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Discount Retailers Move to Renovate, Expand as Frugality Flourishes

Discount retail giants Wal-Mart Stores Inc. and Target Corp. will keep riding the wave of frugality among skittish consumers, with plans for several store renovations and expansions in San Diego County.

Target spokeswoman Kristin Jahnke said the Minnesota-based retailer has remodels planned for four stores this October — at Poway, Sports Arena, Kearny Mesa and Mira Mesa — as part of nationwide moves to expand fresh-food offerings at its established general-merchandise locations.

Those remodels follow similar renovations already completed at four other local stores. Jahnke said the renovations — 350 completed nationwide last year with an additional 380 set for 2011 — are intended to make the stores more one-stop friendly for consumers, with items like fresh produce, meat and baked goods.

Jahnke said Target has so far seen sales and traffic increases of approximately 6 percent at remodeled stores, with the biggest lift seen in food items, paper products, household cleaning and health and beauty items.

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Last month, Poway officials approved the Arkansas-based company’s plans to expand its existing store in that city into a Walmart Supercenter, adding about 40,000 square feet with a fully-stocked grocery store. Plans have been in the works for about two years and will take the store’s total size to nearly 180,000 square feet.

“The next step for the Poway project will be the permitting process,” said Wal-Mart spokesman Steven V. Restivo. “While we cannot speculate on timing, once we have received all of our permits we will begin construction a short time later.”

Taking a Step Up

In addition, Restivo said Wal-Mart last month completed a remodel of its Kearny Mesa store, and will finish a remodeling of one of its Chula Vista stores later this month. The company also has an expansion in the works at its Santee store, and it plans to occupy a former Home Depot Expo Design Center space in Encinitas for its first store in that city.

“We are actively pursuing potential sites in the city of San Diego and anticipate announcing our first project in the coming months,” Restivo said.

Those projects come as several other national chains have been expanding locally. For instance, Wisconsin-based Kohl’s has a new store opening this month in Encinitas, and home improvement chain Lowe’s has new stores in the works in Carlsbad, Poway and National City.

George Whalin, president of Retail Management Consultants in Carlsbad, noted that expansions and renovations of existing stores remain the best ways for the big chains to boost their presence in San Diego County, since there is limited land available for new big-box locations.

All of the Lowe’s locations, for instance, are planned for in-fill sites in their respective cities. Even if Wal-Mart’s Supercenter stores did not generate controversy, as the Poway project and others before it have in Southern California, Whalin said there are few places remaining in the county for retailers to set up stores the size of a Supercenter.

While the discounters’ popularity was evident at the height of the recession and continues to be a force in the retail sector, Whalin said the latest projects likely are not a direct result of the most recent economic turmoil, since the renovations and expansions were placed in the pipeline months or years ago.

Governor to Review Bill

Still to be seen is the potential impact of a new superstore-review bill passed by the California Legislature on Sept. 1, and awaiting review by Gov. Jerry Brown, requiring the largest discount store projects to undergo added community impact studies before being approved.

The measure, introduced by Sen. Juan Vargas, D-San Diego, is modeled after a similar law passed but rescinded earlier this year by San Diego City Council. It would require developers of superstores — establishments exceeding 90,000 square feet — to submit an economic impact report that examines the potential effects on the surrounding community’s small and neighborhood businesses, jobs, property values, public services, tax revenues and traffic.

Whalin said the state move was “not really a smart thing to be doing right now” considering the fragile state of the economy. “It’s going to cost the stores and the communities a lot of money,” he said.

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