|New England market
By Justin Pope
The Associated Press
RAYNHAM, Mass. -- New England is one of the final frontiers for Wal-Mart's
grocery business, which has already transformed the industry in much of
the country and is now expanding its toe-hold here.
The region is a cultural, demographic and economic challenge for the Bentonville,
Grocery stores aren't taking their rival's expansion lying down. They're
rapidly remodeling stores and even building new ones -- bucking a national
trend -- so fast it almost looks as though they're trying to snap up every
parcel Wal-Mart might want.
For shopper Louise Ford, the workmen expanding her local Wal-Mart into a
grocery-selling "Supercenter" in this community 25 miles south of Boston
can't finish the job soon enough.
"It's about the fact that my husband is now retired, and I don't have as
much money to live on," said Ford, who discovered the chain and its low
prices while in Alabama for her daughter's wedding.
When the Supercenter opens, it could have a big impact on the Shaw's and
Stop & Shop stores just down the road. Across the region, those chains are
playing defense with aggressive offense.
Shaw's, owned along with Star Market by Britain's J. Sainsbury PLC, is remodeling
90 percent of its 186 New England stores, and plans to add or replace 30
stores in the next three years. It also plans to buy control of 18 former
Ames department stores out of bankruptcy proceedings.
Royal Ahold's Stop & Shop, the region's leader with 211 stores and 26 percent
of the market, plans to build or replace 30 stores, and will move into New
Hampshire next year.
Wal-Mart has done its own shopping, buying 27 sites from bankrupt retailers
Bradlees and Caldor's, though not all for Supercenters.
All that comes as the Food Marketing Institute reported last month that
supermarket store openings hit a 10-year low nationwide last year.
"They're all in the process of staking out their turf," said William Beckeman,
a partner in Finard and Co., a commercial real estate firm that has identified
three dozen new grocery stores planned in the Boston area.
Bernard Rogan, a spokesman for Shaw's, acknowledges some of the expansion
may be attributable to Wal-Mart, but he insists Shaw's would be growing
"You don't sit idle, and customers have grown used to seeing competition,"
he said. "Wal-Mart just stirs it up a little bit more."
Wal-Mart jumped into the grocery business when it opened its first Supercenter
in Washington, Mo., in 1988.
Its 2,000 stores, with 185 more planned this year, command 8 percent of
the grocery market, second only to Kroger, according to research firm Trade
Dimensions. Stock prices of rival chains have fallen lately on worries they
Only two major regional domestic markets -- California and New England --
have yet to feel the full Wal-Mart effect.
They will soon. In California, where there are no Supercenters, Wal-Mart
plans to open as many as 60 within six years.
In New England, where the first Supercenters opened in 1998, there are now
18, holding two percent of the market. Supercenters openings are planned
in the next 15 months in Brewer and Bangor, Maine; Epping, N.H.; Raynham;
Waterford, Conn. and Westerly, R.I. Stores recently opened in Plymouth,
N.H. and Farmington, Maine. The company is also planning a distribution
center in Killingly, Conn., to support the expansion.
Wal-Mart has no choice but to expand in the densely populated and wealthy
Northeast, said Kathleen Siders, a Babson College professor who follows
the grocery industry.
"They have to be everywhere," she said. "If you look at this as a $230 billion
company, in order to maintain their stock price, they have to grow. When
you start to look at what 8 percent growth on $230 billion is, that's enormous."
Still, New England is not naturally fertile ground for Wal-Mart's model.
Land and labor are expensive, and support is strong for unions, which Wal-Mart
doesn't allow. Anti-sprawl activists have taken advantage of a glacial permitting
process. Finally, New England has a relatively old population that may tire
of Wal-Mart's cavernous stores.
Also, insiders still have some big advantages in getting permits and winning
"The soil in New England is going to be very rocky for Supercenters," said
Al Norman, who chronicled his successful efforts to keep Wal-Mart out of
Greenfield in his book "Slam-Dunking Wal-Mart!" and now runs a group called
Sprawl Busters. "They may have plans for a significant ramp-up of stores,
but I would hope that at least a third of those locations, they're going
to run into citizen opposition."
Norman's Web site claims 164 "victories" nationwide against big box stores.
Fourteen are in Massachusetts, more than any other state, and 32 in New
Still, anti-Wal-Mart sentiment seems to be waning, especially in the wake
of 100,000 job losses in Massachusetts. Petitions to block the expansion
in Raynham fizzled, as have others. A new Lewiston, Maine, distribution
center received $17 million in city and state tax incentives.
Nonetheless, Wal-Mart has built 100 grocery and non-grocery stores in the
region and says they perform as well as stores elsewhere.
"When we first came in 1991, there was all this talk the economy in this
area was coming out of a recession," said Keith Morris, Wal-Mart's community
affairs director for New England. "We were putting our foot in the water
at that time in a difficult environment. I don't think we ever anticipated
that within a 10-year period we'd have 100 stores."
Siders, the Babson professor, says New Englanders will welcome lower prices
and the bigger, fancier stores competitors are being forced to build. Stop
& Shop announced last week a new prototype superstore featuring a Toys "R"
Us toy department and other amenities. It's already partnered with Dunkin'
Donuts and Boston Market.
Such luxury superstores, common elsewhere, have been relatively rare in
New England, where real estate costs make for smaller sites, and there's
less fresh produce, which drove the model in other regions, Siders said.
What's clear is that New Englanders don't appreciate how profoundly Wal-Mart
has affected the grocery industry elsewhere, and what they're in for --
for better or worse.
"Yankees are oblivious to Wal-Mart's effect on the rest of the world," she