Retail Memo: Wal Mart Has Created A New, More Upscale Supercenter Store Design Prototype; Submitting Plans For the Stores Selectively in U.S.

Wal-Mart, Inc. has created a new Supercenter design prototype (pictured above) which the retailer is currently submitting plans for to a select number of cities and counties in the U.S. where it hopes to build and open the first of these new design stores.

The prototype Supercenter, pictured at top in the artist's rendering of the design, has a completely different look and feel compared to the retailer's existing battleship blue and grey Supercenters.

The new Supercenter prototype is much sleeker in design than Wal-Mart's existing traditional big box Supercenter design and is rather upscale in its look and feel.

It still is a big box store in that it will feature all of Wal-Mart's traditional Supercenter departments, but it also has numerous new features and elements including: glass windows or large skylights on the roof to let in natural sunlight; numerous green building design elements which Wal-Mart has been using in its prototype "green" Supercenters for some time; and energy-efficient lighting systems that turn on when they detect a shopper and off when shoppers leave the particular area of the store.

The new design prototype Supercenter also features new department titles or names throughout the store, less clutter and in-store signage, curved lines rather than the square edges common in Wal-Mart's traditional Supercenters, and multiple earth-tone colors used throughout the store rather than the traditional blue and grey-only standard color scheme.

The new Supercenter prototype also features a new Wal-Mart logo to be placed on the stores. The new logo has two color schemes we've viewed. The first color scheme (pictured above) has blue lettering with a gold/orange starburst after "Wal-Mart." The second color scheme has "Walmart" in white letters on an orange background, with a white starburst after.

Wal-Mart, Inc. plans to officially unveil a new corporate logo next week, something that's being anxiously anticipated by company stakeholders, analysts and others. We believe Wal-Mart's new corporate logo might well be the one above, in one or the other color schemes. You read it (and viewed the logo) here first.

One of the handful of U.S. cities and counties Wal-Mart has submitted plans to for the new Supercenter prototype stores is Cordova, in Shelby County, Tennessee, according to a senior Wal-Mart official.

That plan initially called for the new design prototype Supercenter to be a whopping 267,000 square feet, which would have made it Wal-Mart's largest Supercenter built to date.

However, the Shelby County Land Use Control Board rejected the mega-retailer's plan for the mega-Supercenter earlier this year because of extensive objections by nearby residents over its size, along with having concerns about potential noise and traffic issues. The Supercenter's size also was objected to by the Shelby County Division of Planning and Development, along with it having some serious concerns about increased traffic on existing roads.

Wal-Mart went back to the drawing board, and on July 10 will present a revised plan to the Shelby County Land Use Control Board for a much smaller 151,908 new design prototype Supercenter for the same site in Cordova, in Shelby County, according to the senior Wal-Mart official. Cordova is near Memphis. The Supercenter site is at Macon and Houston Levee in Cordova. The county has jurisdiction over planning in Cordova.

The design elements of the revised, smaller 151,908 square foot Supercenter are identical to those of the initial 267,000 proposed monster-store, acccording to the Wal-Mart senior official. The only change is one of scale, he says.

One of the features of the new design prototype Supercenter is that it can be of variing sizes--as big as the 267,000 square foot model (and bigger if desired) described above, and as small as about 100,000 square feet. This feature allows Wal-Mart to moreeasily adapt the prototype to specific neighborhoods, as well as municipal and county political situations aand conditions.

The site for the Supercenter in Cordova, in Shelby County, Tennessee, is a 26-acre development which includes numerous other commercial buildings besides the proposed Supercenter. Wal-Mart has a contract to buy the land on which the proposed Supercenter would sit and will do so if its plans for the 151,908 square foot new design prototype Supercenter are approved by the county land use board, according to the senior Wal-Mart official.

If approved at or not to long after the Shelby County Land Use Control Board meeting on July 10, when Wal-Mart officials will present the revised Supercenter plan, we're told by the Wal-Mart senior official the Tennessee new design prototype likely will be the first of the new design Superstores to be built and opened in the U.S.

It's far from certain the revised Supercenter will gain approval however. There remains much opposition to it among various citizens and groups in the area, although thy've yet to see Wal-Mart's plans for the smaller Supercenter.

The Supercenter's opponents' primary concerns are traffic and noise. The county also has concernes because it says it will have to spend a considerable amount of money on road and intersection improvements because of the heavy volume of automobile traffic the new Supercenter will generate in the area.

What's significant though, at least for this piece, is that Wal-Mart has created this new age design Supercenter prototype. You can bet if this particular new Supercenter doesn't get built in this particular part of Tennessee, one of the new design Supercenters will be built soon elsewhere in the U.S.

As we wrote about here, Wal-Mart has become flexible with its Supercenter size recently, when historically it's been rigid over tweaking the size of the mega-stores. For example, the retailer is converting a 105,000 square foot former big box retail building in Modesto, California into a Supercenter which will be one of only two in that small size range it currently has. The other is near Fresno, California.

Additionally, as we reported here, Wal-Mart is converting a number of its Wal-Mart discount format stores in Southern California's Orange County into Supercenters, adding about 50,000 -to- 75,000 square feet to them, which will be used for food and grocery (including fresh foods) product merchandising.

These "hybrid" Supercenters will be much smaller than the average 180,000 square foot Wal-Mart Supercenter but will allow for a full selection of fresh foods and grocery products to be sold in them, which is a top priority for the mega-retailer, since food and grocery now comprise 41% of Wal-Mart's overall sales, according to the most recent categorysales numbers from the retailer.

Despite being the world's largest corporation and retailer, Wal-Mart isn't letting that prevent it from innovating. In fact, when it comes to retail format innovation, Wal-Mart is currently innovating more so than it's done at any time in its history.

In addition to the multi-format Supercenter concepts mentioned above, along with Wal-Mart's "green Wal-Mart Supercenter prototype, the mega-retailer is set to open its new Marketside small-format grocery stores, or what we call "Small-Mart's," in four cities in the Phoenix, Arizona Metropolitan region this fall.

The Marketside "Small-Marts" at about 15,000 square feet are about the size of the meat department in one of the retailer's 200,000 square foot Supercenters.

The stores are being positioned by Wal-Mart as small community grocery stores with a focus on service. The product merchandising focus in the Marketside stores will be in-store made fresh, prepared foods, fresh produce and meats, and basic and specialty grocery products, including some new store brands to be introduced by Wal-Mart just for the Marketside grocery stores.

Additionally, Natural~Specialty Foods Memo has learned Wal-Mart plans to convert more former big box stores in the 100,000 square foot range into smaller Supercenters like it's doing in Modesto, California, in other selected cities which like Modesto it's been difficult if not impossible for the retailer to get new Supercenters approved due to extensive city and community opposition. This is particularly true in California.

Further, as we wrote about in this May 6 piece, "Ethnic Retailing Memo: Wal-Mart to Open the First Store of its 'Hispanic Community' Store Ethnic Retailing Format Tomorrow Morning in Garland, Texas," Wal-Mart also recently created a brand new "Hispanic Community Sstore" format, opening the first one in a converted Supercenter in Garland, Texas in May.

Lastly on the format innovation front, we've learned Wal-Mart is working on some new design changes, tweaks and upgrades to its 45,000 square foot Neighborhood Market supermarkets. The retailer hasn't done much in terms of expanding its Neighborhood Market store count since it created the format and opened the first store in 1998. However, in the last couple years its opened a higher than historic annual average number of the supermarkets, and plans on continuing to do so for the next few years in select regions of the U.S.

For the last few years, Wal-Mart has been customizing the design of its Supercenters in a few regions of the U.S., where doing so has helped it to gain approval for the stores. For example, in Colorado, Wal-Mart has built two Supercenters that blend in with the respective communities' mountain setting, using earth-tone colors and brick on the store facades rather than the traditional blue and grey-colored materials it normally uses, as well as adding features like bicycle paths around the store, and even a bicycle shop inside one of the Colorado stores.

It appears to Natural~Specialty Foods Memo the new design prototye Supercenter is an evolution of that customization as well as a "mass customizatio"n of many elements of the handful of "green" Wal-Mart Supercenters the retailer has opened over the last few years in the U.S.

The flexibility of the new design prototype Supercenter--to go from say 267,000 square feet -to 152,000 sqaure feet for example--also has an element of "mass customization" in it which should serve Wal-Mart well.

The fact the new design prototype Supercenter is much more upscale and attractive than the basic format Supercenter (which wouldn't take much), seems to send a signal from the brawny big box retailer from Bentonville it believes its low and value price positioning won't be hurt by housing such merchandising--the key to the retailer's success--in a more sleek, upscale and considerably more attractive retail box (a box with lines even).

As far as we are aware, Wal-Mart doesn't intend at this point in time to completely do away with its standard Wal-Mart Supercenter battleship blue and grey big box. Although, based on conversations with our sources, we suspect eventually doing so will be the case for the mega-retailer from Arkansas, especially if the new logo Wal-Mart unveils next one is the one we have pictured in this story.

Ethnic Retailing Memo: Wal-Mart to Open the First Store of its 'Hispanic Community' Store Ethnic Retailing Format Tomorrow Morning in Garland, Texas

Wal-Mart, the world's largest corporation and retailer--and an increasingly multi-format and niche merchandising-oriented one--will open the first store in its new "Hispanic Community" store format tomorrow morning in Garland, Texas.

The store, a 100,000 square foot-plus market dedicated 100% to Hispanic shoppers (others are welcome of course), is not only a first in terms of being the mega-retailer's pioneer "Hispanic Community" store ethnic retailing format, it's also is housed in a historic building.

The Garland, Texas Wal-Mart "Hispanic Community" store is located in what was the retailer's first Hypermart USA, the prototype of which eventually became today's combination food, grocery and general merchandise Supercenter. Wal-Mart later changed the Garland store's name to Supercenter, like its other mega stores of that format and name.

Legend has it that on the first day the Garland, Texas Hypermart USA opened in 1987, 40,000 people shopped what was then one of the biggest stores ever built in the United States.

The store has been open all this time since 1987 (as a Supercenter), and is only closing because Wal-Mart decided to convert the store into its first combination food and general merchandise "Hispanic Community" store.

One of the reasons Wal-Mart chose the former Hypermart USA on Garland Avenue to be its prototype "Hispanic Community" store, is because a full 50% of the store's shoppers are of Hispanic ethnicity, Daniel Morales, Wal-Mart's Texas regional spokesman told Natural~Specialty Foods Memo.

The brawny big-box retailer from Bentonville says 14% of all of its shoppers in the U.S. are Latino, according to its research. (14% is about the overall percentage of Hispanics living in the U.S.) Further, Wal-Mart says 1,000 of its U.S. Supercenters are located in predominately Hispanic neighborhoods.

The retailer has niche marketed to Latinos in these stores increasingly over the last few years, adding authentic Mexican, Latin and Central American food and grocery items, fresh produce and cuts of meat.

Wal-Mart also has introduced fresh baked Mexican breads and pastries in its in-store bakeries in Latino neighborhoods where it has stores, brought in Hispanic non-foods' items across all categories, ranging from toys to clothing, and printed all of its in-store point-of-purchase signs in Spanish as well as in English, among other Hispanic marketing and merchandising practices its initiated.

Wal-Mart is now the number one food and grocery retailer in Mexico with its Wal-Mart-Mexico Supercenter division. As a result, it's gained lots of knowledge about Hispanic consumers and authentic Mexican cuisine, food and grocery brands, and non-foods items.

Further, because of its size in Mexico, Wal-Mart also has lots of leverage and buying power in terms of importing food, grocery and non-foods products from Mexico, Latin and Central America to its stores in the U.S. There's an excellent synergy between what Wal-Mart does in its Wal-Mart-Mexico Supercenters and what it does at its U.S. Supercenters--and now will be able to do in its "Hispanic Community" stores--which have high percentages of Hispanic shoppers.

However, the Garland, Texas "Hispanic Community" store is the very first Wal-Mart completely created for Hispanic shoppers, Morales says.

Among the store's features which shoppers will see tomorrow morning include:

>An in-store bakery where fresh tortillas and corn chips are made from scratch, aisles and aisles of food and grocery products from Mexico, Latin and Central America.

>A massive produce department the size of many supermarkets, piled high with every type of Hispanic-oriented fresh fruit and vegetable item Wal-Mart could locate, along with rows and rows of dried peppers, spices and other Latino favorites.

>A meat department which features all the types and cuts of meat (think thin sliced beef), poultry, pork, fish and seafood Latino shoppers could desire; and a huge inventory of non-foods' items geared especially for Hispanic consumers.

The store also features food, grocery and general merchandise items consumers of all ethnic backgrounds are familiar with; including lots of national brands both from the U.S., Mexico, Latin and Central America.

Research shows Hispanic or Latino shoppers in the U.S. spend far more of their income on a per-capita basis on food and groceries than do consumers of all other ethnic backgrounds. Additionally, Hispanic shoppers buy more overall meat, poultry, fish and dairy products than consumers of all other ethnic origins.

Some special in-store features in the "Hispanic Community" store include Wal-Mart's first kids' furniture department, and the chain's first drive-through garden department.

There's a huge juice bar named Flor De Michoacan in the front of the store, with an ice cream shop right next to it. Both in-store shops sell dozens of the ice cream and juice varieties and flavors popular among Latinoconsumers.

Because Hispanic families tend to be larger than other ethnic groups in the U.S., as well as being very close knit, the theme throughout the store--as evidenced by the kids' furniture shop garden center, ice cream shop and juice bar for example--is family-oriented.

Wal-Mart will deck the store out for every Hispanic holiday, according to Morales, including having in-store fiestas on special days like Mexican Independence Day in September.

But it isn't just the holidays the store will being celebrating.

Basically, the merchandising philosophy will be to have excitement happening all the time in the store, Morales says. Multiple food tastings, live music, events for the kids, special days for senior citizens, will be just a sampling of the in-store activities the retailer has planned for the 100,000-plus square foot Wal-Mart "Hispanic Community" store.

When the first-of-its-format store opens tomorrow morning, the entire interior will be merchandised around a family-oriented picnic theme. Everything one could imagine they would need for a family picnic will be available in the store, according to Morales: foods, drinks, paper plates and serving ware, deserts, picnic tables, backyard grills, clothes, flip flops for the kids and much more.

In fact, Wal-Mart has created what it calls an "events" department in the front of the Garland "Hispanic Community" store. The events department will have rotating displays and other activities based on seasonal themes, with something always going on, Morales says.

The origin of the Garland Hypermart USA, which tomorrow morning officially becomes store number one of the new "Hispanic Community " store format, is an interesting one.

In 1986, Wal-Mart, which only operated its discount store and Sam's Club formats at that time, created a joint venture with Dallas, Texas-based Cullum, Cos., which operated the Tom Thumb supermarket chain at the time, which has since been sold to Safeway Stores, Inc. Cullum Cos. and Wal-Mart opened the Garland Hypermart USA in 1987, and then a second one in Arlington, Texas in 1988.

Later in 1988, Wal-Mart opened a similar store on its own in Washington, Missouri. However, since the Hypermarket USA name was restricted only to stores the two companies opened together as joint-venture partners, Wal-Mart needed to come up with a different name for the Missouri big box store. That's when the name Wal-Mart Supercenter was born, in 1988 for the Missouri store. As they say--the rest is history.

Wal-Mart and Cullum Cos. never did open any additional Hypermarket USA's together after the two in Texas. Later, Wal-Mart bought Cullum Cos.'s interest in the two stores--the one in Arlington and the Garland, Texas store--and re-branded them as Wal-Mart Supercenters.

We don't think Sam Walton ever intended to open more than the two Hypermart USA stores with Cullum Cos. Rather, since prior to opening the two joint-venture Hypermart stores, Wal-Mart had basically zero food and grocery expertise, we think savvy Sam Walton was going to school on the Cullum brothers, who had decades of experience in the supermarket industry.

When it comes to food and grocery industry experience, Wal-Mart has certainly come a long way in just a shade over 20 years, when that first Hypermart USA opened. It's now the leading food and grocery market share retailer in the U.S.

Tomorrow, Wal-Mart begins another chapter in its increasingly multi-format and niche retailing empire--the opening of its first-of-the-format "Hispanic Community" store in the old Hypermart USA building in Garland.

Related Reading:

Wal-Mart 2.0: The emerging multi-format retailer

As we reported in Natural~Specialty Foods Memo on April 25, Wal-Mart has created two new Supercenter hybrid formats in California. One is a smaller-size Supercenter (about 100,000 square feet rather than the traditional average 185,000 square feet) that it's put into two old big box stores it acquired; one in Sanger, California that's open, and the other in Modesto, California, which will open soon.

The second Supercenter hybrid format has been developed for some of the retailer's discount stores in Southern California. Wal-Mart will add additional square feet on those stores, creating a hybrid Supercenter.

Read about these two developments in our April 25 piece here.

Wal-Mart also has developed a new, small-format grocery store concept called Marketside. The grocery stores, the first four of which are set to start opening this summer in the Phoenix, Arizona Metropolitan region, will be about 15,000 -to- 25,000 square feet. The small-format markets will feature a selection of basic food and grocery items, including fresh meats and produce. The Marketside stores also will feature fresh, prepared foods, wines and items in other food and non-food categories.

Read some of our Wal-Mart Marketside format coverage here.

Wal-Mart 2.0: The emerging niche-merchandiser

In addition to expanding its retail format portfolio with the Supercenter hybrids, the small-format Marketside grocery stores soon to open in Arizona, and its new "Hispanic Community" store ethnic format, Wal-Mart also has taken a Supercenter and niched-merchandised it out so it targets and caters to Arab American consumers. The store is believed to be the only chain outlet in the U.S. with an ethnic merchandising focus centered around Arab Americans.

That store, a 200,000 square foot Supercenter, is located in Dearborn, Michigan. The Dearborn region has the highest per-capita concentration of Arab Americans in the U.S.

Read about the Dearborn, Michigan "Arab American" Wal-Mart store here and here.

Other merchandising niches Wal-Mart is mining in it's stores include:

> "localism:" In parts of the U.S. like the Colorado Rocky Mountain region, the retailer has built Supercenters which look more like rustic lodges than the typical Wal-Mart Supercenter. Wal-Mart also put its first in-store complete bicycle shop in one of those Colorado stores last year. The retailer created miles of bike trails around the store. It also built rest areas off the trails near the store where cyclists can stop to filled their bike tires with air fro free and get a drink of water.

>"environmentalism:" Wal-Mart continues to rollout its "green" or "eco-Supercenters" selectively in the U.S. The retailer has promised it will built more of these stores, which not only are designed to very high "green" standards, but also carry an expanded variety of eco-oriented food and general merchandise prodcuts across the entire store.

>"Asian foods:" Wal-Mart is increasingly niche-merchandising its Supercenters located in neighborhoods where ther is a high percentage of Asian consumers. It's learned much about Asian category merchadising from its Sam's Club stores, which tensdto get a high-porportion of Asian shoppers. Look for the retailer to get much deeper into Asian category food and non-food niche merchandising in the near future.

Retail Memo Special Feature: Wal-Mart, Inc. Might have Found A Solution or Two to Much of the Opposition to its Mega-Supercenter Stores in the USA

Mega-retailer Wal-Mart may have found a solution (or two) to all the community-based opposition in many parts of the U.S. to the retailer's building of its Supercenter stores.

Last month, the brawny big-box bruiser from Bentonville (Arkansas) decided to kill 47 new Supercenter store projects it had on the books for a variety of reasons, all having to do with either opposition to the stores from city and country governments or community-based groups in the cities and neighborhoods where the respective stores were to be built.

Don't feel sorry for Wal-Mart though. The world's and United States' largest retailer will still open at least that many (47) new Supercenters in the U.S. this year, plus a handful more.

The municipal government and community-based group oppostion is a serious impediment to Wal-Mart's Supercenter growth plan in the U.S. however. But it's not a new problem. It's been going for for years.

However, what is new is Wal-Mart's response to the oppostion, which historically has only been one-dimensional: To lobby city governments and community groups, trying to change their minds, or to fight the oppostion in court.

Until now, that is.

The Modesto Supercenter Strategy

In the Central Valley city of Modesto in Northern California, Wal-Mart is gutting an old 105,000 square foot long-empty big-box retail building, which most recently was divided in half and housed a store belonging to the now gone local discount warehouse grocery chain SavMax in one half of the building and a Rite-Aid drug store in the other half.

Wal-Mart is turning the 105,000 square foot building into a scaled-down version of its Supercenter format store. The Modesto Supercenter, which is located at 3848 McHenry Blvd. a popular shopping street in the city of about 210,000, will have all the departments--fresh produce, meat, perishables, dry grocery and the like--that its larger Supercenters have, which average about 185,000 square feet and run as big as 225,000 square feet.

The only difference between the more petite Modesto Supercenter and nearly all of the retailer's other, larger Supercenters, is that those departments will be scaled down and the store's overall product selection will be a bit less expansive than in the traditional Supercenters.

To compare the size difference of this new Supercenter in Modesto to Wal-Mart's other stores of the same format, lets compare it to the retailer's Wal-Mart discount store format stores, one of which the retailer has in Modesto. That store, like all the Wal-Mart disount format stores', carries only a limited assortment of grocery products in a few aisles plus some basic frozen and perishable foods. However, it's still 115,000 square feet without the supermarket inside, which is 10,000 square feet larger than the new full food and grocery Supercenter set to open early next year on Modesto's McHenry Avenue.

The Modesto Supercenter scheduled to open early next year isn't the first smaller-size Supercenter Wal-Mart has opened, nor the first it's located in an old big-box building it's gutted and completely remodeled. Last year, the retailer opened a Supercenter in Sanger, California that's just a bit larger than the Modesto store. Sanger is a suburb of Fresno and is about 100 miles south of Modesto in the southern Central Valley.

The main reason Wal-Mart is doing this Supercenter scaling-down in California, and especially in the Central Valley, is because the state as a whole and the region particularly, has been one of the most difficult places in the U.S. for the mega-retailer to get approval to build it's 185,000 -to- 225,000 square foot new, from the ground-up Supercenters.

For example, Wal-Mart planned to build a roughly 200,000 square foot Supercenter in a shopping center in Modesto in 2001. However, after a couple years' of rangling with the city planning commission and city council, as well as opposition from numerous small business groups, it abandoned those plans.

In 2004, Wal-Mart proposed building a brand new 225,000 Supercenter in Turlock, which is a city of about 75,000 residents located just 10 miles from Modesto. The Turlock City Council not only rejected Wal-Mart's proposal--even though the retailer already had a Wal-Mart discount store in the city and promised to keep it open along with the new Supercenter--it ended up passing a big-box ordinance which prohibited any retailer from opening a store of at least 100,000 square feet that devoted at least 5% of its floor space to grocery items.

The Supercenter ban was specifically designed to prevent Wal-Mart from locating a Supercenter in the city. However, through its language it left the door open for big box retailers like Costco Wholesale and even Wal-Mart's Sam's Club.

Wal-Mart filed a law suit against the city of Turlock in February 2004, one month after the city council passed the ban legislation. The case was in the courts for two years. In 2006 the court ruled in favor of the city and Wal-Mart announced it would no longer try to build a Supercenter in the city.

Big box bans like Turlock's are common in California. Two other cities in the area, Oakdale which is next door to Modesto, and Patterson, which is about 25 minutes away from Modesto, have both passed laws similar to Turlock's, designed specifically to keep Wal-Mart Supercenters out of their respective cities.

Wal-Mart pulled the plug on a Supercenter in another nearby city in 2006, when the city of Ripon, just a few miles from Modesto, fought against the retailer's proposal to locate a Supercenter in the community. At the time the issue of contention was over where the Supercenter would be located in Ripon. Wal-Mart announced it would not build on the site but would look for a more suitable location in the city. That was two years ago and the retailer is yet to announce a site in Ripon.

Last year, Wal-Mart did get approval to build a 225,000 square foot Supercenter in Ceres, which is right next door to Modesto. However, the community of about 45,000 was far from the retailer's first or second choice in the region. But since the city is aggressively seeking retail and streamlines the permit process, Wal-Mart went forward with the proposal. The Ceres, California Supercenter is currently being built--not without community protest of sorts--and is scheduled to open later this year or early next year.

Bay Area and SoCal also tough for Supercenters

Its not just the Central Valley that opposes Wal-Mart Supercenters so strongly. In fact, the nine county San Francisco Bay Area, which is about 90 minutes from Modesto, opposes the mega-stores as much or even more than the Valley's municipalites and communty groups.

Wal-Mart has only a couple Supercenters in the 7-million population-strong Bay Area. Those stores are out in the fringes of the region where opposition and the need for tax dollars of any kind are far more desired than in the major Bay Area cities and suburbs. As a result, opposition to the Supercenters is less intense.

Try as it might, Wal-Mart has failed to build numerous new Supercenters its proposed in many of the most desirable Bay Area cities; cities where it wants to be with that format.

Wal-Mart hasn't had much better luck in the Southern California region, where more than half of California's residents live. It has some Supercenters in the region, but nowhere near the number it wants--or has tried to get approval for.

In fact, it's in Southern California where Wal-Mart has come up with phase two of its plan to open more Supercenters in the Golden State, albeit somewhat smaller than average like the Modesto and Sanger stores, and of a somewhat hybrid nature

The retailer just announced plans to add an additional 25,000 -to- 50,000 square feet on to a number of its Wal-Mart discount stores in Orange County, therby turning them into hybrid Supercenters.

According to John Mendez of Wal-Mart, the stores--like the Modesto Supercenter--will have all the same departments and sell the same food and grocery products that a standard, larger Supercenter does. The departments will just be scaled-back and have a more limited overall product assortment.

Wal-Mart's discount stores sell perishable items like milk, juice and eggs, have some frozen foods, and contain aisles where a limited assortment of grocery products is offered.

The expanded discount stores would still retain all the non-foods departments they currently have but would add a smaller-version of a full-fledged Wal-Mart Supercenter supermarket inside.

Wal-Mart becoming more agile

These two developments, along with Wal-Mart's new, small format (about 15,000 -to- 20,000 square feet) Marketside grocery markets, which will make their debut this summer in the Phoenix, Arizona Metropolitan region, are showing that a mega-retailer can also be a nimble one when it comes to format adjustments and creations.

By choosing a Supercenter strategy which includes remodeling existing, smaller buildings like in Modesto and Sanger, and adding on square footage to Wal-Mart discount stores like the retailer plans to do in Orange County, Wal-Mart is showing a new adaptability after years of sticking with the single Supercenter mind set and format.

As a result, the retailer will be able to garner much more of the grocery dollar market share in states like California where the opportunity is there but the jumbo sized singular Supercenter format has proven a barrier to entry.

Additionally, the small-format Marketside stores will give Wal-Mart an urban strategy for city's like San Francisco, Oakland, San Jose and Sacramento in Northern California, and Los Angeles and San Diego in Southern California, if it chooses that strategy.

For example, it's impossible for Wal-Mart to get approval, even if it found the space, to built a Supercenter in politically-charged San Francisco. However, it's likely it could get approval--with a bit of a fight still--to buildl a 15,000 -to- 20,000 square foot Marketside store, or two or four in the highly dense city.

The same is the case in urban Los Angeles and San Diego. In terms of the Modesto model of locating a Supercenter in a smaller, existing building, doing so makes it difficult for a city to stop Wal-Mart because the application and permiting process is much different than when building a new store from the ground up. Essentially, a city like Modesto can't prevent Wal-Mart from putting whatever type of store it desires in an existing building like the 105,000 square foot former combined supermarket and drug store location on McHenry Avenue, as long as it files the proper paperwork and meets existing city laws.

It's the same for the square footage additions the retailer plans to do with some of its Orange County Wal-Mart discount stores. Should the respective cities in Orange County try to hold up or prevent Wal-Mart from adding the additional square footage to those stores, the retailer would easily win in court, since such additions are done by retailers of all types regularly, and preventing Wal-Mart alone from doing it would likely be ruled descriminatory.

Localizing and shrinking new Supercenters

Another strategy Wal-Mart is employing is to design its Supercenter to fit in with a local city's geographic location, setting, culture and history. For example, the brand new Wal-Mart Supercenter in Austin, Texas pictured at the top of this piece, sure looks different than the typical Wal-Mart square, big box Supercenter, doesn't it? It's designed to fit into the more hip, upscale style that is Austin.

The retailer has designed similar "local" Supercenters in Colorado that fit in with the regions rugged mountains and woods, using different roofing and siding on the buildings, in addition to numerous other local touches. One Supercenter in Colorado even has a complete bicycle shop in the store, and Wal-Mart built and paid for bike paths and bike racks on land around the store because the communtiy is a major bicycling area.

These localization design strategies also include shrinking the Supercenters a bit if need be. Wal Mart has built a couple of brand new Supercenters so far that are in the 130,000 square foot range rather than the average 185,000 size.

Marketshare is key regardless of format

Last year, Wal-Mart overtook Kroger Co. as the number one grocery sales market share leader in the U.S. It's a close race between the two retailers though.

What Wal-Mart seems to have finally figured out with its new format flexibility as detailed in this piece, is that grocery marketshare is king, and it doesn't have to just come from a 185,000 -to- 225,000 square foot Supercenter.

In addition to putting the scaled-down Supercenters in the old big-box buildings like the retailer is doing in Modesto and Sanger, adding the additional square footage for groceries onto the existing discount Wal-Marts in Orange County, and introducing the new, small-format Marketside grocery stores this summer in Arizona, Wal-Mart also is building more of its average 45,000 square foot Neighborhood Market supermarkets this year and next than it has in many years.

This new, muti Supercenter and multi grocery store format strategy should give Wal-Mart additional market share, allowing it to increase its lead over Kroger. The main reason this should be the case is because these strategies will allow it to increase its grocery sales square footage in places like California where it currently has a minimal food and grocery retailing presence because of the inability to open any where near the number of traditional, new Supercenters it has wanted to for over a decade.

The mega-retailer plans to use its hybrid Modesto Supercenter strategy and the Orange County add-on discount store strategy in other parts of the U.S. in which gaining approval for new, built from the ground up Supercenters is a problem.

The Modesto Supercenter strategy also will be used in places like urban areas, where space is of a premium and the idea of acquiring an empty big box building and turning it into a Superstore is a good option.

Further, expect to see Wal-Mart add additional square feet on to other discount stores in other parts of the U.S. this year and beyond. Food and grocery sales are what's allowing the retailer to post strong sales and profit gains like its recently released quarterly profits.

Wal-Mart wants to be able to sell more food and grocery products in all categories in all of its stores--as well as in more places in the USA. As a result, the strategies detailed in this piece will be implemented, along with the building of new Supercenters, wherever the brawny big box retailer from Bentonville thinks they make sense.

Retail Memo Special Feature: New Multi-Supercenter and Multi-Format Strategies Are Showing Wal-Mart to Be A More Agile Grocery Retailer in the U.S.

The new Supercenter in Austin, Texas (above) isn't your 'father's' Wal-Mart Supercenter

Mega-retailer Wal-Mart may have found a solution (or two) to all the community-based opposition in many parts of the U.S. to the retailer's building of its Supercenter stores.

Last month, the brawny big-box bruiser from Bentonville (Arkansas) decided to kill 47 new Supercenter store projects it had on the books for a variety of reasons, all having to do with either opposition to the stores from city and country governments or community-based groups in the cities and neighborhoods where the respective stores were to be built.

Don't feel sorry for Wal-Mart though. The world's and United States' largest retailer will still open at least that many (47) new Supercenters in the U.S. this year, plus a handful more.

The municipal government and community-based group oppostion is a serious impediment to Wal-Mart's Supercenter growth plan in the U.S. however. But it's not a new problem. It's been going for for years.

However, what is new is Wal-Mart's response to the oppostion, which historically has only been one-dimensional: To lobby city governments and community groups, trying to change their minds, or to fight the oppostion in court.

Until now, that is.

The Modesto Supercenter Strategy

In the Central Valley city of Modesto in Northern California, Wal-Mart is gutting an old 105,000 square foot long-empty big-box retail building, which most recently was divided in half and housed a store belonging to the now gone local discount warehouse grocery chain SavMax in one half of the building and a Rite-Aid drug store in the other half.

Wal-Mart is turning the 105,000 square foot building into a scaled-down version of its Supercenter format store. The Modesto Supercenter, which is located at 3848 McHenry Blvd. a popular shopping street in the city of about 210,000, will have all the departments--fresh produce, meat, perishables, dry grocery and the like--that its larger Supercenters have, which average about 185,000 square feet and run as big as 225,000 square feet.

The only difference between the more petite Modesto Supercenter and nearly all of the retailer's other, larger Supercenters, is that those departments will be scaled down and the store's overall product selection will be a bit less expansive than in the traditional Supercenters.

To compare the size difference of this new Supercenter in Modesto to Wal-Mart's other stores of the same format, lets compare it to the retailer's Wal-Mart discount store format stores, one of which the retailer has in Modesto. That store, like all the Wal-Mart disount format stores', carries only a limited assortment of grocery products in a few aisles plus some basic frozen and perishable foods. However, it's still 115,000 square feet without the supermarket inside, which is 10,000 square feet larger than the new full food and grocery Supercenter set to open early next year on Modesto's McHenry Avenue.

The Modesto Supercenter scheduled to open early next year isn't first smaller-size Supercenter Wal-Mart has opened, nor the first it's located in an old big-box building it's gutted and completely remodeled. Last year, the retailer opened a Supercenter in Sanger, California that's just a bit larger than the Modesto store. Sanger is a suburb of Fresno and is about 100 miles south of Modesto in the southern Central Valley.

The main reason Wal-Mart is doing this Supercenter scaling-down in California, and especially in the Central Valley, is becuase the state as a whole, and the region particularly, has been one of the most difficult places in the U.S. for the mega-retailer to get approval to build it's 185,000 -to- 225,000 square foot new, from the ground-up Supercenters.

For example, Wal-Mart planned to build a roughly 200,000 square foot Supercenter in a shopping center in Modesto in 2001. However, after a couple years of rangling with the city planning commission and city council, as well as opposition from numerous small business groups, it abandoned those plans.

In 2004, Wal-Mart proposed building a brand new 225,000 Supercenter in Turlock, which is a city of about 75,000 residents located just 10 miles from Modesto. The Turlock City Council not only rejected Wal-Mart's proposal--even though the retailer already had a Wal-Mart discount store in the city and promised to keep it open along with the new Supercenter--it ended up passing a big-box ordinance which prohibited any retailer from opening a store of at least 100,000 square feet that devoted at least 5% of its floor space to grocery items.

The Supercenter ban was specifically designed to prevent Wal-Mart from locating a Supercenter in the city. However, through its language it left the door open for big box retailers like Costco Wholesale and even Wal-Mart's Sam's Club

Wal-Mart filed a law suit against the city of Turlock in February 2004, one month after the city council passed the ban legislation. The case was in the courts for two years. In 2006 the court ruled in favor of the city and Wal-Mart announced it would no longer try to build a Supercenter in the city.

Big box bans like Turlock's are common in California. Two other cities in the area, Oakdale which is next door to Modesto, and Patterson, which is about 25 minutes away from Modesto, have both passed laws similar to Turlock's, designed specifically to keep Wal-Mart Supercenters out of their respective cities.

Wal-Mart pulled the plug on a Supercenter in another nearby city in 2006, when the city of Ripon, just a few miles from Modesto, fought against the retailer's proposal to locate a Supercenter in the community. At the time the issue of contention was over where the Supercenter would be located in Ripon. Wal-Mart announced it would not build on the site but would look for a more suitable location in the city. That was two years ago and the retailer is yet to announce a site in Ripon.

Last year Wal-Mart did get approval to build a 225,000 square foot Supercenter in Ceres, which is right next door to Modesto. However, the community of about 45,000 was far from the retailer's first or second choice in the region. But since the city is aggressively seeking retail and streamlines the permit process, Wal-Mart went forward with the proposal. The Cerers Supercenter is currently being built--not without community protest of sorts--and is scheduled to open later this year.

Bay Area and SoCal also tough for Supercenters

Its not just the Central Valley that opposes Wal-Mart Supercenters so strongly. In fact, the nine county San Francisco Bay Area, which is about 90 minutes from Modesto, opposes the mega-stores as much or even more than the Valley's municipalites and communty groups.

Wal-Mart has only a couple Supercenters in the 7-million population strong Bay Area. Those stores are out in the fringes of the region where opposition and the need for tax dollars of any kind are far more desired than in the major Bay Area cities and suburbs. As a result, opposition to the Supercenters is less intense.

Try as it might, Wal-Mart has failed to build numerous new Supercenters its proposed in many of the most desirable Bay Area cities; cities where it wants to be with that format.

Wal-Mart hasn't had much better luck in the Southern California region, where more than half of California's residents live. It has some Supercenters in the region, but nowhere near the number it wants--or has tried to get approval for.

In fact, it's in Southern California where Wal-Mart has come up with phase two of its plan to open more Supercenters in the Golden State, albeit somewhat smaller than average like the Modesto and Sanger stores, and of a somewhat hybrid nature

The retailer just announced plans to add an additional 25,000 -to- 50,000 square feet on to a number of its Wal-Mart discount stores in Orange County, therby turning them into hybrid Supercenters.

According to John Mendez of Wal-Mart, the stores--like the Modesto Supercenter--will have all the same departments and sell the same food and grocery products that a standard, larger Supercenter does. The departments will just be scaled-back and have a more limited overall product assortment.

Wal-Mart's discount stores sell perishable items like milk, juice and eggs, have some frozen foods, and contain aisles where a limited assortment of grocery products is offered.

The expanded discount stores would still retain all the non-foods departments they currently have but would add a smaller-version of a full-fledged Wal-Mart Supercenter supermarket inside.

Wal-Mart becoming more agil

These two developments, along with Wal-Mart's new, small format (about 15,000 -to- 20,000 square feet) Marketside grocery markets which will make their debut this summer in the Phoenix, Arizona Metropolitan region, are showing that a mega-retailer can also be a nimble one when it comes to format adjustments and creations.

By choosing a Supercenter strategy which includes remodeling existing, smaller buildings like in Modesto and Sanger, and adding on square footage to Wal-Mart discount stores like the retailer plans to do in Orange County, Wal-Mart is showing a new adaptability after years of sticking with the single Supercenter mind set and format.

As a result, the retailer will be able to garner much more of the grocery dollar market share in states like California where the opportunity is there but the jumbo sized singular Supercenter format has proven a barrier to entry.

Additionally, the small-format Marketside stores will give Wal-mart an urban strategy for city's like San Francisco, Oakland, San Jose and Sacramento in Northern California, and Los Angeles and San Diego in Southern California, if it chooses that strategy.

For example, it's impossible for Wal-Mart to get approval, even if it found the space, to built a Supercenter in politically-charged San Francisco. However, it's likely it could get approval--with a bit of a fight still--to buildl a 15,000 -to- 20,000 square foot Marketside store, or two or four in the highly dense city.

The same is the case in urban Los Angeles and San Diego. In terms of the Modesto model of locating a Supercenter in a smaller, existing building, doing so makes it difficult for a city to stop Wal-Mart because the application and permiting process is much different than when building a new store from the ground up. Essentially, a city like Modesto can't prevent Wal-Mart from putting whatever type of store it desires in an existing building like the 105,000 square foot former combined supermarket and drug store location on McHenry Avenue, as long as it files the proper paperwork and meets existing city laws.

The same is the case for the square footage additions the retailer plans to do with some of its Orange County Wal-Mart discount stores. Should the respective cities in Orange County try to hold up or prevent Wal-Mart from adding the additional square footage to those stores, the retailer would easily win in court, since such additions are done by retailers of all types regularly, and preventing Wal-Mart alone from doing it would likely be ruled descriminatory.

Localizing and shrinking new Supercenters

Another strategy Wal-Mart is employing is to design its Supercenter to fit in with a local communities geographic location, setting, culture and history. For example, the brand new Wal-Mart Supercenter in Austin, Texas pictured at the top of this piece, sure looks a bit different than the typical Wal-Mart square, big box Supercenter, doesn't it? It's designed to fit into the more hip, upscale style that is Austin.

The retailer has designed similar "local" Supercenters in Colorado that fit in with the regions rugged mountains and woods, using different roofing and siding on the buildings, in addition to numerous other local touches. One Supercenter in Colorado even has a complete bicycle shop in the store, and Wal-Mart built and paid for bike paths and bike racks on land around the store because the communtiy is a major bicycling area.

These localization design strategies also include shrinking the Supercenters a bit if need be. Wal Mart has built a couple of the mega-stores so far that are in the 130,000 sqaure foot range rather than the average 185,000 size

Marketshare is key regardless of format

Last year, Wal-Mart overtook Kroger Co. as the number one grocery sales market share leader in the U.S. It's a close race between the two retailers though.

What Wal-Mart seems to have finally figured out with its new format flexibility as detailed in this piece, is that grocery marketshare is king, and it doesn't have to just come from a 185,000 -to- 225,000 square foot Supercenter.

In addition to putting the scaled-down Supercenters in the old bg-box buildings like the retailer is doing in Modesto and Sanger, adding the additional square footage for groceries onto the existing discount Wal-Marts in Orange County, and introducing the new, small-format Marketside grocery stores this summer in Arizona, Wal-Mart also is building more of its average 45,000 sqaure foot Neighborhood Market supermarkets this year and next than it has in many years.

This new, muti Supercenter and multi grocery store format strategy should give Wal-Mart additional market share, allowing it to increase its lead over Kroger. The main reason this should be the case is because these strategies will allow it to increase its grocery sales square footage in places like California where it currently has a minimal food and grocery retailing presence because of the inability to open any where near the number of traditional, new Supercenters it has wanted to for over a decade.

The mega-retailer plans to use it hybrid Modesto Supercenter strategy and the Orange County add-on discount store strategy in other parts of the U.S. in which gaining approval for new, built from the ground up Supercenters is a problem.

The Modesto Supercenter strategy also will be used in places like urban areas, where space is of a premium and the idea of acquiring an empty big box building and turning it into a Superstore is a good option.

Further, expect to see Wal-Mart add additional square feet on to other discount stores in other parts of the U.S. this year and beyond. Food and grocery sales are what's allowing the retailer to post strong sales and profit gains like its recently released quarterly profits.

Wal-Mart wants to be able to sell more food and grocery products in all categories in all of its stores--as well as in more places in the USA. As a result, the strategies detailed in this piece will be implemented, along with the buolding of new Supercenters, wherever the brawny big box retailer from Bentonville thinks they make sense.