CHICAGO -- As Illinois retail leaders consider their options to battle a newly passed Chicago ordinance that sets a $10-an-hour minimum wage for some retailers, the measure seemingly opens the door for neighboring suburbs to court big-box stores such as Wal-Mart and Target.
Indeed, Wal-Mart for the first time has a veteran supermarket executive planted in Chicago, signaling that big changes are ahead, according to a report in the Chicago Tribune.
Michael J. Lewis, president of Wal-Mart's Midwest division, sees millions [image-nocss] of consumers hungry for Wal-Mart's low-priced groceries and envisions operating 40 Supercenters in the Chicago area in the next three years by building new stores and expanding existing stores. Wal-Mart currently has only a handful of Supercenters in the outlying suburbs.
Our share of the market is relatively low in Chicago," said Lewis. "And that's an opportunity for us. We think there's tremendous opportunity to double or even triple our market share in Chicagoland."
That expansion is a threat to Jewel and Dominick's, the Chicago area's two major supermarket chains, where workers are unionized and where prices are generally 15% to 30% higher than those at Wal-Mart.
But it appears the city's living wage ordinance will curtail that growth somewhat.
The Chicago ordinance requires big-box retailers that are 90,000 square feet or more and generate $1 billion in annual sales to pay workers a minimum wage of $10 an hour and $3 in benefits by 2010. It's the first ordinance of its kind in a major city and affects a total of 19 retailers, including Target, Sears, Home Depot and Bloomingdale's.
David Vite, president and CEO of the Illinois Retail Merchants Association, said he will continue to battle the ordinance. Retailers are holding out hope that Mayor Richard Daley will veto the bill. If that doesn't happen, they will file a lawsuit seeking to have the measure declared unconstitutional, he said. "I'm not as disappointed as the thousands of job seekers who would have had an opportunity for employment," Vite told the newspaper. "There are, as it stands, thousands of jobs that are going to be lost."
Supporters of the measure were exultant after the vote was tallied.
"At the heart of this ordinance is equality and fairness," Chicago Federation of Labor president Dennis Gannon said in a statement. "Today's vote sends a message that our elected officials and community members alike are not interested in the creation of low-paying jobs that fail to provide a living wage or adequate health-care benefits for working families.
"The choice between no job and a low-paying job is a choice between bad and worse," Gannon said.
Prior to the Chicago City Council's vote on the living wage ordinance, Lewis said if the bill was approved, Wal-Mart would "put more time and effort in the suburbs," in particular focusing on those close to the city in order to draw shoppers across city lines. "It would stand to reason that we would ring Chicago with Supercenters," Lewis said.
Late Wednesday in a written statement issued after the Chicago vote, Lewis added, "Our preference is to serve the people of Chicago in their communities, and we will do what we can to keep up with significant consumer demand from city residents." The official statement didn't address whether Wal-Mart would carry through with threats to avoid opening stores within the city limits.
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