Stores in 4 Md. counties facing a challenge from the No. 1 chain, Wal-Mart

INVASION ON THE RETAIL FRONT

September 08, 1991|By Michael Dresser | Michael Dresser,Sun Staff Correspondent

PRINCE FREDERICK -- After Phil Weiner paid his first visit to a Wal-Mart store last month, he ruefully remarked to his fiancee that he might as well hang it up.

As he wandered through the football-field-size store in York, Pa., the 33-year-old owner of the Ben Franklin store in Prince Frederick took it all in with the trained eye of a veteran retailer. He noticed the wide aisles, the bright lighting, the well-stocked shelves, the helpful staff. He checked the prices and found that some were lower than what he pays wholesale.

"I was a little awe-struck," he recalls.

But Mr. Weiner quickly shook off the jitters. And now he's preparing a strategy to meet the biggest threat of his retailing career: the 91,440-square-foot Wal-Mart store that is rushing toward completion a half-mile up the highway in this quiet Southern Maryland county seat. He's changing his product mix, planning special services and actively seeking the market niches that Wal-Mart won't fill.

The challenge Mr. Weiner faces is one that will confront retailers big and small throughout Maryland in coming years. Wal-Mart -- the best-loved (by consumers), most-loathed (by competitors) and largest retailer in the nation -- is launching what may be the most awesome invasion of Maryland since the Civil War. Retailing may never be the same here.

The Prince Frederick Wal-Mart, scheduled to open in November, is in the vanguard of the Wal-Mart advance, along with stores in Hagerstown, Easton and Waldorf.

Wal-Mart Stores Inc. will not discuss its plans beyond those four locations. But within three years, the Arkansas-based discounter will almost certainly plunge into the heart of the Baltimore-Washington region.

A store in Bowie has already received preliminary approval from the town government and could open in late 1992 or in 1993. In Howard County, the chain wants to rezone land at U.S. 40 and U.S. 29 so it can build a Wal-Mart store and a Sam's Club, Wal-Mart's fast-growing membership club affiliate.

In Anne Arundel County, it is looking at a site across from Annapolis Mall in Parole for a Sam's outlet. And in Harford and Frederick counties, Wal-Mart has been scouting sites, according local real estate brokers.

Some of these reports may be what Wal-Mart spokesman Don Shinkel calls "Elvis sightings," but Wal-Mart's invasion is unlikely to stop with a half-dozen stores. If reaction to the first four stores is favorable, he said, "certainly our presence in the state of Maryland would be several times what it is now."

He could not think of any states where reaction had not been favorable. Neither can anybody else.

"Our customers love us"

Most Americans know Wal-Mart well.

From its original stronghold in the South, Wal-Mart swept across the Midwest and West in the 1980s to pass Sears as the nation's largest retailer in 1990, with $32.6 billion in sales its last fiscal year. Meanwhile, the value of its stock has grown thirtyfold the past 10 years, giving its founder and chairman, Sam Walton, a fortune second only to that of the sultan of Brunei, according to Fortune magazine.

And it all happened before Wal-Mart sold a stick of gum in the Northeast. Only last fall did it open its first stores in Pennsylvania, the only outposts northeast of the Potomac.

Now, Wal-Mart is expanding nationwide. Mr. Walton has set a target of $125 billion in sales by 2000 -- a goal some retail analysts believe Wal-Mart will achieve with ease. By the end of the decade, say Oppenheimer & Co. analysts Bernard Sosnick and Dorothy Lakner, Wal-Mart alone will account for 20 cents of every dollar spent in the United States in the huge category of general merchandise, apparel and furniture.

On top of that, it will take a hefty chunk of the nation's food business, they predict.

For many competitors, Wal-Mart is the Darth Vader of Discount, aiming its massive bulk-buying power at helpless mom-and-pop stores and strangling regional chains with its coldly precise distribution system.

But there's a lot more than muscle to Wal-Mart's success. The fuel for its money machine may come from the lowest expense ratios and the highest sales per square foot in the discount retail industry. But the lubricant is its culture of service.

Each Wal-Mart store has a "greeter" whose job is to welcome shoppers and direct them to the departments they want. Ask a sales associate where to find an item of merchandise and you won't be told it's in aisle 20; the employee will lead you to the product and put it in your hands.

"Our customers love us, and we love our customers," said Mr. Shinkel. It's an oft-repeated phrase that could be called the corporate mantra.

This love affair between Wal-Mart and America's shoppers can cause a lot of heartbreak for the chain's rivals. When a new Wal-Mart opens, an estimated 80 percent of its business is drawn from existing retailers -- about two-thirds from big discount chains and the remainder from small specialty retailers.

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