As Walmart pulls back, businesses and neighborhoods need to talk

Sometimes, it feels like the fair city most of us profess to love can’t catch a break.

It was April 11 when Chicago got the news it would host the Democratic National Convention in 2024, a civic win whose great value is more as a showpiece than a moneymaker.

But the news broke almost simultaneously that Walmart, citing escalating losses, would close four stores in Chicago, three in retail- and grocery-starved sections of the South and West sides. The next weekend, youth-led violence returned to the Loop.

The Walmart retreat follows other big chains that ventured into mostly Black and Hispanic areas here in recent years. Aldi, Target and Whole Foods come to mind. When it happens, there’s a certain repetitiveness to the fallout. Residents express shock and anger. Retailers express regrets, maybe, but shed little light on internal thinking or financial results.

As these communications go, Walmart’s missive was better than most, describing a yearslong effort to improve the stores. But losses mounted, Walmart said, and it warned its four remaining Chicago stores are unprofitable but perhaps still can be saved.

The attempt at candor just left some wondering why the retailer didn’t ask for help some time ago. “It makes me very sad that the retailers can’t figure it out and don’t invite the community to help them figure it out,” Nedra Sims Fears, executive director of the Greater Chatham Initiative, told the Chicago Sun-Times.

There’s a disconnect here, and businesses and communities need to stretch their thinking to fix it.

For businesses, it starts with communication, something difficult for organizations used to secrecy and silos. Within companies, “the real estate decision-makers are often different from the operational decision-makers,” said Zeb McLaurin, CEO of McLaurin Development Partners. Although he’s one of Chicago’s busiest Black developers, he said he’s had a hard time understanding their different priorities.

Mitchell Armentrout/Sun-Times file

McLaurin said large retailers often have management that’s too remote and too slow to adjust product lines. There’s certainly demand on the South and West sides, but McLaurin said having deep local connections is better than controlling the sites from afar.

He said withdrawal of major chains creates opportunities for smaller competitors or recent startups. McLaurin cited Pete’s Fresh Market, Living Fresh Market, 40 Acres Fresh Market and Momentum Coffee as promising.

Bigger companies can get it right, though. McLaurin brought Starbucks to 71^st Street and Stony Island Avenue, a pioneering move in 2004. He said the chain is thriving there.

Some cite as an investment deterrent the damage to the South Side from the 2020 riots after George Floyd’s murder. But McLaurin pointed out that almost all the looted locations reopened.

No matter the location, product selection is key. One analyst said when Target opened in the former Carson’s on State Street, managers had to learn they can’t sell giant packs of toilet paper or 40-pound bags of dog food to people taking the bus home.

One of the best developments on the South Side of late has been the call center for Discover Financial Services in Chatham. It opened in 2022 and now employs 500 people. CEO Roger Hochschild put it there, he said, to help the disadvantaged but also to be where Discover could become an employer of choice.

The result, according to Hochschild, is that the call center does fine in all performance metrics, except one where it clearly tops others: a low attrition rate.

It’s not a retail store, but some of the challenges are similar. Hochschild said Discover worked as a partner with community groups to recruit and train people. For other executives considering such a move, Hochschild said, “Be bold. Work with the community. Make sure you’re invited in. But also, be humble.”

Hochschild is a board member of Chicago Public Media, owner of the Sun-Times.

Local chambers of commerce and other groups have to take the initiative, too. Areas faced with crime and disinvestment can’t expect companies to invest purely for diversity, equity and inclusion. They can play up their advantages, which can include a big one — cheap land. Too often, said one business leader who asked not to be named, tax incentives factor too heavily, and when they run out, so do the companies.

Another expert, retail consultant Anne Brouwer, said large chains constantly evaluate store profitability and make adjustments. With the Walmart shutdowns, the common reaction was the stores had lots of customers. But Brouwer, senior partner at McMillanDoolittle in Chicago, said, “How many bags were they carrying? There’s traffic, and then there are transactions.”

Anthony Vazquez/Sun-Times file