Wal-Mart's Urban Push
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Printed from dallasnews.com Page 1 of 5 Wal-Mart's urban push Efforts in D-FW used across U.S. 08:31 PM CST on Monday, October 31, 2005 By MARIA HALKIAS / The Dallas Morning News Second of two parts In a show of resistance, Lake Highlands residents will sign a petition and pick up yard signs Tuesday night at the Brother's Pizza restaurant near a proposed Wal-Mart Supercenter. Some oppose the construction of a 204,000-square-foot store at Forest Lane and Abrams Road because of the additional traffic and issues that come with a 24-hour operation. Others in this large residential quadrant inside Dallas' loop are glad to have the project for its urban renewal of this 17.2-acre parcel. It's the latest neighborhood battle for Wal-Mart Stores Inc. And more will come as the world's largest retailer, a fixture in small-town America, continues its advance into larger cities. Wal-Mart's urban strategy is maturing in Dallas-Fort Worth, and its efforts here offer a glimpse of what the company has in store for other major U.S. markets. The Arkansas-based company, which opened its 102nd area store last week, already takes in $1 out of every $3 spent on food and household goods in Dallas-Fort Worth. It still considers the market an expansion opportunity even though it has more stores here than in any other major market – and more than it operated last year in 37 states. Earlier this year, it established a team of media, community affairs and real estate managers who live in the area and work with established developers. The local team approach is in place, or on the way, in 36 additional cities as Wal-Mart seeks to head off new-construction battles, field maintenance complaints and work with government officials and neighborhood associations. "We haven't even scratched the surface of the urban cores. DallasNews.com/extra Think about New York, Boston, Detroit, San Francisco, Washington, D.C.," Wal-Mart Realty president Eric Zorn told 10/30: Living with Wal -Mart Wall Street analysts last week. "There are thousands of new Supercenter opportunities." Photos: Wal -Mart in Texas The discount giant is accelerating its U.S. Supercenter expansion plans through 2010. It expects to open up to 280 of the stores next year and says it has 1,400 projects in the pipeline, including almost 1,000 Supercenters. http://www.dallasnews.com/cgi-bin/bi/gold_print.cgi 11/1/2005 Printed from dallasnews.com Page 2 of 5 Fighting back Al Norman, the original anti -big box retail crusader, said he's busier today than when he began to focus on Wal-Mart 12 years ago. "It's evolved into my second occupation. I spend 30 to 40 hours a week," he said in an interview last month, as more neighborhoods meet up with Wal-Mart for the first time and seek him out. "This Friday I'm in Miami. The following weekend I'm in a Frankenmuth, Michigan, a Bavarian village fighting a Wal-Mart. Then I'm going to Boonville, Missouri, and Thursday night I'm in Rhode Island." Wal-Mart chief executive Lee Scott raised some eyebrows last week when he said, "We could be three or four times bigger in the U.S. In our five-year plan, we don't reach saturation." Was that just hype to inspire Wall Street to move Wal-Mart's stock price off its five-year floor? The answer can be found in and around Dallas-Fort Worth. Dallas delivers Wal-Mart operates 58 Supercenters, 19 Sam's Clubs warehouse stores and 20 Neighborhood Market grocery stores – the largest concentration anywhere – in the area. The company has stepped up new construction here in the last few years and relocated all but five discount stores into the larger Supercenter format that offers both food and mass merchandise. It's also planning to "de-homogenize" the 40,000-square-foot grocery stores to reflect the tastes, income levels and ethnic composition of the surrounding residents. Moreover, it's testing 24-hour pharmacies in Plano, environmentally friendly and energy-saving systems in McKinney, and "site-to-store" Internet shopping. It's also launching a new technology here for tracking merchandise – the radio frequency identification tag, or RFID – that it says will eventually keep shelves perpetually stocked. Wal-Mart is slowly penetrating deeper into this metropolitan area of more than 5.2 million residents. In January, Wal-Mart opened a Neighborhood Market at the base of the Dallas skyline. It just opened its newest Supercenter near Ameriquest RICHARD MICHAEL PRUITT / Field in Arlington. DMN Wal-Mart district manager Aron And a Supercenter is under construction in a heavily Carter tried to allay community commercial and residential area in Far North Dallas, on concerns of a Neighborhood the site of a former mall that housed a Neiman Marcus. Market store in Lake Highlands. When that Supercenter opens next year, it will be within four miles of two Neighborhood http://www.dallasnews.com/cgi-bin/bi/gold_print.cgi 11/1/2005 Printed from dallasnews.com Page 3 of 5 Markets and within eight miles of two Supercenters and two Wal-Mart discount stores. More important, Wal-Mart is changing the way Dallas-Fort Worth shops. Residents make fewer visits to traditional supermarkets and drugstores than other Americans on average, and are almost twice as likely as a typical Americans to shop at a Supercenter, according to ACNielsen's Homescan. Area shopping patterns are radically different in D-FW "because of the number of Wal-Mart Supercenters you have there," said Todd Hale, senior vice president of consumer insights at ACNielsen. "I live in Connecticut. We have two or three that I can think of." Wal-Mart opened its first Texas store in Mount Pleasant 30 years ago and now counts the state as its biggest market both by sales and retail store count. Wal-Mart spokesman Gus Whitcomb said the company considers the D-FW market mature "in number of stores compared to other areas." But "it's not even close when measuring the area's population relative to number of stores," he said. "The metroplex is still targeted for growth." A new major player In 2004, Wal-Mart became the No. 1 grocery seller in the D-FW. Not long ago, federal antitrust officials didn't even perceive it as a major player. In 2000, the Federal Trade Commission blocked Kroger Co.'s acquisition of 74 Winn-Dixie Stores Inc. locations in North Texas and Oklahoma. It was the last time the U.S. government stopped a merger among traditional supermarket chains. James A. Fishkin, the lead FTC attorney at the time, concluded that a merger would hurt area shoppers. But Wal-Mart's impending expansion made that decision unnecessary, he said. "Wal-Mart had a small market share and it was in the outer-ring areas. It hadn't yet invaded the core markets where Kroger, Winn-Dixie, Albertsons, Minyard, Tom Thumb, Fiesta and others also operated," he said. Also, "around the country – among the top markets – there wasn't one where Wal -Mart was close to being No. 1." Mr. Fishkin, who left the FTC in 2002, said he believes the merger would be approved today. "The FTC is more likely to approve a merger between two traditional supermarket chains in a market where Wal-Mart has a significant market share and its market share is growing," he. The question may come up sooner than later with Kroger, the largest traditional U.S. supermarket chain, reportedly in the bidding for No. 2 Albertsons Inc. Besides Dallas and Fort Worth-Arlington, Wal-Mart has the No. 1 grocery market share in El Paso; Oklahoma City; Little Rock, Ark; Albuquerque, N.M; and Kansas City, Mo., according to http://www.dallasnews.com/cgi-bin/bi/gold_print.cgi 11/1/2005 Printed from dallasnews.com Page 4 of 5 Trade Dimensions Market Scope and the Shelby Report . It's No. 2 in Houston and San Antonio and No. 3 in Denver, Phoenix and St. Louis. Minyard Food Stores was among the the last major family-owned and operated grocers in Dallas-Fort Worth before the 69-store chain was sold to investors a year ago this week. The chain felt the pressure of Wal-Mart, said former president J.L. "Sonny" Williams. Whenever Wal-Mart would talk about overseas expansion, he said, "it tickled us; we figured that meant they were getting close to saturation point in D-FW." But "no one stays on top forever," Mr. Williams said. Fifty years ago, when he was a teen sacking groceries in Dallas, "no one thought A&P would ever be beat in the U.S." Fast learner Another family -owned and operated Dallas chain helped Wal-Mart learn the food business, which drives the Supercenter format today. Wal-Mart formed a joint venture in 1986 with Dallas-based Cullum Cos., operator of Tom Thumb supermarkets and Page Drug stores. Within a year, two huge Hypermart USA stores opened in Garland and Arlington that were reminiscent of European one-stop shopping. Separately, in 1988, Wal-Mart opened a smaller Supercenter in Washington, Mo. Brooks Cullum, son of Tom Thumb co-founder Robert Cullum, said his family eventually sold its half of the venture to Wal-Mart because "they wanted to expand more rapidly than we could. It was a sheer disparity in size." The Dallas-based company sold its stake for an amount under $10 million and booked a $3.1 million quarterly gain associated with the sale.