NEW WAL-MART SUPERCENTER REFLECTS URBANIZATION EFFORT 2004-01-19 (2)

MARK HAMSTRA

NEW YORK -- Wal-Mart is preparing to test a new prototype "metro" supercenter that will be smaller than the company's typical supercenters and could allow the company to open in sites that previously could not house the company's massive food-and-general-merchandise combo stores.

In a presentation at the National Retail Federation's annual convention here last week, H. Lee Scott, president and chief executive officer, Wal-Mart Stores, Bentonville, Ark., said the company developed the smaller supercenter to meet the zoning requirements for the Florida site. SN later learned that the store was scheduled to open this week on Dale Mabry Highway in Tampa.

"We have rural supercenters, but the supercenter we are building in Florida will be a 99,000-square-foot metro supercenter, so the assortment is different and the adjacencies are different," said Scott, who added that the company had to "rationalize the assortment" for the location. "We're excited about it," he said of the new prototype.

He did not provide additional details about the new store. A spokeswoman for the company would only confirm that a 99,000-square-foot supercenter set to open this week in Tampa was "a test." Typical supercenters are closer to 200,000 square feet, although the company does have some smaller supercenters in rural locations.

David Rogers, president of DSR Marketing Systems, Deerfield, Ill., later told SN that the store could be at the forefront of a new stage of growth as Wal-Mart seeks to wedge its supercenter format into more urban and suburban sites, as exemplified by its failed effort to get approval for a two-story Wal-Mart in Dallas.

"This way they can shoehorn the store with the requisite general merchandise assortment for profitability into those kinds of sites," he said. "Without a doubt, a store that size would be appropriate for a used space like an old shopping center or a Kmart."

He said having a smaller prototype supercenter that could occupy a site where a similar business previously existed could give the company a means to get around zoning regulations in some areas, such as California, where several municipalities have taken steps to bar the company from opening full-scale supercenters. Rogers also said he thought a 99,000-square-foot prototype could enable the company to enter such markets as Chicago, New York and other Northeastern cities.

"All these moribund regional shopping centers that are out there could be bulldozed and replaced with one of these stores," he said.

He compared Wal-Mart's effort to downsize its supercenters with the Tesco Extra concept, which is a similarly sized venue located on the outskirts of metropolitan areas in the United Kingdom.

Rogers also said he expected to see Wal-Mart use its growing base of Neighborhood Market stores as a launching pad for new, smaller supercenters. He said the company could simply "knock out a wall" of a neighborhood market and add an expanded general merchandise section to create a mini-supercenter where only a supermarket had existed before.

In his address to the NRF, Scott maintained that the company's "most productive supercenters" are its 200,000-square-foot locations. However, he said he expected to see retailers continue to pursue stores at both extremes -- either smaller stores that offer convenience and enable companies to enter smaller sites, or large stores like the company's own traditional supercenters.

Scott also said he sees consolidation continuing on both the retailer and supplier side of the industry. He also said he expected to see more investments in which companies take a non-controlling stake in other operators, such as Wal-Mart's 35% investment in Japanese retailer Seiyu.

Scott also outlined what he saw as the major challenges for the retail industry in the year ahead, singling out health care as one of the primary issues. He called on the federal government to investigate the current state of the nation's health care system.