Retail

Walmart's Toehold in NYC Is Nothing Short of Revolutionary

Paul Ausick

Published: October 4, 2017 10:00 am

Last Updated: January 12, 2020 7:32 am

Wal-Mart Stores Inc. (NYSE: WMT) has had little success in trying to open stores in some of the largest U.S. cities. In 2014, the company had no stores in New York City, San Francisco, Detroit, Seattle or Boston. It still doesn’t.

In an end-run around city councils and voters, Walmart announced Tuesday that it had acquired a New York City grocery and meal-kit delivery service called Parcel. The company did not disclose how much it paid for Parcel except to say that it paid less than other acquisitions made this year.

Walmart said it intends to “leverage Parcel for last mile delivery to customers in New York City — including same-day delivery — for both general merchandise as well as fresh and frozen groceries from Walmart and Jet.”

“General merchandise,” as in all the stuff Walmart sells in its supercenter stores? This is a revolutionary idea. The question now is whether Walmart can operate a virtual supercenter in the country’s largest city and skirt all the outcry the company gets when it tries to build a brick-and-mortar store in large U.S. cities.

We examined some of the reasons Walmart was not able to build stores in some cities back in 2014. They range from union opposition, reluctant city councils and vocal voter opposition. In fact, New York City even sent a letter to the company requesting that Walmart stop making charitable contributions in the city. That was harsh.

The immediate focus of Walmart’s latest acquisition is on the company’s battle with Amazon.com Inc. (NASDAQ: AMZN). And there are plenty of good reasons for Walmart to fight back against Amazon/Whole Foods and Amazon’s entry into the brick-and-mortar realm that NYC has so determinedly banned Walmart from entering.

But can New York ban Walmart from owning distribution centers outside (or inside) the city from which deliveries are made? Can unions win protests against opening warehouses outside the unions’ spheres of influence in large U.S. cities? Doesn’t seem likely to us.