The naivete of Pullman Mayor Glenn Johnson and Pullman Chamber of Commerce Executive Director Fritz Hughes is simply stunning with respect to the effect a Wal-Mart Supercenter will have on the community of Pullman.- Gerard Connelly, "Mayor's reaction to Wal-Mart naive," Moscow-Pullman Daily News, December 14, 2004
Depending on the price of real estate, you like to be as close to Wal-Mart as you can get.- Gerard Connelly, "Something Wal-Mart this way comes," Lewiston Tribune, February 3, 2008
From today's Lewiston Tribune:
One, two, three or four.Technorati Tags: wal-mart walmart
That's about as specific as Wal-Mart officials are willing to get about how many super centers the nation's largest retailer might locate in the Quad Cities.
Karianne Fallow, a spokeswoman for Wal-Mart, points to a news release from the company's June annual shareholders meeting that states the retailer is getting pickier in setting its criteria for new super centers. "They're doing a lot of due diligence to make sure we're making the right decisions," Fallow said.
The national chain expects to add 190 to 200 super centers in the present fiscal year, down from a previous estimate of 265 to 270, according to the news release. The number will drop to 170 for the next three fiscal years.
"The priority for a potential store is selecting a location that makes the most efficient use of capital resources and aligns with market growth priorities," according to a Wal-Mart executive quoted in the news release. "We also have been focused this year on reducing cannibalization of existing stores via our more strategic selection of U.S. real estate properties."
Assuming Wal-Mart moves ahead with super center plans in this region at a number of three or fewer, a University of Idaho economist believes the outcome will be positive for existing businesses.
Steve Peterson, a research economist at the UI, did a study about the issue for the Moscow Chamber of Commerce.
Wal-Mart could put one in Clarkston, another in Lewiston and a third in Pullman. Or it might choose Pullman, Moscow and Clarkston.
Regardless of the combination, super Wal-Marts would attract shoppers from at least as far away as Grangeville, the Montana border, Pomeroy, Potlatch and Colfax. They will shop at Wal-Mart first and then make other stops, Peterson says. "If you look at retail trade partners, it is the large stores and shopping centers that draw the customers."
Numerous residents of the Palouse visit Clarkston to shop at Costco, which, incidentally, Peterson believes won't be hurt by having a Wal-Mart across the street.
The stores serve completely different demographics, Peterson says. Nationally, the average household income of a Costco customer is $80,000 and higher, compared with about $35,000 for a Wal-Mart shopper. "Costco is one of the biggest sellers of fine wines. You're not going to find fine wines at Wal-Mart."
And Wal-Mart already has stores in Lewiston and Moscow, so the only new elements of competition the super centers would bring would be for tires and groceries, Peterson says.
One of the businesses in Clarkston that will likely be hardest hit is the Albertsons because of the similarity of its products and its proximity to the store, Peterson says.
A spokeswoman from Albertsons declined to comment for this story.
But even those kinds of businesses could find successful ways to compete as long as they're not trying to beat Wal-Mart on price, Peterson says.
Les Schwab operates numerous tire dealerships in places with super Wal-Marts. It does so by offering outstanding customer service, such as free road-side repairs for tires, Peterson says.
Safeway in Moscow seems to compete with Winco by having a larger selection of upper-end products in a more relaxed environment where shoppers can get in and out quickly, Peterson says.
Similarly, some grocery stores in Lewiston or Clarkston will likely keep customers because they're in a different part of town or because people don't want to fight Wal-Mart crowds, Peterson says.
"The opening of a Wal-Mart doesn't necessarily guarantee success," says Bill Wertz, a spokesman for Wal-Mart in Denver. "Customers make a choice as to where they want to shop and only if they find good value, good service and good products at a Wal-Mart do they give us their business."
It started as a mom-and-pop store carving out a niche in the face of the giants of that era such as Sears, Wertz says. "We succeeded even though we were small because we offered something of value to the customer."
Gerard Connelly, president and majority owner of Tri-State Distributors, employs a strategy similar to the one Peterson recommends. Nothing in the shoe department of his stores can be purchased at Wal-Mart.
Achieving that is easier than it sounds. Numerous manufacturers will not sell to Wal-Mart, such as North Face, Adidas, Keen, Under Armour, Patagonia and Mountain Hardware, Connelly says.
Companies fear Wal-Mart's purchase practices, Connelly says. One of the most famous examples is Rubbermaid.
It raised its prices to Wal-Mart after the cost of a key ingredient in plastic containers increased, according to a U.S.A. Today story from Jan. 23, 2003. Wal-Mart gave more shelf space to less expensive items from competitors, helping drive Rubbermaid to merge with a rival.
Consumer demand for the types of brands not available at Wal-Mart is strong, partly because they often offer higher quality, Connelly says.
He runs five days a week - never in $30 shoes - because he would rather avoid the injuries that happen when people do so in shoes not designed for that kind of activity.
He observed what skiers were wearing on a recent trip to Schweitzer. "I can guarantee you that not one single coat up there was one someone bought at Wal-Mart."
A Wal-Mart spokesman declined to respond specifically to Connelly's comments. Wal-Mart works cooperatively with its suppliers to make sure its customers can buy quality goods at the lowest possible price, Wertz says. "Wal-Mart considers itself an agent for the customer. In order to do that effectively for the customers, we have to be a good negotiator."
Even Connelly acknowledges Wal-Mart has helped him in some ways. Its sales associates have referred customers to him for heavy-duty tools and outdoor gear.
Tri-State's Lewiston store is within view of Wal-Mart by design. "Wal-Mart does choose good retail real estate," Connelly says. "Depending on the price of real estate, you like to be as close to Wal-Mart as you can get."