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WAL-MART'S CALIFORNIA BUILDUP SLOWER THAN ANTICIPATED

The news feature referenced on the front page of this week's SN takes a look at California and how change is being driven by the impending advent of Wal-Mart supercenters into the state.The conventional wisdom about Wal-Mart is that it will blanket the state with supercenters, capturing significant market share from incumbent supermarket retailers. As is often the case, the conventional wisdom looks

The news feature referenced on the front page of this week's SN takes a look at California and how change is being driven by the impending advent of Wal-Mart supercenters into the state.

The conventional wisdom about Wal-Mart is that it will blanket the state with supercenters, capturing significant market share from incumbent supermarket retailers. As is often the case, the conventional wisdom looks solid enough. Indeed, it seemed solid enough to have formed much of the rationale for the protracted labor strife that strafed Southern California late last year and early this year. SN's news feature, written by reporter Elliot Zwiebach, supports that conventional wisdom to a great degree.

At the same time, though, the feature poses and ponders a contrarian question: Will Wal-Mart really change the market in California that much and, if so, when?

It's a question well worth considering since if the answer is that Wal-Mart may not pose much of a threat to supermarket retailing, or won't do so for many years to come, then there's a lot of wasted motion and unnecessary angst going on.

The answer to the latter part of that question concerning the speed of change is already emerging with some clarity. Change is going to happen a lot more slowly than had been anticipated. To date, there is just one Wal-Mart supercenter in the entire state. It's in the desert not far from Palm Springs and was opened in March. It had been anticipated that by now, perhaps several supercenters would be at least rising from the ground. But Wal-Mart has encountered stiff political resistance in and near Los Angeles, so that's not happening.

"It's taking Wal-Mart a long time to get started in California, and it's going to take them a long time and a lot of stores [will be needed] to have a significant impact in any given area of California," one observer quoted in the feature said. At that, Wal-Mart's goals are modest enough for upcoming years. Its earlier announced intention was to have 40 supercenters in the state in four years' time, or an average of 10 per year. Earlier, it was assumed that Wal-Mart was announcing a goal that was overly modest. Indeed, a report endorsed by Wal-Mart itself suggests that California could be home to as many as 150 supercenters. No time frame was specified.

Now it seems that the original goal may be under some challenge, and that many years will elapse before the state has supercenters in sufficient numbers and concentration to win much market share. So the answer to the part of the question about whether Wal-Mart will change the market in a big way is probably not, or at least not for many years. And by that time, who knows what competitive dynamic will drive market share?

What will change quickly is highly localized market conditions. Where Wal-Mart opens a store, an area of perhaps 10 miles around the location is likely to see changing business conditions. But time remains for competitive strategies to be put into place virtually everywhere in the state.

TAGS: Walmart