Two-tier mall-based Wal-Mart store lands on fringe of dense NYC market

DSN Retailing Today, June 9, 2003 by Mike Duff

MASSAPEQUA, N.Y. -- Wal-Mart has opened its first two-level store on the East Coast, choosing to land in the community of Massapequa, N.Y., on the outskirts of New York City. The mall-based unit shares anchor positioning with Macy's, JCPenney and Sears and operates alongside an array of 135 retailers, including Old Navy, Hot Topic, Spencer's Gifts, H&M, Pacific Sunwear, Victoria's Secret, Waldenbooks, Sam Goody and a soon-to-be-closed Eddie Bauer.

Goldman Sachs analysts George Strachan and Adrianne Shapira, in a research note, focused on the new Massapequa location as evidence of a potential emerging trend in discount retailing. They estimated that 600 to 800 mall anchor slots could open during the next 10 years, with 300 to 400 of them in densely populated urban and suburban communities where undeveloped real estate is expensive and scarce. From 200 to 300 of these vacated stores could be replaced by discount store anchors, they reason, depending on factors such as lease costs and the availability of nearby freestanding stores.

Cities and densely populated suburbs remain underserved by broadline retailers in general and discounters in particular, and both Target and Wal-Mart have looked upon such markets as potential opportunities as they complete their conquest of more rural realms. Target has stores in the New York City boroughs of Queens and Brooklyn, and Wal-Mart recently unveiled a three-story, mall-based store in the Baldwin Hills section of Los Angeles. It previously opened a two-story unit, its first, in Panorama City, part of the L.A. metropolitan area. They noted that Target-which the analysts identified as having about 30 mall anchor locations-could play a major role in any trend of discounters bolstering existing retail malls, as could Wal-Mart. Although not as many as Target, Wal-Mart operates several mall-anchor locations, as well.

The new location, in the Sunrise Mall, is one of several stores in New York City's Long Island suburbs that WalMart has opened or is opening after they were shuttered by other retailers. One of its first stores in Long Island was a former Caldor, this most recent was a former Stearns and a planned store in Valley Stream, N.Y. was a former Kmart. The Valley Stream store is just about a 20-minute drive straight down Sunrise Highway, which borders the Sunrise Mall. Wal-Mart now operates 23 supercenters, 52 discount stores and 18 Sam's Clubs in New York state.

The Massapequa Wal-Mart debuted on May 28 without a soft opening, and customers didn't seem to mind the two-floor feature. "The customers love it," said assistant manager Elliot Martasin. "They've been coming by asking, 'When are you going to open? When are you going to open?'"

Their enthusiasm seemed to hold up even though a defective shopping cart put the cart conveyer that operates between the store's two levels out of service for half an hour or so during the first morning. Maintaining it will be a priority for the store. The 131,000-square-foot unit isn't particularly deep on either level, which may be one reason why only one set of check stands is available. Providing check stands on only one level turns the cart conveyer into something of a bottleneck, although customers seemed pretty patient as an employee disassembled the jammed cart and got the belt moving again.

The store had some unique attributes. The food section was deep, although the lay out more resembled the company's Canadian pantries than the blown out food sections Wal-Mart has been adding to some stores, including one nearby in East Meadow, N.Y. It included, for example, 32 cold and frozen doors with a product assortment ranging from milk, eggs, orange juice and bacon to frozen meals such as Uncle Ben's Rice Bowls, Stouffer Family Dinners and Michelina's Italian entrees.

The store also is part of a test that is gauging reaction to new, more industrial-looking fixtures, said John Watz, the store's manager. The new fixtures, called Canadian Outriggers, appear in consumables, where they housed, among other things, bulky- one is tempted to say warehouse-club size-bags of dog food up to 50 pounds in weight. They also showed up in housewares, where the new fixtures housed vacuum cleaners, extractors and related supplies.

One of the store's unique attributes is a manifestation of the manager's merchandising philosophy. End cap and power aisle displays included an out-of-the-box example of the featured product. Would you buy something if you couldn't touch it? Watz asked rhetorically, adding that providing a handson experience by way of a demo product "is something I do all the time."