PEPPERS SUPERMARKET BUILDS A PLAZA AROUND ITS STORE

Jon Springer

DEMING, N.M. -- For Peppers Supermarket here, surviving the arrival of a Wal-Mart Supercenter two miles down the road took more than being a good grocer.

It meant being a good developer, a good builder, a good franchisee and a good landlord.

Mark Schultze, managing partner of the group that owns Peppers -- and several of the businesses that surround it in a self-developed shopping center known as Peppers Plaza -- credits his co-tenants for the added strength his group needed to stand up against the Bentonville, Ark.-based mass merchant.

"Basically, the idea was, we're in a small town, and when you're competing with a Wal-Mart, you can't give shoppers a reason to go over there," Schultze said in an interview with SN. "So we went looking for reasons for them to stay with us. The gas station and convenience store are a draw. The restaurant is a draw, and the fitness center is a draw."

Peppers not only owns the land these co-tenants use, but two of the businesses: Peppers Chevron, a convenience store and gas station; and Caliche's, a quick-service restaurant specializing in frozen custard desserts. Peppers has a partial interest in a local fitness center that is also located there. Rent-paying tenants include First New Mexico Bank, Showtime Video, Medicine Shop pharmacy and a local doctor's office.

"Anything to keep them on our side of town," Schultze said.

Schultze grew up in Deming -- a Mexican border town of 15,000 located about 100 miles west of El Paso -- and after a first career in financial services in the Phoenix area, returned to Deming in 1992 and purchased a 6,000-square-foot store known as South Side Market. In 1996 he relocated the business to a 40,000-square-foot box and re-named it Peppers.

Peppers was one of three independent supermarkets serving Deming when Wal-Mart came along in 2003. Within eight months, both of the other independents went dark. "When Wal-Mart comes to town, anybody who's marginal will get completely wiped out," Schultze said.

Peppers survived because it was better prepared for Wal-Mart's arrival, Schultze said. With the help of his partners, they developed the land around the store into a shopping plaza he describes as more of a town center than a strip center. Adding gasoline and a convenience store helped draw necessity stops. They filled more space -- and drew more visitors -- by becoming a franchisee of Caliche's, a well-regarded local chain of custard shops. Other tenants followed.

The Plaza is close to 100% occupied, Schultze said, and sales are at an all-time high.

"I used to have people ask me, 'What are you going to do when Wal-Mart comes to town?' and I'd tell them, 'The same thing we're doing now -- because if we're not doing it, we're not doing it right to start with.' You can't control the competition: All you can control is what you do," he said.

Now that Wal-Mart is its only local competition, Peppers -- along with its neighbors -- are determined to fight the giant with better customer service. "Our motto is to keep it fast, friendly and fun. We can't compete with Wal-Mart on price, but we can on value."