Wal-Mart's Urban Strategy: Build Up, Not Out

Brent Felgner, July 31, 2006

White Plains, N.Y. — This is not Plano.

On its first weekend in operation, Wal-Mart's new urban “store of the community” here produced traffic bottlenecks on Main Street and in its drive aisles along with something only occasionally seen in the company's stores: backed-up checkout lines.

There were no $5,000 diamond rings or $500 bottles of wine, there was no sushi or Internet cafe, none of the “wow” features touted in Wal-Mart's upscale merchandise lab in Plano, Texas. This is Wal-Mart playing to its loyalist base, as it did in its Kearny, N.J., opening last month — and again here, to a broadly diverse multi-ethnic and multi-racial customer base — all while learning what form its city-based stores might take, moving forward.

The 180,000-square-foot big box here goes up, not out. In a nine-story building, the store occupies the basement and main floor of a former Sears, with a six-level 600-car parking deck above.

“This store represents an excellent example of how well the Wal-Mart concept can fit into an urban setting,” said Steve Mitchael, director of design for Wal-Mart's North-Central Division. He said the design captures White Plains' downtown revitalization.

More than cosmetic, this unit is an example of the other side of Wal-Mart's upmarket thinking: Rather than just pushing top end products and price points higher in a bid to attract the Target-like customer, it is also enhancing selections and boosting quality at many lower and opening price point merchandise levels.

Main St., Bentonville, meet Main St., White Plains.

This is not Wal-Mart's first multi-level store — there are 15 or so nationwide, including one in Massapequa, Long Island — and it clearly won't be its last. Wal-Mart has made no secret that it covets locations in New York City, despite being rebuffed last year by community leaders in Queens. Moreover, the merchant has repeatedly outlined a broader urban siting strategy in its continuing efforts to eke out more growth from its more slowly expanding domestic store base.

This store is about 25 miles north of New York, but is expected to draw from the Bronx, Yonkers, Riverdale and other communities in Westchester County. It is in the heart of downtown White Plains, surrounded by offices, apartments and homes — and a remarkable amount of other retail, including the Galleria, City Center and the Westchester Mall, as well as a variety of street-facing stores.

If Wal-Mart's traffic counts on this first weekend were any indication, it will be a large draw.

By early evening on its first Sunday, the store was still checking out more than six customers a minute, more than a few with full shopping carts. Earlier in the day, it was nearly 10 transactions a minute. By contrast, Target, located across the street in the basement of City Center, was pushing out just under four customers a minute, most with discernibly smaller transactions.

At Wal-Mart, lines of shoppers waiting to pay occasionally clogged the front aisles. All but two of the 19 regular, four express, and three self-service registers were in operation. Throughout portions of the store, particularly on the lower level and near the front end, there were moments of gridlock.

Wal-Mart's main sales floor at the entry and checkout level featured apparel, health & beauty, cosmetics, greeting cards, crafts and jewelry. Shoppers entering the store are pulled past displays of George and Metro 7 apparel for women. Customers must traverse many of those other merchandise exposures to reach an elevator and two passenger escalators connecting to the lower level, along with a pair of shopping cart escalators.

Most hardlines — the traffic categories — and domestics were in the basement. Soft home was in a center “infield” location adjacent to housewares and surrounded by grocery, pet supplies, lawn and garden, as well as paint and hardware.

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