December 27, 2004

AJC on Empty Stores

The Atlanta Journal-Constitution has an interesting take (rr) on WM dumping its old locations to build Supercenters:

With all the hand-wringing that can occur when Wal-Mart decides to move into a community, however, the biggest impact in many cases is not when it arrives. It's when it leaves.

Wal-Mart stores are huge � upwards of 100,000 square feet for a regular store, twice that for a Supercenter � and when the company abandons one of those big boxes for a hotter market, it can hurt a community. That is increasingly happening as Wal-Mart leaves its old stores to build giant Supercenters, often just a few miles up the road.

The company points out that it is re-leasing or selling its vacant stores faster than ever � in many cases before it even vacates the premises. In those instances, the new tenant moves in within a year of Wal-Mart's departure. But many towns have seen vacancies last for years.

Wal-Mart is certainly not alone in this. The list of companies that have abandoned big boxes in metro Atlanta in recent years is long and growing: Upton's, Bruno's, A&P, Kmart, Service Merchandise, Cub Foods and many more. But Wal-Mart is the biggest of the big-box retailers, so it is at the forefront of the debate. It has more stores that are empty, or due to be empty within weeks, than most businesses have stores: nearly 300 nationwide.

It's not the empty box that's a problem to communities, it's the other stores who were depending on the "traffic" provided by the big box. But again, the article has no recognition at all that these empty stores cost Wal-Mart $$$--probably a lot more money than they "cost" the community. Still, it does profile Tony Fuller, head of Wal-Mart realty:
In the middle of all this stands a tall, soft-spoken Arkansas native named Tony Fuller.

He got his start selling shoes at a Wal-Mart in Jonesboro, Ark. Now he's a vice president of the company � and his ascension is not unique. Wal-Mart promoted 9,000 hourly workers into management positions last year.

Fuller now runs the day-to-day operations of a major Wal-Mart subsidiary, although most people probably have never heard of it.

It's called Wal-Mart Realty, and it's a big player in commercial real estate. Outside the industry, it tends to fly under the radar, because it has only one customer: Wal-Mart. All that Wal-Mart Realty and its 500 employees do is sell and lease vacant Wal-Mart stores....

The major question is whether WM is willing to lease or sell to competitors after it has decided to move. But most anti-WM activists don't understand that WM's new policy of selling to everyone just means that it only vacates stores that will not become threats if competitors fill them. Besides, if WM is moving out of a store, it is most likely an underperforming store; why would competitors want to move in?
Fuller said the deal with Home Depot shows that Wal-Mart Realty is aggressively marketing its vacant properties, even to competitors. "We'll do a deal with anyone," he said.

But some people who have dealt with Wal-Mart during relocations say that's not so.

Melanie Chen was Roswell's economic development director when Wal-Mart left the Holcomb Bridge site (she now works for a nonprofit organization in Atlanta). Firstly, Chen said, Home Depot is not a direct competitor with Wal-Mart.

"If Wal-Mart is calling Home Depot a competitor, then they're basically saying that everything in the retail world is a competitor," Chen said, echoing others. "There's not much overlap there."

When a real competitior, such as Costco, showed an interest, Chen said, Wal-Mart wouldn't deal. "They have one big condition: It cannot be a competitior," she said. "That much was clear to me."

When the Holcomb Bridge store was shut down in 2000, Fuller said, Wal-Mart Realty was transitioning into its new policy of leasing to anyone, so that property might have been an exception, he said.

"That was around the time when you saw the tide changing," he said. "I'm not going to try to kid anyone that we've always been doing it that way."

But even now, some people don't think Wal-Mart will sell or lease to direct competitors. "You won't see them turn [vacant stores] over to a Target or a Costco," said Norman, the author and activist.

Fuller said there might be some situations where Wal-Mart Realty did not lease to a particular retailer, but on the whole, he said, "We are much more aggressive today about doing those deals with our competitors, direct competitors." For example, he said, the company has leased or sold stores to Kroger, which compete with the food operations at Wal-Mart Supercenters.

Folks, remind me to write a review of Al Norman's new book; it's not good...

Posted by Kevin on December, 27 2004 at 11:47 AM