Have Cities Become More Welcoming to Chain Stores?

In the Northern California city of Stockton, the city council in January quietly repealed a “Big Box Ordinance” that banned stores over 100,000 square feet containing full-size groceries for nearly two decades.

The legislation passage in 2007 came amid public opposition to the development of a south Stockton Walmart and was designed to “address concerns with the potential impacts of discount superstores.”

“Stockton is open for business,” Councilmember Kimberly Warmsley told Stocktonia in January. Any size store could still be rejected through the permitting and approval process.

“We don’t want like five Rite Aids on one block or area,” Ms. Warmsley said. “We just want to have potential, see what’s out there. We know that small businesses are the heart of Stockton. And so we will work closely to ensure that we’re preserving the integrity of small business all the time.”

Such legislation was fairly common around 2007, but bans or limits on big boxes or national chain stores appear rarer these days outside of some pushes to ban dollar stores. Addressing traffic and parking often seem to be of greater concern than protecting mom-and-pops.

Target has found particular success opening stores in urban centers, ending 2022 with 147 locations under 50,000 square feet. In early 2021, John Mulligan, Target’s COO, said Target saw more real estate opportunities for stores under 100,000 square feet. “As a group, these new stores are generating higher-than-average sales productivity, above-average gross margin rates and strong financial returns,” he said.

The city of Palo Alto in Southern California is considering easing restrictions on chain and big box stores after a study found the proliferation of nearby Target and Costco locations “cannibalizing the retail offering within the city.” The open-air Stanford Shopping Center’s success in the city also impacts downtown traffic.

Responses to a related article on Palo Alto Online found some residents apprehensive about the arrival of big box stores. Still, one argued, “Hate to break it to the PA [Palo Alto] Fiefdom, but it is now the 21st century and PA has lagged behind other communities in providing useful amenities.”

• Adopt An Ordinance Amending Multiple Sections Of The Stockton Municipal Code For Warehouse Retail Stores (“Big Box”) — City of Stockton

• City Council repeals ‘Big Box Ordinance’ — Stocktonia

• Council to discuss removing big-box ban — Recordnet.com

• Stockton retail ban makes waves — East Bay Times

• As Dollar Stores Proliferate, Some Communities Say No — The New York Times

• Q1 2021 Target Corp Earnings Call — Target

• Comprehensive Economic Development Strategy Update and Study Session Supplemental Report — City of Palo Alto

• As retail trends shift, Palo Alto looks for new economic strategy - Palo Alto Online — Palo Alto Online

• Big-box myopia runs rampant / S.F., East Palo Alto disdain giant retailers — San Francisco Gate

• Retail revolution: should cities ban chain stores? — The Guardian

• Banning Big-box Stores Can Hurt Local Retailers — Harvard Business School