WAL-MART SUPERCENTER CROSSES A DIVIDE

David Orgel

Wal-Mart is about to mark a major moment in the history of its 13-year-old supercenter format.

The world's largest retailer will unveil its 1,000th supercenter this week when it opens a store in Fort Robert, Mo., as was reported earlier.

Lest anyone question the need for that many supercenters, be warned that this format is nowhere near maxing out. Wal-Mart, by some predictions, could come close to doubling its number of supercenters by mid-decade. Fueling the rollout is the supercenter's ability to take on widely different sizes, depending on the needs of the local market.

All of this is significant, of course, because Wal-Mart supercenters are currently the biggest threat to conventional supermarkets.

That wasn't the case in 1988 when Wal-Mart first unveiled its version of the supercenter format, which combines a grocery store and discount store under the same roof. Initially, these supercenters were derided as second-rate food stores from a company that didn't have the expertise to compete with established grocers.

But Wal-Mart has gradually enhanced its food merchandising and proven its commitment with a relentless rollout of new units.

For supermarkets that are competing against Wal-Mart's supercenters, it may be helpful to pause for a moment to admire the enemy. That's the preferred approach of Bill Lancaster, corporate vice president of sales, Associated Wholesale Grocers, Kansas City, Kan. Through speaking engagements and writings, Lancaster has dedicated himself to motivating independents and other retailers to "Survive and Thrive" against Wal-Mart.

"I admire Wal-Mart supercenters in almost every way," Lancaster told me recently. "These supercenters now have credibility with the food customer. They are better in fresh departments than before."

And because of their general merchandise expertise, "They see [all of] retailing as their world, which is a wider vision than that of the food stores, which stayed in the food business."

According to Lancaster, once you've taken the time to admire and study Wal-Mart, you need to act. Basic steps include enhancing customer service, strengthening nonfood departments and improving item and shelf management.

Why is shelf management so important in this effort? It builds consumer demand without the need for expensive consumer promotions.

"Speeding up new items to the shelf and removing old ones is very important," Lancaster stressed. "Supermarkets in the past operated with ad money. But Wal-Mart supercenters have done a better job at managing items. Ads aren't super important if you have the right items at the right price."

Retailers should also consider what might be called the weakest-link rule: "If in one part of the store you aren't mounting a good effort, it erodes the store overall," he said. Lancaster's message is helpful because it recognizes the supercenter's growing credibility but still tries to empower supermarket operators.

I like best this advice to supermarkets: "Consolidate and upgrade ahead of time. ... Your past credibility is your greatest defense against new competition. You can build up such a base that it's hard for anyone to take over."

That's a tall order, but not impossible for a retailer that understands its niche and customer base.