The recent expansion of Wal-Mart Stores’ Oceanside store marks the mega-retailer’s first full-service grocery division within the county, but more are on the way.
The 14-year-old store in the Town Center North shopping center was increased in size to 158,000 square feet from 129,000 to accommodate a new grocery section.
Does that qualify it for “SuperCenter” status? According to retail analysts, the Bentonville, Ark.-based chain has turned 75 percent of its 3,700 U.S. stores into SuperCenters, ranging in size from 98,000 to 261,000 square feet, during the last 10 years.
So it’d already made the grade. Yet, in California, the push to expand stores to increase grocery departments is moving more slowly because of strict land-use regulations and objections from local communities and labor unions, analysts say.
In 2006, the San Diego City Council voted to ban stores with more than 90,000 square feet that use 10 percent of their space to sell groceries. Interestingly, the ban would have excluded membership stores such as Costco Wholesale. Mayor Jerry Sanders vetoed the vote.
But John Mendez, Wal-Mart’s regional manager of public affairs, says the chain has no plans to expand any of its four stores within the city of San Diego.
Meanwhile, public hearings on the proposed 50,000-square-foot expansion of the 140,000-square-foot store on Community Road in Poway aren’t expected before 2010. Some residents say that it would increase the number of cars on the highly trafficked artery where it intersects with Poway Road.
Details of the project are undetermined as yet, and the size of the proposed expansion could be reduced, Mendez says.
Reopening With Groceries
The company celebrated the Oceanside store’s grand reopening July 29. In addition to fresh produce, the grocery section includes a meat case for fresh seafood and beef cuts, a deli counter and frozen foods section, as well as a bakery. Mendez declined to give construction costs for the Oceanside store and others that are planned or under construction.
Gatlin Development of Del Mar developed and owns the Oceanside property. The general contractor for the expansion was Shames Construction, which has its headquarters in Livermore. It had 75 workers on the site.
Altogether, the store has a staff count of 450, including 160 positions created by the expansion.
The next store to offer a full grocery lineup is the Wal-Mart at the Eastlake Terrace shopping center in Eastlake. Construction that will add 67,000 square feet to the existing 141,000-square-foot store began in January and is expected to be completed in the fall.
HBI Construction of Newport Beach is the general contractor. Approximately 75 workers are on the job site daily. The store currently employs 300 people and 100 more will be hired when the project is completed, Mendez says.
Construction is expected to start this summer to add 27,000 square feet of grocery space at the 130,000-square-foot Wal-Mart on Camino Canada in the East County Square shopping center in Lakeside. Completion is projected for the fall of 2010. At present the store has an employee roster of 250, and it’s likely that 100 more would be added when the new grocery department opens.
The proposal to expand Wal-Mart’s 125,000-square-foot Vista store by 30,000 square feet is in litigation. The Vista City Council unanimously approved the project in February 2008. However, a lawsuit filed a month later by attorney Cory Briggs of San Diego on behalf of a Vista resident halted construction.
Wal-Mart reported $401 billion in sales at its U.S. stores for the fiscal year ending Jan. 31 , up 7.2 percent from the prior fiscal year.
Bite Into Grocery Chains?
According to the company, the average wage for its full-time hourly workers in California is $11.67 per hour, which translates to $467 for a 40-hour week.
Wal-Mart touts how its massive buying power can create savings and efficiencies for consumers. Yet at least one analyst doesn’t think it’s going to take market share away from local grocery stores.
“Wal-Mart’s stores will do well,” said retail analyst George Whalin of Carlsbad. “But I don’t think they’re going to take a big chunk of business from established grocery retailers. Kroger and Safeway aren’t wimpy. They’re major players and they’ll do what they’ve got to do to make sure they keep their piece of the market.”
Cincinnati-based Kroger, which owns Ralphs, reported sales of $76 billion in fiscal 2008, up from $70.2 billion in the earlier fiscal year.
If Wal-Mart’s expanded grocery offerings trigger a price war, “It’s not going to be much of a war,” Whalin said. “All major grocery retailers around here have already reacted to the economy by lowering prices.”