WAL-MART FINDS FEW PROBLEMS WITH URBAN MINI-SUPERCENTER

ELLIOT ZWIEBACH

NEW YORK -- Wal-Mart Stores is pleased with the 100,000-square-foot supercenter prototype it opened in mid-January in Tampa, following a disaster with a similar-sized prototype in Dallas five years ago, Jay Fitzpatrick, senior vice president and treasurer, told an investors conference here last week.

"The biggest problem [at the Tampa store] is, it's doing more volume than we thought, and we're running out of parking spaces," Fitzpatrick said. "But we believe it's 90% of what we need it to be."

Fitzpatrick made his remarks at the Merrill Lynch Retailing Leaders conference here.

Although Fitzpatrick called the original 100,000-square-foot prototype in Dallas "a disaster," he did not explain what was wrong with it or what changes were made when Wal-Mart opened the supercenter in Tampa.

Wal-Mart developed the smaller prototype -- which Wal-Mart officials told SN is actually 99,990 square feet -- for two reasons, Fitzpatrick explained. "Our first objective was to see what we could do with 100,000 square feet in case the California Legislature passed laws" restricting the size of box stores in the state, he explained, "and the second was to see what we could build in a metropolitan area where we could not find 28 acres of land."

Most supercenters are 200,000 square feet or more. On the food side, the smaller prototype is identical in terms of assortment and fixtures to the company's Neighborhood Market format, Fitzpatrick said.

To accommodate the smaller footprint, Wal-Mart eliminated the supercenter's snack bar and substituted the "grab-and-go" approach found at its Neighborhood Markets, which allows customers to pick up a cup of coffee or other items and pay for them on the honor system, he added.

Wal-Mart opened its first supercenter in California -- a 225,000-square-foot unit in La Quinta -- earlier this month, "and we had an excellent opening that was better than we expected," Fitzpatrick said.

In response to a question, Fitzpatrick said Neighborhood Markets are more likely to grow through new-store construction than through acquisition.

"Their growth has been relatively slow because we're running out of people, not capital. It takes almost as many people to run a Neighborhood Market as [the food section in] a supercenter, so we put them where we get the better return," he noted.

"The Federal Trade Commission would never give us approval to acquire a chain, and while we have looked at stores the chains have closed, we can't afford to buy them because there's so much cost built in. We've done a couple of conversions, but that's not going to happen much because of the expense.

"So most new Neighborhood Markets will be ground-up stores."

Fitzpatrick said Wal-Mart plans to take a more proactive approach in its TV advertisements to counter negative publicity about the company.

"If you believed what you read, Wal-Mart doesn't pay any benefits, yet we paid $1.8 billion in medical [benefits] last year, and in terms of compensation, what we paid employees in Las Vegas exceeds what the union paid," he said.

"Grocery cashiers are among the highest-paid employees because at one time they had to remember all the prices. But cashier is a part-time position at Wal-Mart, and when you look at the whole package, it's a good job."