There's no doubt that supercenters are dotting the landscape and will continue to fill the landscape in greater density for the next five years, if not longer.
But for conventional-supermarket operators -- whether chain or independent -- that truism isn't sufficient. The question all supermarket operators are asking is, "When will a supercenter locate close to a store for which I'm responsible?" (This assumes they haven't already found out through experience.)
The answer is that it remains difficult to know far in advance exactly when a particular discount store or an undeveloped site will be transformed into a supercenter. But that doesn't mean there aren't useful clues about when and where supercenter development will take place, at least as it concerns the leading supercenter operator, Wal-Mart Stores. And those clues are in this week's front-page news feature on Wal-Mart Supercenters. The feature is based on an SN interview of Nick White, Wal-Mart's executive vice president of supercenters, which was conducted by SN reporter Elliot Zwiebach.
As you'll see when you peruse this news feature, the Wal-Mart executive said the decision to roll out supercenters generally hinges on the maturity of the discount-store market; that is, the newer Wal-Mart is to a marketing area, the less likely Wal-Mart is to need supercenters. Conversely, the longer Wal-Mart has had a discount-store presence in a market, the more likely it is to consider the region ripe for supercenter conversion.
White told SN that this outlook on markets means that two regions many consider to be ready for Wal-Mart supercenters -- New England and the West Coast -- are not actually prime candidates for supercenters: "Those are relatively new areas for Wal-Mart discount stores, and our growth in those two areas will still be largely in that segment."
There's another clue about what areas are more or less likely to see Wal-Mart supercenters: The closer an area is to a major population center, the less likely it is to see a Wal-Mart supercenter.
However, as you'll see in the front-page news article, there is an exception to that general rule in the making, namely Minneapolis. Wal-Mart has plans to open a 200,000-square-foot supercenter in nearby Apple Valley, Minn., in less than a year's time.
This may be a special case, though. After all, Minneapolis isn't a densely populated urban center in the mold of, say, the cities of the Northeast, so it might be a useful middle ground on which Wal-Mart can see how its supercenters would fare in a higher-population environment. Why not? Other supercenter operators have had good luck in such areas, so Wal-Mart may too as the process goes on.
By the way, on the topic of urban selling, Kmart has two new stores in New York City, both of which, although not supercenters, have a substantial grocery selection. And it's grocery products that are stellar performers for these most urban of all Kmarts since the grocery price spread between Kmart and conventional supermarkets in the city is more than enough to bring in traffic. Maybe this urban-retailing business isn't much of an enigma. Finally, and in a different vein, you'll be interested to see in this week's news feature how Wal-Mart studies the supermarket industry in an effort to refine its presentation, just as the supermarket industry keeps a wary eye on supercenters to see what they are up to.
