June 11, 2007
The Wal-Mart effect hits local town officials
By Adam Smartschan
Retail giant brings traffic and anonymous phone calls
Though exactly what a new Wal-Mart brings to a town or city is up for debate, officials in communities where a store is proposed can expect at least one thing for sure: Phone calls from companies that actually want to locate as close as possible to the "big-box" retail behemoth.
When Wal-Mart stores and Supercenters open, it's common to hear tales of woe from local businesses, who say they can't compete with the Bentonville, Ark.-based giant. But enough retailers are interested in cashing in on the increased traffic Wal-Marts generate that community leaders are hit with often anonymous queries as soon as Sam Walton's chain is rumored to be coming to town.
Plenty of interest
With a Wal-Mart Supercenter planned for her town, Lancaster Planning Director Noreen Piazza said she's received a number of phone calls from companies with designs on a pair of lots in front of the proposed store location.Some came from restaurants, which would benefit from the high volume of traffic coming into the Route 2 site. But other calls came from retailers - direct Wal-Mart competitors, it seemed.
"One was from a representative of a company looking at some sort of retail operation," Piazza said. "It was interesting. They said the type of merchandise they carried was clothing, footwear and accessories for men, women and children; exactly what Wal-Mart does. I don't know how they could do it much cheaper."
Another retail representative didn't disclose as much about his business.
"They were absolutely unspecific about what it was they did," Piazza said, "but they made it very clear that this is what they do. They tend to piggyback on Wal-Mart sites."
Leominster officials reported a similar experience - when the city's to-be-built Wal-Mart was in the early planning stages, potential hangers-on got in touch to try to situate themselves near it.
Who are they?
The list of retail companies with the highest percentage of their Massachusetts stores in Wal-Mart-anchored plazas is counterintuitive at first glance. Most of the 10 companies with at least 3 percent of their locations neighboring Wal-Marts all sell similar goods to those offered at the bigger store.
Fashion Bug and Sleepy's top the list, with five of 39 locations each in Wal-Mart plazas, according to real estate researcher CoStar Group Inc. Though Bethpage, N.Y.-based Sleepy's is typically a competitor only though walmart.com (which sells mattresses), Charming Shoppes Inc.-owned Fashion Bug's women's clothing is distinctly similar to lines sold in Wal-Mart.
Ten percent of Westbrook, Maine-based sporting goods retailer Olympia Sports' 48 Massachusetts stores are near Wal-Marts, which carry similar products. And Framingham-based Staples (9 percent of 81 state stores) and Topeka, Kan.-based Payless ShoeSource (7 percent of 95 stores) both often locate in the same shopping center as Wal-Mart, again despite competing in some aspects.
Close for comfort
Though none of the companies most likely to be located near Wal-Marts in Massachusetts could be reached for comment, the reason they want to be there is simple: people.
Richard Feinberg, a consumer psychologist, Purdue University professor and former director of the Purdue Retail Institute, said increased traffic and numbers make Wal-Mart plaza locations attractive to some retailers.
"Based on a 30-year track history, there are certain businesses that understand they can be successful in a location next to Wal-Mart," Feinberg said. "One-hundred and forty million people shop at Wal-Mart each month. More people shop at Wal-Mart each month than go to malls. Since retailing is a numbers game, the more people you have in a geographic location, the more likely they'll notice you, recognize you and shop."
As for the similar product lines, Feinberg said there's generally a differentiation between the smaller retailer and the behemoth. A sporting goods store, for instance, would offer wares similar to Wal-Mart's, but also more specialized products and more selection.
"Usually, the people are selling something a bit different," he said. "You cant out-Wal-Mart Wal-Mart."
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