Sunday, January 17, 2016

Wow, who could have seen this coming?

In a shocking shocker of a shocking move that left city officials shocked, Walmart has announced that it will not be opening two planned stores in the District of Columbia. The decision to not open the two stores, planned for poor, mostly black neighborhoods east of the Anacostia River, was because of hgher-than-expected operating costs for the retailer's existing three stores in the District as well as lower-than-expected revenues at those stores. That's what Walmart officials said in public, at least. In private, they were more forthcoming, District Council Member Jack Evans said:
Evans said that, behind closed doors, Walmart officials were more frank about the reasons the company was downsizing. He said the company cited the District’s rising minimum wage, now at $11.50 an hour and possibly going to $15 an hour if a proposed ballot measure is successful in November. He also said a proposal for legislation requiring D.C. employers to pay into a fund for family and medical leave for employees, and another effort to require a minimum amount of hours for hourly workers were compounding costs and concerns for the retailer.
The District keeps piling extra costs and burdens on businesses in the District and then wonders why businesses that have a choice choose not to open or expand in the District. It's not the world's most lucrative market, apparently, as much of the population looks down its nose at the oh-so-plebian Walmart, much of the hyper-left population is more likely to picket Walmart for its refusal to give in to labor unions, and much of the rest of the population is too poor to spend a lot of money at Walmart, even if they do all their shopping there.

The two stores Walmart is cancelling were set to go up in the Skyland and Capital Gateway neighborhoods, both poor black neighborhoods east of the Anacostia River that have been referred to as "food deserts" because of their lack of grocery stores. Grocery stores won't open there for the reasons cited by Walmart and because of one that Walmart doesn't mention: shoplifting. No low-margin business that relies on sales volume to drive profits can survive in a high-shoplifting environment. It's no surprise that Walmart built its stores in the more upscale neighborhoods first: if they couldn't make money there, there would be no point in even trying to do so in the poorer neighborhoods. The District, of course, blithely moves ahead with its anti-business proposals -- the minimum-wage hike is likely to pass, and no one is betting that the family leave and minimum-hours proposals won't pass, as well.

DC officials might be surprised and angry that Walmart is backing away from previously planned expansions, but will they also be surprised when other businesses are forced to cut jobs, relocate or close because the the District's virulently anti-business policies? Yeah, they probably will.

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