Wal-Mart driven out of town by Californian people power

As the world's biggest company, Wal-Mart has become accustomed to plonking its sprawling out-of-town retail outlets pretty much where it likes.

But yesterday the US firm, which already has about 3,500 stores in America, was delivered a humiliating rebuff by the people of Inglewood, California. Residents of the Los Angeles suburb rejected by a large margin arrangements that would have allowed the company to build a megastore in their midst without the normal reviews and hearings.

It was a rare blow for Wal-Mart ­ owner of the Asda supermarket chain ­ which had taken the unorthodox step of trying to sidestep city officials in Inglewood, who for the most part opposed the project. Instead they went directly to the citizens in a ballot on Tuesday to seek their approval.

The strategy backfired. After counting the votes in Inglewood, one of the more economically depressed communities in greater Los Angeles, it seemed that residents, mostly black and Hispanic, had rejected Wal-Mart's plan by about two to one.

The battle in Inglewood was about more than a single store (albeit one that would have covered 60 acres, the equivalent of 17 football pitches). It may also represent the moment when the people at Wal-Mart learn that even they cannot bulldoze away planning laws that don't suit them.

"This is a major victory," declared Jerome Horton, a member of the California legislature who, together with city officials, leaders of major unions as well as local and national religious leaders, had spearheaded the campaign to thwart the megastore. "This would have set a national precedent and developers all over the nation were watching to see whether or not a developer could exempt themselves from complying with local laws," Mr Horton said.

The Inglewood project formed part of a far more ambitious blueprint to throw up similarly large stores, so-called supercentres, along the length of California. The new stores include large grocery and fresh food sections not seen in smaller Wal-Mart stores. Although some have been built already, the company has met resistance elsewhere. Last year voters in Oakland rejected a supercentre.

The company, based in Arkansas, spent about $1m (£550,000) trying to persuade voters in Inglewood to accept the store. Its opponents, who included a coalition of local small retailers fearing for the future of their businesses, responded with equally vigorous campaigns.

Wal-Mart had the support of the Mayor, Roosevelt Doorn, who said the store would create jobs as well as $5m in new tax revenues every year.Critical to the outcome, however, was the commitment of unions, which pumped hundreds of thousands of dollars into the campaign to stymie Wal-Mart.

Even after yesterday's defeat by voters, however, the company still hopes to gain control of 20 per cent of California's food market.