Forum: Wal-Mart Pressure Requires New Plans

"Our strategy has been to stick our head in the sand and ignore the Wal-Mart problem," Joseph Dykstra, executive vice president of acquisitions and dispositions for Los Angeles-based Westwood Financial Corp. told about 300 people gathered yesterday at Scottsdale's Doubletree Hotel for the 2004 Southwest Idea Exchange conference. Wal-Mart, which currently has 1,300 "Supercenters" nationwide is planning about 1,000 more in the next few years, he said, and for each Wal-Mart one, statistics show two grocery stores will close. In a decade in which 29 grocery chains have gone out of business, the impact that Wal-Mart's plans will have on smaller neighborhood grocery marts can no longer be ignored, he added.

Dykstra, who spoke about the Valley's retail market during a panel discussion on the topic, said investors need to rethink their shopping plaza strategy. "We have to go back to basics. How good is the dirt," he said, referring to a property's location. "You have to find properties that you can reinvent yourself."

Dykstra said better investment strategies are grocery-anchored shopping plazas located in more affluent areas where residents are more likely to oppose the construction of a super center; infill locations where land is less plentiful to support the construction of a mega-store; and shopping centers where grocery stores can be transformed for other uses.

Another panelist, Deborah Froeb, vice president and regional officer in Denver for Jacksonville, FL-based Regency Centers, said although studies have shown that super centers are hard to locate, Wal-Mart's smaller "Neighborhood Market" concept could become even a bigger threat to smaller grocery stores as consumers flock to stock up on cut-rate grocery items.