WAL-MART WILL BRING SUPERCENTERS TO DOWNTOWN DALLAS, NEW ORLEANS

DAVID GHITELMAN / Additional reporting: Rusty Williamson

BENTONVILLE, Ark. -- Wal-Mart Stores here said it plans to open several urban supercenters, including stores in Dallas and New Orleans.

The company late last month unveiled plans for a two-story, 200,000-square-foot store in Dallas.

Wal-Mart also recently received approval from the New Orleans city council to build a supercenter in that city's historic Garden District.

Industry observers told SN the Dallas store could be poised to start a rapid rollout of downtown supercenters.

Burt Flickinger, managing director, Reach Marketing, Westport, Conn., said, "Just about every city's wide open [for Wal-Mart supercenters]."

He noted that the company has been buying the empty stores of bankrupt competitors such as Caldors, Bradlees and Montgomery Ward. "Wal-Mart is accelerating expansion through big-box conversion," he said.

Flickinger said in Dallas the stores most likely to lose market share to the downtown supercenter are those conventional supermarkets operated by Kroger Co., Cincinnati; Albertson's, Boise, Idaho; Tom Thumb, a subsidiary of Safeway, Pleasanton, Calif., and Minyard Food Stores, Coppell, Texas.

He added that he expects Winn-Dixie Stores, Jacksonville, Fla., will respond to the Wal-Mart announcement by converting its conventional supermarkets in the Dallas-Fort Worth area to the price-impact SaveRight format, which has been successful for them in Dallas.

However, David Rogers, president, DSR Marketing System, Deerfield, Ill., said he doubted that Wal-Mart is ready to begin a major rollout of urban supercenters.

"I wouldn't overanalyze one store," he cautioned. "It is expensive to operate a two-level store. You need all sorts of elevators both for people and goods, and a high level of staff just to watch for shrink.

"It will be interesting to see if they can make it work. There is a tremendous untapped potential in many urban areas."

The two-story concept store in Dallas will occupy 11 acres of land, as opposed to Wal-Mart's typical 20-plus acre layout. Parking will be under the store.

The company said it expects to get final zoning approval in August, and groundbreaking will begin after that. The store should open in mid-to-late 2003, the company added.

"We've never built a store like this before," said a Wal-Mart spokeswoman. "This is an incredibly unique design. We are eager to be more convenient for our customers in this area who may travel some distance to our stores in the suburbs."

There are two other Wal-Mart supercenters within about 10 miles of the site.

"This is a hugely important development for Wal-Mart and its future growth. It's a radical move into the urban retail environment. Target will be watching this very closely," said Walter Loeb of Loeb Associates, New York. "It could easily have yearly sales of $40 million to $60 million, which is a little higher than the average [Wal-Mart] supercenter. This is a new concept and will attract upscale, urban customers who now won't have to travel several miles to the suburbs to shop Wal-Mart."

The new supercenter format will feature an urban design scheme and construction innovations that are unusual for Wal-Mart. For example, the new format will feature a ground-level parking garage that sits directly beneath the elevated store. Escalators will be big enough to accommodate shopping carts, and the store's front will be right on the street to be accessible via sidewalk.

The prototype was designed by Middough Associates, Cleveland.

"In designing the urban supercenters, we're looking at the uniqueness of each neighborhood and how best to customize the store to fit into the setting," the Wal-Mart spokeswoman said. "We have plans to open several other urban supercenters, including in New Orleans, where we're going into a former public housing project. We're working with the city to preserve many of the old architectural and design elements."