New England stiffly yields to sprouting Wal-Marts in their midst

Discount Store News, Dec 5, 1994

GREENFIELD, MASS. -- Even while encountering the traditional "rough sledding" that often greets newcomers to New England's business climate, Wal-Mart has scored big gains in a pincer movement into the heart of the six-state region.

To New England's west, Wal-Mart is building at a good clip across New York State, and peppering the Hudson River Valley with stores will help build a critical mass for pushing eastward. Operations began this year at the new distribution center in Marcy, N.Y., located 100 miles from the Vermont border.

From the Northeast, Wal-Mart's thrust will be anchored by a new DC in Raymond, N.H., set to start operations by fall 1996. With at least 30 discount stores in Maine and New Hampshire, Wal-Mart has begun to duplicate the kind of rapid saturation strategy it employed in the Midwest and South.

New England store count

Chain          Ames  Bradlees  Caldor  Kmart  Wal-Mart  Sam's Club
Vermont        13       0         0      3        0        0
New Hampshire  19       8         1     11       14        4
Maine          28       4         0      8       19        3
Massachusetts  32      38        25     26       17        5
Connecticut     15     24        30     15         4       3
Rhode Island    7       1         3      6        3        1
Total         114      75        59     69       57       16

Source: DSN Research

There were no Wal-Mart discount stores in New England until 16 opened in 1992. Within the next 13 months, 20 stores were added. Now there are at least 57 Wal-Marts in the region, as well as 16 Sam's Clubs across New England.

Wal-Mart has more than doubled its discount store count in Massachusetts in the past year, with 17 stores operating by November 1994. Rhode Island added one to the pair it had; Connecticut has doubled its count to four stores.

Today, Vermont remains the sole state in the Union without a Wal-Mart. To change that, the discounter downsized its proposed store for St. Johnsbury, winning approval for a site close to the town's central shopping district. Wal-Mart has also scaled down its St. Albans proposal. As word gets around, other towns may demand similar downsizing--a trend counter to Wal-mart's preference.

The chain seemingly has no immediate plans to include supercenters in New England, but is concentrating on building discount stores of the 115,000-sq.-ft. size.

The chain's efforts will soon enough bear fruit in Vermont, but in many choice markets, real estate elbowroom is at a minimum. In the population-rich states of Massachusetts and Connecticut, the topography is clogged with competitors. Full-liners Kmart, Ames, Bradlees and Caldor have a wealth of better locations, and command real estate teams with local savvy.

Wal-Mart's advance has been stymied by local citizen opposition in some towns, notably in Vermont and Massachusetts.

Residents of Westford and Greenfield, Mass., recently chased away proposed Wal-Marts. In Greenfield, citizens were persuaded by a coalition led by local Main Street merchants to bar the re-zoning of the area's industrial park to a commercial designation. In a related referendum, voters decided not to remove a 40,000-sq.-ft. cap on new commercial structures.

"One product not found on any shelf in a Wal-Mart," said Al Norman, a planner active in leading the Greenfield resistance, "is the small town quality of life. A lot of these small communities realize their quality of life attracts many businesses, and they can jeopardize that" by allowing in an overwhelming competitor.

Wal-Mart's legal scrapes with the "keep Vermont green" forces kicked up enough dust that the anti-sprawl National Trust for Historic Preservation placed the entire state on its "Most Endangered Places" list in June 1993. The Trust is not easily labeled from a political standpoint. It has also championed, for instance, the preservation of the oldest surviving McDonald's hamburger stand, which raised its 60-foot golden arches over Downey, Calif., in 1953.

Like other retailers that favor megaboxes for their newest stores, Wal-Mart has met spirited opposition in New England towns that possess hard-won awareness of the economic value of unspoiled scenery. While the chain typically wins these struggles, the cost can be high.

By its roughshod handling of some of these zoning cases, Wal-Mart has drawn anti-sprawl heat away from other chains, and may have delayed its own entry into some markets. The three regional discount chains have used this precious time to strengthen their merchant ranks. Ames and Bradlees now press comebacks, while Caldor has surged with double-digit growth for several years.

On the other hand, the region's long-depressed economy prompts many residents to give a ready welcome to a shiny new outsider bringing promises of jobs, tax revenue and low prices.

While its full-line competitors maneuver into soft lines strategies, Wal-Mart deploys its overpowering hard lines muscle to widen inroads. Category killers from Lechmere to Home Depot will provide friction on that front, but Wal-Mart's vendor partnerships add momentum across a growing number of categories.