Wal-Mart Stores Inc offered a plan on Monday aimed at winning over union leaders and Chicago lawmakers in its attempt to open dozens of stores in the city over the next five years.
But a union leader said the jobs in the stores would not pay enough and said that as of now Walmart did not have enough votes to get permission to open more stores.
The plan would let Walmart expand into a large urban area at a time when its U.S. sales growth has been hit by a weak economy.
The populations are super dense, Edward Jones analyst Matt Arnold said about cities like Chicago, New York and Los Angeles. If you can find a store format where the economics work, it can be another growth avenue.
The stores Walmart would build will be of various sizes and formats, not just the company's well-known supercenter format, the company said.
Discounters like Walmart and Target Corp have been trying to come up with the right format to build in urban areas, where real estate is expensive and where the typical large suburban store cannot fit.
Walmart has also faced complaints about labor practices like the wages and healthcare benefits it offers.
Jorge Ramirez, secretary-treasurer for the Chicago Federation of Labor said the jobs in stores would pay $8.75 an hour, 50 cents above minimum wage. Union leaders are calling for Walmart to pay a wage comparable to other retailers, including union-represented shops, but Ramirez did not say what that wage was.
They want to come in at the bottom end of the market, rather than leading the market, and that's a cause for concern, he said.
Other than one store built on Chicago's West Side in 2006, the world's largest retailer has not been able to get approval for any other stores through the Chicago City Council's zoning committee, let alone through a full council vote, Walmart spokesman Steven Restivo said.
An attempt to end that occurred on May 3 when five union leaders and five Walmart officials met, the Chicago Sun-Times said on Monday.
Chicago Mayor Richard Daley also met with Walmart executives last week, the newspaper reported.
Daley's press office would not comment on a Walmart release but said the mayor planned a news conference on Tuesday.
Restivo said the company had no agreement with the unions or the city to enact the plan, but noted that the company has agreed to use union labor to construct the stores, leading to 2,000 unionized construction jobs.
The company has not agreed to union representation for the 10,000 people who will staff the store's he said. But the jobs will pay competitive wages, he said.
A spokesman for the Chicago Federation of Labor could not immediately comment on the Walmart plan.
Rising unemployment and falling tax revenue have put pressure on city officials to put more Walmart stores within city limits.
Our city is facing a number of challenges, but most of all, we need good jobs, Alderman Anthony Beale of Chicago's South Side said in a statement released by Walmart. A proposal that would put a Walmart in Beale's South Side district is set for a zoning committee vote on Thursday, Restivo said.
The stores would bring $500 million in tax revenue to the city, Walmart said.
The company also said the stores would give consumers access to affordable groceries in areas where their are no major grocery chains and that it would also develop $20 million in charitable partnerships in the city.
If Walmart were to enter Chicago in force, it could put further pressure on grocery operators Supervalu, which owns Jewel stores in Chicago and Safeway Inc, which operates as Dominick's. Those companies are already having to slash prices to try to combat the discounter.
Chicago has gotten increasingly difficult and this is not going to make things easier for those companies, said Scott Mushkin, analyst Jefferies & Co.
(Additional reporting by Lisda Baertlein; editing by Andre Grenon, Bernard Orr)