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2005-10-25
Chicago, IL. Wal-Mart Promises Wall Street 280 New Supercenters

Like a whirling dervish that has to keep spinning faster and faster to maintain its balance, Wal-Mart is trying to keep up its growth image on Wall Street -- even as it builds stores that cannibalize its own existing stock. Wal-Mart this week is promising investors that it will build as many as 280 new supercenters this coming year that begins February 1st -- that means a new ribbon-cutting somewhere in America every 31 hours. At the same time, as many as 40% of those stores, or 112 -- will be challenged by citizen's groups, and mired in controversy. CEO Lee Scott recently told reporters that America has room for 4,000 more Wal-Marts, but building superstore every five miles has demonstrated that the company is churning stores that serve no consumer need, but are built merely to meet investor expectations. Wal-Mart has no choice but to build at the same frenetic pace, in an effort to hold up stock price -- which already is in the doldrums. If the company's production schedule slips, investor confidence weakens, and stock price falls. The bad news for Wal-Mart is that more stores means more community opposition, and more negative headlines. Headline shock is not good for Wal-Mart, and no matter how many PR firms the retailer hires, those headlines won't go away. Sprawl-Busters projects that between 90 and 100 stores will be stopped outright, or seriously delayed this year by angry citizen groups. Many of these battles will take place in towns that already have a Wal-Mart discount store, and will result in another "dark store" left behind. The fact is, America does not need 60 million more square feet of Wal-Mart supercenters -- especially when the company has 26 million square feet of empty space already on the market for sale or lease. Wal-Mart also promised to build up to 30 discount stores, 40 more Sam's clubs, and 20 of its Neighborhood Markets. The unfettered growth area is in the international arena, where there are few citizen groups, very little zoning, and large quantities of poor people. Wal-Mart exists on poor people -- both as workers, and then as consumers. Third World countries, like China and India, represent Wal-Mart's future -- not redundant U.S. superstores. As the Reuters news reports admitted, "Communities across the country have waged fierce battles to block Wal-Mart's expansion efforts." In the Reuters news article, Lee Scott also predicted that zoning laws in the U.S. will get tougher in the years to come, so Wal-Mart needs to build stores while towns are still unprepared to stop them.

What you can do: Sprawl-Busters began writing about "dark stores" in 1998. Since that time, Wal-Mart has emptied out hundreds of discount stores, in some cases leaving "towns that Wal-Mart killed twice" -- going in, and then coming out. Today, if Wal-Mart wants to build a supercenter, it needs to plan on two or three alternative locations in any given area -- knowing that one, possibly two sites will come under fire from local groups. Even if they succeed in building a new superstore, all it does is lower the sales per square foot at its other nearby superstore. It is getting costlier for Wal-Mart to apply for and get a superstore. The company makes no such figures available, but Wall Street knows that it is taking longer, and costing much more money to get a supercenter approved at the local level. No other store in America has four out of ten units challenged by local groups.










 
 
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