Wal-Mart Virginia expansion bares urban strategy - discount store chain

Discount Store News, Oct 16, 1989 by Arthur Narkowitz

Wal-Mart Virginia Expansion Bares Urban Strategy

BENTONVILLE, Ark. - Wal-Mart plans to open at least four stores that exemplify its new urban strategy in the Greater Richmond area in eastern Virginia next year.

The move into Richmond also strengthens its base of units below the Mason-Dixon line prior to invading the Northeast. That step is expected to take place in the 1990-1991 period, with Wal-Mart opening stores and/or possibly acquiring a chain, trade observers said.

Wal-Mart's new urban growth plan calls for opening units in small cities on the perimeter of major malls and in mixed-use centers that include retail, office and even residential space.

The Wal-Marts in eastern Virginia, along with those set to open next year in Pennsylvania (see DSN, Sept. 25, page 1), firm up the chain's outpost on the edge of one of its two major untapped markets, the Middle Atlantic States/New England region. The other major region is the West Coast/Pacific Northwest, which Wal-Mart will invade for the first time next year with at least three stores in California (see DSN, Aug. 7, page 1).

The discounter will firm up its Southwest outpost, preparatory to invading California, by entering the Phoenix, Ariz., metro market next year. The stores, Phoenix sources said, will be in Chandler and Peoria, to be opened during the first quarter, and in Mesa, and in as yet unknown location, to be unveiled later in 1990.

Wal-Mart entered Arizona last year when it opened six stores, and this year Wal-Mart has added an additional five units. The discounter plans to open a regional distribution center in Loveland, Colo., next year to serve its growing presence in the Western states.

The Richmond area stores, along with those in Pennsylvania, are on a distribution line from Wal-Mart's distribution center in Laurens, S.C., opened last year. Opening stores in western Maryland, a state where Wal-Mart currently doesn't have any units, in Frederick and Hagerstown, for example, would fit in with this distribution pattern as well as its urban strategy and its drive to form a base for its move northward.

The company is preparing the grounds for opening discount stores in the Northeast by first unveiling Sam's Wholesale Clubs in this region. Wal-Mart projects opening a least 21 Sam's in the Northeast - a new market for the membership warehouse division - by the end of 1991. Sam's already has stores in Virginia and its Northeast units are due to be opened in Pennsylvania, Delaware, New Jersey, New York, New Hampshire and Maine.

Wal-Mart's long-range plan for Virginia, besides the move into Richmond, includes planning more stores in the southwestern part of the state, where it already has units in Big Stone Gap, Christianburg, Galax and Martinsville. Targeted communities include South Boston, Staunton, Lexington and Marion.

The Richmond stores - all 110,000 square feet - are in the suburbs of Short Pump, Mechanicsville, Chesterfield and Colonial Heights.

Three of the four Wal-Marts will be in shopping centers being built by the Tri-Equity Group, a Virginia-based real estate partnership, which is constructing at least six retailing and mixed-use developments in the Greater Richmond area.

The other site is owned by Faison & Associates, a North Carolina developer who is working with the discounter on other locations.

Spotting stores in mixed-use centers means the Wal-Mart can draw shoppers from a captive market, the people living and/or working in the development. In effect, the discounter becomes both a local convenience store and a shopping magnet for the wider surrounding area.

The three Tri-Equity centers that Wal-Mart will anchor include:

* The $20.2 million, 325,000-square-foot Short Pump Plaza, an all-retailing center located on Richmond's fast-growing West End; * The mixed-use $11.5 million, 250,000-square-foot Hanover Square center in Mechanicsville, a rapidly growing community in Richmond's northeast suburbs. A hotel, a movie theatre and offices are planned for the area along with retail space; * The mixed-use $10 million, 250,000-square-foot Iron Bridge Plaza being developed in the Chesterfield area on Richmond's South Side. The project will include an apartment complex and offices and office warehouse space.

Wal-Mart is pursuing another aspect of its urban strategy at Faison's development in Colonial Heights, also on Richmond's South Side. There the discounter will have a free-standing store on the perimeter of the site housing the 850,000-square-foot Southpark Mall, an enclosed center that has four department store anchors: Sears, JCPenney, Thalhimer and Leggett's. Wal-Mart isn't physically part of Southpark Mall but will easily be seen by customers shopping the center, enabling the discounter to feed off the mall's traffic.