $6.6 billion and cash flow from operations was more than $10 billion.

Wal-Mart also didn’t meet its goal last year of having total shareholder return of at least 15 percent, a goal it set five years ago, though its annual compound return since then has averaged 17.9 percent.

The chain spent nearly $8.3 billion last year to build 200 new stores and several new distribution centers. In the U.S., it now operates 1,647 discount stores, 1,066 SuperCenters, 500 Sam’s Clubs and 31 Neighborhood Markets.

This year in the U.S., Wal-Mart plans to open about 50 new Wal-Mart Stores, 185 new SuperCenters, of which 115 will be relocations or expansions, and 20 additional Neighborhood Markets.

The Sam’s Club division plans up to 55 new locales this year, about half of which will be relocations or expansions of existing clubs.

Outside the U.S., Wal-Mart International plans to open 130 new units, including stores, clubs, restaurants, department stores and supermarkets. The International division plans to continue to fine-tune and roll out its greatly expanded and revamped shoe departments, which are racking up high sales.

Additionally, Wal-Mart recently announced that it plans to acquire 35 Supermercado Amigo supermarkets in Puerto Rico. It also plans to purchase 6.1 percent of the stock of The Seiyu Ltd., a Japanese retail chain, as reported. It has the option to increase its stake in the company to up to 66.7 percent over time.

The firm expects to open seven additional distribution centers in fiscal 2003. Total proposed capital expenditures for fiscal 2003 are about $10.2 billion.