Up Against the Wal-Mart

By John Greenwald

You've got to hand it to the resolutely rustic citizens of Vermont: they know how to bend outsiders to their will. Outraged by the thought of Wal-Mart megastores sprouting among their sugar maples and dainty shops (Ye Olde Wal- Marte?), antigrowth protesters have repeatedly fought off America's No. 1 retailer and made their state the only one in the country to remain Wal-Mart free.

That stubbornness has forced the huge company, based in Bentonville, Arkansas, to think small. In a deal that reflected the determination of Wal- Mart to conquer all 50 states, the firm last week agreed to build a sharply scaled-back outlet near the downtown area of St. Johnsbury (pop. 8,000) as the price of admission to Vermont. Not that it will be a mere boutique. At 75,000 sq. ft., the store will dominate the town's landscape, yet it will still be modest by comparison with the discount palaces of 120,000 sq. ft. that Wal- Mart has built in other states. The concession could accelerate Wal-Mart's expansion in New England at a time when the company is beginning to run out of other U.S. locations and is moving abroad -- from Canada to Argentina -- to build new markets. While Wal-Mart had 1993 sales of $67.3 billion, an increase of 21% over the previous year, that was far below its average gains of more than 30% a year in the 1980s. The growth of the company's profits has slowed as well -- from 29% a year over the past decade to 17% in 1993. Some investors have concluded that Wal-Mart's biggest gains could be behind it and have helped drive down the price of the company's stock from about $35 a share some 18 months ago to the mid-$20 range today. "This says the days of easy growth in the U.S. are at a close," notes John Eade, a retailing analyst at Argus Research.

For Vermont the compromise reflects the recognition that Wal-Mart will bring jobs to depressed parts of the state. Even nervous merchants agreed that the company could generate fresh business for everyone by attracting customers to downtown areas. Governor Howard Dean himself journeyed to Arkansas last October to make the case for building near Main Street and attracting shoppers there. "If you want to come into Vermont, our growth areas are downtown," says Steve Bradish, a leader of the statewide group Vermonters Against the Wal. "They are not suburban sites and cornfields."

Yet the truce could prove only temporary. A lot of Vermonters think of the battle in symbolic terms, referring to the store chain as "Sprawl-Mart," a term conveniently supplied last year by the National Trust for Historic Preservation. Wal-Mart opponents vow to fight the retailer's efforts to build stores in the more suburban locations of St. Albans and Williston, where Wal- Mart has unsuccessfully sought permits for the past four years. As the company surely knows by now, Vermonters give ground grudgingly when they give it at all.

With reporting by Bernard Baumohl/New York and Tom Witkowski/Boston