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Wall to Wal

WELCH — Brooms hang from the ceiling, pocketknives sit on the counter, and a potbelly stove rests on the floor in the weathered photo.

The people pictured have hard, mostly expressionless faces — and they all are long dead. But their family grocery store, Goodsons’, remains open in McDowell County, with the photo on the wall.

“We’ve been here for 100 years,” said Wanless Goodson, 84. “It’s because of customer loyalty. But we have to earn that loyalty every day.”

Time hasn’t been kind to McDowell County, where only about 25,000 people live. That’s 75,000 fewer than in 1950, five years before Goodsons’ opened a Welch location, becoming one of about 25 grocery stores in the county seat.

Today, only Goodsons’ and a nearby Save-A-Lot remain.

But next fall, the Goodsons will compete with the world’s largest company, largest grocery store, largest toy seller and largest sporting-goods chain. It’s also West Virginia’s largest private employer.

It’s a competitor that — depending upon your outlook — is either a great American success story or the scourge of downtown and small-town USA.

Wal-Mart is coming to McDowell County in nearby Kimball.

“They’re a fine company, no doubt about it,” Jerry Goodson said. “They do a great job, and it’s a free-enterprise system.

“More power to them.”

Evolution

It was 1989, and Emmett Pugh was Beckley’s new mayor. A year earlier, Bentonville, Ark.-based Wal-Mart announced plans to open a store in the new Beckley Crossing Center.

“We had heard of Wal-Mart, but nobody really did know what to expect,” said Pugh, who is still Beckley’s mayor.

Fast-forward 15 years.

The original Wal-Mart closed in the mid-1990s, and Wal-Mart opened a Beckley supercenter nearby. A Wal-Mart-owned Sam’s Club sits next to that store, and another supercenter in Beckley is under construction.

Other national retailers and restaurants surround Wal-Mart and Sam’s Club. Pugh said Wal-Mart helped make Beckley “the retail hub of Southern West Virginia.”

Including discount stores, supercenters and Sam’s Clubs, Wal-Mart has 33 stores in West Virginia, not counting those being built in Raleigh and McDowell counties.

“The customer base was obviously there, and we do extensive market research,” said Wal-Mart spokeswoman Mia Masten. “We’re just thrilled by the growth in West Virginia.”

The retailer’s stores in the Mountain State dot interstates, major highways and retail corridors from Huntington to Charles Town, from Weirton to Princeton.

Kenneth Stone, a professor of economics at Iowa State University who has studied Wal-Mart for nearly two decades, said he is often surprised by the groups who regularly meet for coffee at the Wal-Mart near his home in western Iowa.

“In rural America, it’s become very important,” he said, acknowledging that business, not sociology, is his area of expertise. “Wal-Mart’s become a main place to congregate.”

In 1998, Wal-Mart passed Weirton Steel as West Virginia’s largest private employer. It has added more than 5,000 employees since.

In all, 11,450 people work for Wal-Mart in West Virginia, more than 10 percent of all state retail workers. For every three coal miners in West Virginia, there are two people who work for Wal-Mart.

Wal-Mart’s growth, obviously, hasn’t been restricted to West Virginia. In 1989, sales reached $26 billion, up from $1 billion nine years earlier.

Net sales topped $137.3 billion in the nine months ending Oct. 31 this year. That’s up 10 percent from the same period in 2003. Wal-Mart has more than 3,500 U.S. stores and another 1,600 abroad.

Has any company ever grown as quickly?

“Not to the extent that Wal-Mart has, I don’t believe,” Stone said. “There were others — Sears, Kmart — but none of them ever kept growing the way Wal-Mart has.”

Empire

Stories abound about Wal-Mart squeezing suppliers — including a tale about Wal-Mart-owned Sam’s Club putting Vlassic pickles into bankruptcy.

Karl Gattlieb of Charleston sold windshield insect remover to Wal-Mart in the 1990s. In describing negotiations with Wal-Mart officials, Gattlieb was blunt: “You don’t request things from Wal-Mart ...You bow down and pray they continue to do business with you when you’re an independent entrepreneur.”

In response to Gattlieb’s comments, Masten said, “anybody who does business is going to be a tough negotiator.”

Wal-Mart is as powerful as it is because of the company’s “logistics, information systems [and] culture,” Chief Executive Officer Lee Scott told CNBC last month. Walton created a culture that expects managers to get to work early and leave late.

That culture also means buying products at the lowest available prices. The company bought $15 billion in products from China last year, according to www.chinadaily.com.

If Wal-Mart were an individual economy, it would rank as China’s eighth-largest trading partner, ahead of Russia, Australia and Canada, Xu Jun, Wal-Mart China’s director of external affairs, told the Web site last month.

“They’re not the only one that does it, but they’re probably the biggest purchaser of merchandise from the Far East,” said Stone of Iowa State. “They put a tremendous amount of pressure on their suppliers, who outsource to China or Korea where the wages are considerably lower.

“On the plus side, that keeps the prices low. But on the minus side, we lose a lot of jobs to the developing world.”

Wal-Mart has fought every effort by its employees to unionize — until recently.

“Last month Wal-Mart announced that if its associates wanted a union to represent them, that would be hunky-dory — as long as the union was affiliated with the All-China Federation of Trade Unions, a body dominated by the Chinese Communist Party,” according to a column written by American Prospect Editor-at-Large Harold Meyerson and published Dec. 4 in The Houston Chronicle.

Unions affiliated with the federation rarely push for wage increases or safer machinery, and locals are often run by someone from company management, according to Meyerson.

“Only in China, with its inimitable blend of Dickensian capitalism and authoritarian communism, has Wal-Mart found a union to its liking,” Meyerson wrote.

Fallout

One common cry against Wal-Mart is that it doesn’t fairly compensate workers. The store’s California employees earn 31 percent less than workers for other retailers, according to a report earlier this year by the Center for Labor Research and Education at the University of California-Berkeley.

“They’re exploiting workers by the conditions that they have them working under, by the low salaries that they pay them and by depriving them of benefits that workers are entitled to,” AFL-CIO President John Sweeney told CNBC last month.

The Berkeley report also found that Californians pay an estimated $86 million annually in taxes that go to Wal-Mart workers on public assistance, including $32 million in health-related costs. Wal-Mart officials decried the report, and its authors, as being pro-labor.

In Georgia, a state survey of state’s children’s health insurance program found that Wal-Mart employees’ families disproportionately relied on the program. More than 10,000 of the 166,000 children enrolled were from Wal-Mart families, according to the report.

In August, when Wal-Mart announced it would open its store in McDowell County, Masten said 250 people would work there. About 75 percent of them would work full-time, which for Wal-Mart is 34 hours a week.

Nationally, Wal-Mart workers on average earn $9.66 an hour. The company offers benefits including medical, dental and catastrophic coverage plus a 401(k) plan, Masten said.

Wal-Mart’s anti-worker reputation is often stoked by labor unions desperate to keep Wal-Mart from expanding in California, where union membership at grocery stores is high, Stone said.

Last year, a labor dispute closed grocery stores in Southern California for months. Meanwhile, a separate labor dispute closed most Kroger stores in West Virginia for two months.

In October 2003, with a settlement seeming unlikely and the previous contract about to expire, Kroger Mid-Atlantic President Pete Williams told employees the company’s offer was necessary to compete with Wal-Mart.

“Wal-Mart has changed the grocery store business everywhere they build stores and especially in West Virginia,” Williams told workers.

Community

The 21st century has been rough on McDowell County and Kimball. Floods devastated the town in 2001 and 2002, and in 2003, Kimball lost 75 jobs and its largest business when Kmart closed.

The empty Kmart will be Wal-Mart’s new home late next year. But City Councilman Randy DeLoatch said town leaders won’t celebrate until Wal-Mart actually opens.

“We’ve been disappointed too many times before,” said DeLoatch, who watched Kimball’s population fall from 411 in early 2003 to about 360 today.

DeLoatch shrugged when asked if he thought Wal-Mart will hurt Kimball’s downtown. There’s not much left to hurt, and what remains should benefit from more people coming to town, he said.

Elsewhere, Wal-Mart’s reputation as a downtown killer is well-known, even if economists say it’s not the only culprit.

“There have been attacks on downtown America for years — catalogs and the automobile also caused people to out-shop more,” Stone said. “Then came shopping malls at the edge of town. Wal-Mart’s not the sole thing that caused the demise of downtown.

“But it probably was the nail in the coffin.”

Still, Stone said Wal-Mart is trying to be less brazen than in previous years, partially in efforts to thwart bad publicity. This year, 1.6 million female employees sued Wal-Mart, alleging that the retailer has systematically promoted men over women and stuck women with smaller paychecks than men who work the same jobs.

“They used to be very rigid, they would not bend for environmental things or change store styles,” Stone said. “More and more, they know they have to deal with the public and soften their image.”

Competition

Each Wal-Mart store is built within a day’s drive of a distribution center.

“Typically, a distribution center can handle about 150 stores,” Stone said. “When they start approaching that, they move in another direction and build another [distribution center]. It’s a very successful strategy for them.”

Wal-Mart is also one of several national retailers working on placing radio frequency identification tags on every product in the company’s stores. That way, consumers could walk through the checkout line where a computer would ring them up automatically, without a self-checkout scanner or cashier.

The radio frequency identification tags would also make it easier and faster to check inventory. The technology is similar to EZ Pass systems some drivers use to pay tolls without having to stop at tollbooths. “You start thinking that you don’t need cashiers anymore,” Stone said.

Resources like that might make it seem impossible for competitors who already struggle to keep up with Wal-Mart to have any chance. Charleston Mayor Danny Jones, an outspoken Wal-Mart critic, decried the retailer during the Kroger labor dispute in West Virginia.

“I think the enemy as far as these two sides are concerned is Wal-Mart,” Jones said during a December 2003 press conference.

Jones said he would probably be the highest-ranking government official in the state to make such comments.

“America wants to know what’s wrong with its neighborhoods: It’s Wal-Mart,” Jones said. “Sometimes we may have to shop in big-box stores, but I will not go to Wal-Mart.”

Concerns

In Iowa and Mississippi, studies have shown that competing businesses struggle mightily when supercenters come to town. But businesses that have a niche or sell something Wal-Mart doesn’t can see more sales if they’re located nearby.

The Goodsons — at stores in Welch and Oceana — employ about 105 people, about 80 full-time. But “full-time” in McDowell County has a different meaning than in most places.

Employees work more hours at the beginning of the month and fewer at the end. That’s because many McDowell County residents buy groceries at the beginning of the month — when they receive government checks.

“It’s part of doing business in McDowell County,” said Don Goodson.

The Goodsons said they think their store could benefit when people who had to drive elsewhere to shop stay in McDowell County and go to Wal-Mart. They also hope that customers will continue to buy groceries at Goodsons’, and patronize Wal-Mart for clothing and other general merchandise.

But the question remains: Are the Goodsons concerned about the store’s survival?

“We’ve been concerned for 100 years,” Wanless Goodson said, “and we’re still here.”

To contact staff writer Paul Wilson, use e-mail or call 348-5179.


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