Wal-Mart (NYSE: WMT) is having some trouble with its supersized Supercenter concept, with high-profile difficulty brewing in California. Voting is under way today for several communities there that are attempting to block entry of the superscaled version of the discount store, according to USA Today.
Among the concerns cited in the article include Wal-Mart's tendency to open smaller stores, then shutter those to build Supercenters close by, leaving empty shells in communities. The retailer is also facing increasingly bitter public attention for its tendency to wipe out smaller retailers, including mom-and-pop shops.
On the other side of the coin, though, is the idea that low-income consumers need venues like Wal-Mart in order to keep house on a shoestring. Not only does Wal-Mart offer jobs and low-priced merchandise, its Supercenters tend to drive down prices of groceries in the markets they enter.
If California remains largely closed to the retailer, it's a lucrative market to miss. Beyond that state, USA Today points to the increasing number of communities across the country that are balking at the idea of Wal-Mart Supercenters plunking down in their backyards. Frustration with suburban sprawl, traffic problems, and overzealous development are all well-known issues, so it's hardly surprising that a Wal-Mart backlash would eventually become more serious as it seemingly moves into every neighborhood.
Retailers like rival Target (NYSE: TGT), as well as venues like Costco (Nasdaq: COST), BJ's Wholesale Club (NYSE: BJ), Best Buy (NYSE: BBY), Home Depot (NYSE: HD), and others, may snap up prime real estate, but they don't get nearly the same amount of heat on these issues as Wal-Mart does. But then again, the size of many Wal-Mart Supercenters puts the square footage of those retailers to shame.
California's backlash is a trend investors need to watch when contemplating Wal-Mart's future, as the Supercenter concept has served it well. Dialogue about the company is becoming more political, with an increasingly negative eye toward some of its business practices -- even with the strange contradiction that it was deemed one of this year's most admired corporations in America. However, even if a kinder, gentler Wal-Mart emerges from all the recent public scrutiny, the company's also well established as a survivor and an innovator. This gives Wal-Mart one more way to prove its mettle.
Do these developments sound foreboding for Wal-Mart's growth? Talk it over with other Fools on the Wal-Mart discussion board.
Alyce Lomax does not own shares of any companies mentioned.
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