Document text
41 °F Forecast | Road Cams Wednesday, February 23, 2005 Today's News | Classifieds | Autos | Homes | Jobs | Tempo | Health | Community | Home Delivery SECTIONS Home Page Local News Sports Business Obituaries Life Opinion Tempo AP News Weather Classified Archives Site Map SPECIAL SECTIONS Since We Asked Outdoor Journal Menu Guide How To Guide Health Readers' Choice Real Estate Showcase Real Estate Guide Joy Magazine Homelife Magazine Wedding Guide Passport to the Rogue Valley SHOP OUR VALLEY AutoFinder HomeFinder JobFinder Classifieds Place an ad TOP JOBS EXTRA NIE Personals Movie Times TV Times E The People Volunteer Moving here? eSouthernOregon CUSTOMER SERVICE FAQ's Advertise with us Home Delivery Employment Contact Us Media Kit Oregon Road Conditions & Cams Email Story to a Friend October 5, 2003 Fresh fruit is one thing you�ll be able to find at a Wal-Mart Supercenter like this one in Grants Pass, which is larger than those proposed for Central Point and Medford. Mail Tribune / Bob Pennell Super competition Local retailers say a Wal-Mart supercenter at Medford’s South Gateway could bring in more shoppers for all, or it could unleash a fight for market share By GREG STILES Mail Tribune Political controversy along with regulatory and bureaucratic obstacles are as common to the Wal-Mart culture as front-door greeters and low prices. So are head-to-head challenges against its competitors. From Dixie to the Puget Sound, the world’s largest retailer is sparring for market share with grocery giants such as Kroger (which owns Fred Meyer), Albertsons and Safeway. Soon the fray will spread to Medford’s South Gateway area, which could mean good news for price-conscious shoppers. Wal-Mart representatives expect a "supercenter" to rise from the impending ruins of Miles Field sometime next year and begin operation in early 2005. When the proposed 207,000-square- foot store’s doors slide open it will create a golden triangle for grocery shoppers previously unknown here. Advertisement While two large stores sharing a neighborhood aren’t unknown in Medford, the presence of Wal-Mart, WinCo and Fred Meyer in a southside cluster along with Grocery Outlet and Harry and David’s Country Store should be a bonanza for customers. "It will force the bigger guys to get serious about pricing," says Al Auger, a commercial real estate developing, investing, and financing consultant from Tampa, Fla. "They’ll feel the entry of another competitor grabbing for their dollars." Because the Medford-Ashland statistical area’s population is growing at nearly twice the national average, the sales revenue pie promises to grow beyond what is spent in the South Gateway area today. Even as Jackson County’s population trends closer to 200,000, Wal-Mart planners anticipate the supercenters proposed for Miles Field and Central Point will attract customers, and dollars far beyond the present Talent and Crater Lake Highway stores, which are scheduled to close when the new ones are built. At least one neighboring retailer sees Wal-Mart’s coming a good thing. "I’ve been in retail for over 25 years," says Bill Krompeck, director of Harry and David’s Country Village. "The more folks that move into an area, the better. it makes it a regional shopping destination and a more compelling reason to come to the area." Wal-Mart’s name recognition and advertising draws customers from a wide area, including Californians wanting to avoid the sales tax, says David Lakey, president of the Lake Group in Portland. "They’ll make special trips, like a Costco trip, but the big Wal-Marts will have more products and categories than Costco — and reasonably-sized packages," Lakey says. "Wal-Mart Supercenters have the broadest possible appeal of any retailer because it stocks things in virtually every category." Still, it doesn’t mean supercenters automatically dazzle Northwest shoppers as they have in other parts of the country. "What makes the Northwest different is that we’ve had the supercenter concept with Fred Meyer for 70 years," Lakey says. "Wal-Mart and WinCo will be very close on food prices. You’ll find Fred Meyer and other grocery retailers will come down to try to compete as well." Wal-Mart sold $54 billion worth of groceries last year, Kroger was second at $51.8 billion, followed by Albertsons at $35.6 billion, and Safeway, $32.4 billion. The difference is that Wal-Mart’s total revenues were $246.5 billion last year, making it easy for the retail giant to lower its grocery prices. Retailers will respond by lowering prices, including stores several miles away, Lakey predicts. "Grocers will get more promotional with loss-leaders and a few items priced at a very hot price to tempt consumers to go to Albertsons or Safeway." Grocery store profit margins are among the lowest in any industry. Albertsons, for example, earned 1.4 cents for every dollar of sales in 2002. Wal-Mart, strengthened by its general merchandise sales, has averaged 3.3 percent profit margin over the past five years. Kroger’s profit margin in that period was 1.8 percent. That Wal-Mart would propose two supercenters simultaneously says a lot about the strength of the local economy. "The old Wal-Marts must be generating a lot of dollars and must be seeing a lot of shoppers," Auger says. "There are a lot of people in the area on fixed incomes who are sensitive to pricing. You have a perfect Wal-Mart customer there." With three heavyweight grocers and two niche retailers in the mix at South Gateway, there will be enough options to make cost-conscious consumers’ heads spin. "Fred Meyer and WinCo will see a huge drop (in customers) in the first week or month," Auger says. "People will go there (to Wal-Mart) just to try it out. After that, it depends on how well the supercenter services the customer and their reaction. Will they go back or stick with the new guy in town? "With a big retiree market, they’ll gravitate toward the Wal-Mart Supercenter and I’m not so sure that you’ll see a lot of people traveling back." Brand loyalty will be a factor with some shoppers. Younger demographic groups drift toward convenience and brand names. "They’re not as concerned as much with pricing as they are with time," Auger says. Fred Meyer, because of its similar format, stands to take a bigger hit long-term than WinCo. "We compete very effectively with Wal-Mart," says Rob Boley, Fred Meyer’s assistant vice president of public relations. "There are several right next to our stores. It’s just like any other new department store moving in." He characterizes supercenters as discount stores with a food department tacked on to it. "Even the food is more limited," Boley says. "They don’t have meat cutters, they have pre-packaged meat and they have small selections in their delis." Fred Meyer, Safeway and Wal-Mart have, like Costco, built gas stations to attract additional business to their stores. Fred Meyer is weighing whether it should build a gas station at South Gateway. "We’re still busy doing some due diligence," Boley says. "There’s no schedule on the project and we’re still working to see if it’s feasible before we make a decision." Whereas Fred Meyer has been in Medford since July 1982 and present in South Medford since January 1994, WinCo is a relative newcomer, arriving in January 2001. WinCo, a regional employee-owned chain with headquarters in Boise, competes against Wal-Mart Supercenters in 11 trade areas in the west says Paul Simmons, Winco’s vice president of retail development The impact of a Wal-Mart Supercenter on an area depends on the demographics, Simmons says. At the high end, the impact is minimal on existing stores. "If it’s on the lower end, in blue- collar areas, it’s going to have a pretty heavy impact." Simmons says his company has endured its share of difficulties in locating new stores. "Sometimes there are marginal projections for the store and others project larger volumes," he says. "There are some cities that welcome us with open arms, and we take the course of least resistance." In Medford, it took a couple of go-rounds with the city for WinCo to get approval for a key traffic light on Barnett Road. Simmons says the store in a building that originally housed a K-Mart has topped revenue projections. "The community response was faster than we expected," he says. "You might say we’ve gotten the vote of the consumer. Where they shop is their vote." Whether it’s selection, price, service or intangibles, the ability to attract and keep shoppers is the challenge. "Our best stores within the chain are the one’s closest to the competition," says Amy Hill, a corporate spokesperson. "It makes us a better store when we’re up against great competitors like Fred Meyer and WinCo that are striving to attract those same customers." One of the things Wal-Mart is banking on is existing allegiances developed by the stores opened in Medford’s King Center in 1993 and in Talent in 1994. "We have a very strong, loyal customer base in Medford," Hill says. "Our customers are actually telling us they want us to carry more products. We owe it to them to offer everyday low prices on groceries." The cost of getting groceries here is a factor. WinCo’s products are warehoused in Woodburn and Myrtle Creek and much of Fred Meyer’s deliveries are out of Portland. Wal-Mart’s northwest grocery stores are presently supplied from Corrine, Utah. But by the time the proposed Medford and Central Point Supercenters open, the company’s Grandview, Wash., distribution center will be finished in the Yakima Valley. Although the 1,300 supercenters’ shelves are uniformly stocked in general, Wal-Mart’s grocery list is influenced from region to region. "We try to reflect the needs and tastes of our customers," Hill says. "Some supercenters may carry more Hispanic products. In some parts of Florida and in the Northeast there might be a much larger selection of kosher products to accommodate the Jewish population, and in some areas there will be more Asian items." Wal-Marts typically attract hoards of fast-food and other small retailers, hoping to cash in on the retailer’s traffic, near their stores. That means more development east of the Miles Field area. It should prove a boon for the Harry and David Village, too. "When customers have a lot of choices they may frequent some stores for some things and some for other things," Hill says. "They may choose to shop at Harry and David for instance for some items or get roses at the Jackson & Perkins down the street." In April, Wal-Mart announced its intentions to buy the county’s ballpark and build its supercenter. However, the deal won’t go to escrow until all the permits from the city of Medford — some of which are subject to the Oregon Department of Transportation’s approval — are in place. "We’re plodding along, getting the elements together to amend our application," says Chuck Martinez, who represents Wal-Mart’s interests to city planners and engineers. "We’re going to amend the application to the road alignment that’s there today. The (new south) interchange involves things we couldn’t control and had not anticipated." Martinez says the market ultimately decides who survives. Montgomery Ward, Woolworth’s and J.J. Newberry’s — all stalwarts of 20th century retail — are gone. K-Mart and the Emporium, large-scale players here for many years, failed as well. "How consumers spend their dollars and who they decide to patronize determines success and failure. If they don’t feel good about the product, value and service, then they will go elsewhere," Martinez says. Reach reporter Greg Stiles at 776-4463 or e-mail [email protected] Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2005 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback Student Loan Consolidation Conference Calls - $50/Month Home Security Systems Trunks, Footlocker, Trunk, Footlockers home equity loans helzberg Slippers Student Loans afsa teleconferencing Memory Foam Mattress Advertisement s