Retailers see mixed results from Wal-Mart opening

Douglas Matthews has a budget of $200 to spend on groceries every month. The Mount Vernon resident regularly thumbs through Sunday circulars, clipping coupons and taking note of which stores have sales.

When there’s a good deal, he heads to his local Safeway or Giant. For the most part, though, he cruises the aisles of the Wal-Mart at 6303 Richmond Hwy. in Alexandria.

“Their prices are more reasonable than the local supermarkets’,” he said, while resting on his cart in the butcher section of the six-month-old Wal-Mart on a recent Tuesday morning. “I can get everything on my list and still have money left over.”

Matthews, like many of the shoppers strolling around the Wal-Mart, views the opening of the store as a economic blessing amid a fledgling recovery that has yet to hit his wallet. Area retailers, however, are divided on whether the new store is a gift or a curse. Some have benefited from the spillover of customers, while others have been driven out of business.

As Wal-Mart sinks its teeth into the District with four planned stores, its detractors are concerned that, among other things, the big-box retailer will squelch competition, much as it has elsewhere. Supporters of the store say that argument ignores the beneficial impact on neighborhood retail clusters, not to mention on consumers such as Matthews.

Wal-Mart, with its low prices and array of products, has an undeniable consumer appeal, which has made it a bankable anchor tenant for numerous developments. In Alexandria, the store anchors JBG Rosenfeld’s Kings Crossing development, which is slated for some 20,000 square feet of additional retail and multifamily housing.

Last week was the first time Eva Shea of Del Ray visited that Wal-Mart, where she dropped by to pick up storage containers for the lacrosse league she runs. The mother of three is a loyal customer of Target, at 6600 Richmond Hwy., but wanted to check out the competition.

“I had no idea there was all this food,” she said. “You can get everything all at once, instead of having to go to a whole bunch of little places.”

Given Wal-Mart’s popularity and customer profile, David A. Ward, president of brokerage firm H&R Retail, said it’s not uncommon for retailers such as Payless Shoes or Ross to want to share space with the big-box store.

“Wal-Mart drives bodies,” he said. “But you’re not going to see many retailers come in and thrive on the heels of Wal-Mart.”

Holly Hicks Dougherty, executive director of the Mount Vernon-Lee Chamber of Commerce, contends that retailers of all types can find success along Richmond Highway, which is underserved by a variety of stores despite significant consumer demand — an argument often made by Wal-Mart proponents in the District.

Members of the chamber, she pointed out, don’t perceive Wal-Mart as a threat, especially since there are a number of national retailers already lining the highway. Mom-and-pop shops in the area consider their wares different enough that competition from the big-box store is of little consequence, Dougherty said.

Workers at El Eden Supermercado, at 6222 Richmond Hwy., who declined to give their names, agreed the grocery store’s stock of plantains and conchas is not likely to show up at Wal-Mart, giving them the competitive advantage.

Other retailers near the Kings Crossing Wal-Mart, including florists, restaurants and nail salons, say the store has brought them new customers.

Arturo Castro, assistant manager of the Panera Bread at 6670 Richmond Hwy., said he has noticed an increased flow of customers toting Wal-Mart bags on the weekends.

“A lot of people do their shopping over there and then come here to get something to eat,” he said. “It’s been really helpful for business.”

Having Wal-Mart nearby may be benefiting Panera, but observers say it crippled the Shoppers Food Warehouse down the street at Penn Daw Plaza. The grocery store went dark within months of Wal-Mart’s opening.

“That [Shoppers] was on the margin, but Wal-Mart put it over the edge,” Ward said. “You will not see any new grocery store development as a result of Wal-Mart. When grocery stores are pursuing new markets, with the threat of Wal-Mart coming in as a competitor, they’re not moving forward with those deals.”

Roughly half of the Kings Crossing Wal-Mart is composed of fresh produce, frozen foods, dried goods and meat and dairy products, a format the retailer has rapidly expanded within the past decade. These Wal-Mart Supercenters, first developed in 1988, number 2,907 nationwide, giving the company a 33 percent share of the national grocery market.

Ward said Wal-Mart’s history of “predatory pricing” makes it difficult for traditional grocers to compete, especially those that have union contracts such as Shoppers, Giant and Safeway. Unions and activists rail against the big-box retailer for alleged low pay and placing downward pressure on wages in competing businesses.

“Wal-Mart’s cost structure is radically different than the big three grocers, which have union employees and higher costs, so it has the ability to undercut their prices,” Ward said.

That cost structure, however, is the reason Jaret Horning and Kathleen Estep of Fort Belvoir traveled 20 minutes by bus to get to the Kings Crossing Wal-Mart. Whatever the couple can’t find at that location, they look for at the two other stores in Alexandria.

“They’re pretty much everywhere,” Horning said.

Danielle Douglas covers the banking industry for The Washington Post.
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