Can You Charge for Parking at Walmart?
The world must be ending; casinos in Las Vegas are making it the norm to charge for parking[i]. In life, there are very few guarantees – but free parking at a casino in Vegas, or at your neighborhood Walmart, seemed like one of them. No, I’m not saying Walmart is starting to charge for parking (although I will address this opportunity below). But maybe they should.
This article is about the copious amounts of free parking that presents itself at nearly every big box retail store across North America. It’s commonplace, but does it make common sense?
I’m going to propose that Walmart is one of the most iconic, prevalent, and effective of all big box stores. As such, I’ll use them as an example of how most of this type of retailer tackles parking management.
In Calgary, there are 11 Walmart locations. Each of these locations offer roughly the same amount (if not more) of square footage for parking as there is shopping/interior of the building. Here are a few images (thanks Google Maps) to illustrate what I’m saying:
You’ll also notice something else in these images – a LOT of parking stalls without vehicles parked in them. So, why would Walmart, a very savvy retailer, opt to purchase all of that land and designate it for unused parking?
There are several answers to this question, and they vary depending on which location you’re looking at. A few common reasons are:
Mandatory minimums: Some municipalities force builders to include a certain number of parking stalls per square foot of space.
Profit maximization: You’d never want a customer to leave without coming into the store because they couldn’t find a parking spot.
Peak demand: The lot must be able to accommodate every single shopper at the busiest time on the busiest day. (Side note here – peak demand is often way over estimated. Take Black Friday for example. It’s allegedly one of the busiest shopping days of the year, however lots are way underutilized[ii].)
Corporate ordinances: stores develop their own internal space requirements at a national level, and don’t take local or regional factors into account.
Alright, so there is some logic to their presence. What if there are valid reasons NOT to have these lots though? Let’s explore.
Large parking lots lead to large volumes of cars (there’s parking, so let’s drive!). Large volumes of cars lead to congestion, eventual expansion of the roadways, and less green space. It reduces the appeal of the spaces and takes away the opportunity to walk or bike to the destination (trust me, riding your bike down a 6 lane road full of traffic is NOT a good decision). It also makes it necessary to build the big box stores further and further towards the edges of cities to keep costs down. That means it’s more expensive for cities to service the stores with water, sewer, transit, and other necessities.
Another consideration is what the empty stalls are actually being used for. Things like drifting and student driving lessons are regular occurrences. Plus these large lots leave room for anonymity for thieves, plus a large supply of unattended valuables. Heck, would anyone even notice a car (your car!) being stolen from one of these huge lots?
We’ve covered a few of the ‘whys’ and ‘why nots’ of these parking craters. But are these mega lots the only option? No – I don’t think so. Here are some other options:
Alternative transportation: people could walk, bike, or take public transportation to these same destinations. Making sure that bike racks and bus stops line up to provide access to the stores is important. However, we know a very small number of patrons will do this. So…
Reducing stall counts: If there was a limited supply for parking spots, they would be in higher demand. It might even be a victory or prestigious commodity that people can brag to their friends about finding. Think this is a joke? It’s not. Consider Trader Joe’s. Parking spots are so limited there that a quick Google search on the topic turns up about 738,000 hits. Results range from homemade commercials[iii] (if you love TJ’s, definitely watch the video) to Twitter obsessions (tweets, accounts, rants, hashtags and more) to CityLab, Fortune, Business Insider, Strong Towns and even Donald Shoup himself[iv] praising the minimalist parking setup[v]. People are legitimately excited when they find a parking spot at Trader Joe’s. And they brag about it!
Reserved parking: What if you could book your spot in advance and plan your shopping around the time frame you have a spot for? Using a parking management tool that offers and online reservation system in a scramble format (like ParkPlus[vi], for example) would allow patrons to come knowing there’s a spot. For retailers, they would have a steadier, predictable traffic flow. They could also capitalize on marketing efforts exactly when they’re most effective, through push notifications, geotargeting, or even retargeting customers after they’ve left.
Improve online presence: Online shopping is growing by leaps and bounds. In fact, nearly 12% of retail sales were made online in 2016[vii] - and that percentage is growing. If big box stores were to improve their online stores, they could push a larger percentage of customers online and out of the parking lot. A few improvement suggestions include transaction security, site navigation, product selection, fast and free shipping, a clear return process, in-store pick-up, and easy-to-use mobile apps.
Multi-story garages: Building a gated or gateless multi story garage offers benefits. First, less land is required so there’s a lower cost to purchase it. Second, less environmental impact and damage[viii]. Third, it’s easy and convenient to collect infinite data points about customer parking and shopping habits. And you can do a lot to increase sales with that information.
These are big changes – I know. So what if retailers aren’t ready for such radical moves? Are there ways to improve new and existing lots? There are:
Permeable surfaces: Building parking lots out of traditional asphalt is pretty bad for the environment. It creates precipitation runoff which leads to eroding, flooding, and all sorts of pollutants making their way into the water system[ix]. A permeable surface allows water to seep through the concrete and drain back into the ground. It’s good for business too, as illustrated by this winery and this commotion among construction companies over a driveway.
Reduce parking minimums: This trend is apparent in residential and retail downtowns across Canada and the US[x]. Municipalities are working with developers to reduce the number of parking spaces required for new construction, which encourages both more development in the core as well as alternate means of transportation. There’s also the potential for parking construction freezes, or for maximum parking construction limitations[xi]. Re-evaluating how parking minimums and maximums are set, both on the municipal and the (big box) corporate level, is a useful place to start.
Repurposing: The parking lots are already built. So, what if they could be used, even temporarily, in a different way? You could hold a farmers market one evening a week. How about a temporary venue for a concert or performance? Maybe even a skate park or a car show or a sidewalk chalk art competition[xii] (yes, really). Who knows – this could be a new source of customers for the retailer, or a way to increase good will in their community.
“Green” requirements: Enforcing standards about the number of trees or square footage of green space every hundred feet or so can go a long way in the esthetics department. It also reduces environmental damage and makes the space more appealing to consumers[xiii].
It’s about time we tackled the elephant in the room: could big box stores, including Walmart, charge for parking? Well, it’s a new potential revenue stream, and if properly managed, a profitable one[xiv]. Installing the equipment for enforcement would be simple – a gate at each entrance/exit, a ticket machine or camera to capture licence plates, and a barrier to driving around the gate. A gradual implementation and enforcement policy could go a long way towards not alienating customers. Appropriate signage and instruction on how and when to pay are a must. And the store could even offer incentives (like a discount) to park at off-peak times to balance traffic.
What would consumers think about paying for parking? Well, my gut is that there would be quite a bit of uproar initially. We conducted a twitter poll and found that 80% of respondents wouldn’t shop at Walmart if they charged for parking[xv]. But what if it resulted in lower overhead for stores, and could translate into lower prices or improved services for those customers? Over time people may grow as accustomed to paying for parking at big box lots as they are to paying when downtown. And hey, Vegas can do it, so why not Walmart? Besides, there are a lot of retailers that charge customers for the use of their shopping carts and consumers don’t even flinch at that request. Maybe it’s just a matter of time before it becomes common place.
When push comes to shove, do big box stores care about this parking abundance? They do. Here’s the proof:
Big data: Orbital Insight is already conducting car counting via satellite imaging for BestBuy, Carmax, Buffalo Wild Wings, Walmart, Ulta, Popeye’s Chicken, Autozone, Wendy’s, Staples, Jack-in-the-Box, Ethan Allen, JC Penny’s, Panera, and about 80 other major retailers[xvi] I didn’t mention. This data provides detailed, time-sensitive, accurate traffic information, patterns, correlation of promotional tactics to actual traffic, or customized data sets can answer almost any question a retailer poses. It isn’t cheap, but the biggest of big box retailers have determined it’s worth the price.
Stock prices: lower volumes in parking lots mean emptier stores and lower inventory turnover, which is the key to success in big box stores. Lower turnover means declining profits and that directly correlates with stock price of these retailers[xvii] – and we can all agree that definitely matters to them.
After all this, are you still on the fence about whether parking spots are a valuable asset (maybe even worth charging for)? Well, check out this quick video[xviii] and find out where the land value of a single parking space is $1,000,000. Yes, really.
In the end, does profuse parking at big box stores make sense? Why are we undervaluing parking at big box stores? And for that matter, why are we giving it away for free?
[xv] Twitter poll conducted March 7-10 2017 and had 5 total responses; email me at chelsea.webster @ getparkplus.com if you would like to see the results or have any questions.