Wal-Mart - the nation's largest seller of groceries - is making a big move into the Milwaukee area, setting the stage for more price competition and offering a challenge to the dominance of the Milwaukee-based Pick 'n Save chain.
In recent years, Wal-Mart has opened supercenters in suburbs ringing the city, and it has converted two existing stores in Milwaukee County into supercenters by adding full grocery departments.
Now, the Bentonville, Ark.-based retailer is planning to bring its newest generation of grocery and general merchandise stores to locations around the metro area. The company hasn't announced a number, but a retail industry source estimated there could be eight or nine sites under consideration.
"We're looking to serve our customers all over the state," said Wisconsin-based Wal-Mart spokeswoman Lisa Nelson. "There's plenty of opportunity in Milwaukee."
Last week, South Milwaukee agreed to sell 3.5 acres of land to Gatlin Development Co., a Tennessee-based developer that is assembling what will be an 11-acre parcel on N. Chicago Ave. Gatlin hopes to build a nearly 120,000-square-foot Wal-Mart store that would sell both groceries and general merchandise. The size is a bit smaller than its typical 140,000-square-foot supercenter and is sized appropriately for the neighborhood, according to Nelson.
Also in the works are plans for Wal-Mart stores in Greendale, at the former headquarters site for the U.S. Bowling Congress, and in Milwaukee at the site of a J.C. Penney outlet store that soon will close. The Greendale location is part of what the village describes as a redevelopment area that includes Southridge Mall and the village's downtown retail area south of Grange Ave. The village is proposing a special tax district for the mall, but the Bowling Congress property is not part of it.
In the past month, Wal-Mart opened large supercenters in Muskego and Waukesha, although the company no longer puts the "supercenter" name on the outside of new stores.
Looking old and new
Wal-Mart is looking at sites where a new store could be built and at older blighted properties in need of redevelopment, said Steven Restivo, a Wal-Mart spokesman. In its quest to expand into new areas, the company has announced a flexible sizing plan that includes grocery stores as small as 20,000 square feet; medium stores of 30,000 to 60,000 square feet, called Neighborhood Markets; and large stores of 80,000 square feet and up that include full grocery offerings.
The Milwaukee expansion could include a variety of store sizes, depending on the sites, Restivo said.
More Wal-Mart grocery stores will put a dent into the market dominance that Roundy's Supermarkets Inc. has enjoyed here in recent years, said grocery industry analyst David Livingston of Waukesha, who is a former Roundy's employee. Roundy's Pick 'n Save stores in the Milwaukee area already have been challenged by the Woodman's entry to the market with two stores, one in Oak Creek and a recently opened store in Menomonee Falls, and by several new Aldi stores around the metro area.
Roundy's has rolled out a 5,000 price-cut promotion at stores near Woodman's and, more recently, at stores near the two new Wal-Marts in Muskego and Waukesha.
While Roundy's store count in recent years has remained relatively stable - 154 stores in Wisconsin, the Twin Cities area and Arlington Heights, Ill. - the company has an aggressive remodeling program.
This month, the company held a re-grand opening for a Pick 'n Save on S. Moorland Road in New Berlin, which is a few miles north of the new Wal-Mart in Muskego. Roundy's also has torn down some older stores and replaced them with new ones nearby. Roundy's also has several stores planned in the Chicago area.
A Roundy's spokeswoman declined to comment on Wal-Mart's plans.
"They want to go as close as they can to high-volume Pick 'n Saves," Livingston said of Wal-Mart's strategy. It is the same plan Roundy's used when Pick 'n Save first went up against the old market leader, Kohl's supermarkets, he said. Roundy's won that fight, with the last Kohl's food stores closing in 2003.
Livingston estimates that Wal-Mart can take 1% of the area's market share with each new grocery store the company opens. New Wal-Marts have full-service pharmacies, so they also will compete against Walgreens, the market leader in drugs in the Milwaukee area.
"The interesting thing about the Neighborhood Market concept is they really haven't had a significant number of them in any market," said Jim Hertel, managing partner at Willard Bishop, a consulting firm in Barrington, Ill. The Neighborhood Markets generate annual sales of about $30 million to $35 million - a high volume, but not extremely high, he said.
Growth in groceries
Wal-Mart's push to open new supercenters and to renovate older stores into supercenters with full grocery departments tipped the balance of the company's sales last year to the point where groceries make up the majority of the company's revenue, 51% as of Jan. 31. In the future, the number of discount stores the company operates will decline as the number of supercenters grows, Wal-Mart said in October.
Next year, Wal-Mart plans to open 152 stores of at least 60,000 square feet and one store smaller than that. In 2012, the company expects to open as many as 165 large stores and up to 40 stores less than 60,000 square feet.
The small stores will go into urban markets and small towns, as well as fill in the gaps in existing markets, Bill Simon, Wal-Mart's chief executive officer, said in a statement in October. The large format is a supercenter with a grocery department.
Others are growing, too
At the same time that Wal-Mart is looking for sites in the area, both Woodman's and the Balistreri-owned Sendik's Food Market chain have said they plan to add stores.
Wal-Mart, the world's largest retailer, faces more challenges entering the area than the Wisconsin-based supermarkets. When Wal-Mart tried in 2008 to build a store in Cudahy, for example, officials refused to approve the plan, hoping to get something better. News of Wal-Mart's suburban plans posted on the JSOnline website last week brought dozens of negative responses from people who identified themselves as living in the communities, but also drew favorable comments.
Wal-Mart spokesmen cite new jobs and low prices as reasons that communities should welcome them.
Danielle Devlin, executive director of South Milwaukee's Community Development Authority, agrees.
"Wal-Mart has a community giving program," Devlin notes. "We have a tradition of our corporations being involved, but Bucyrus is pulling back from that. In terms of an economic impact, it will be significant."
And not only that, Devlin notes: "Residents will be able to buy a pair of socks in their own community."
Top grocers in the metro area
Where respondents bought the most groceries during the 6 months ending in July, the most recent data available.
1. Pick 'n Save 54%
2. Aldi 9.2
3. Wal-Mart 7.4
4. Piggly Wiggly 6.4
5. Sentry 6.1
6. Sendik's 4.5
7. Woodman's 3.3
8. All other 2.9
9. Sam's Club 1.9
10. Whole Foods 0.8
Source: Scarborough Research
Your link to the biggest stories in the suburbs delivered Thursday mornings.
Enter your e-mail address above and click "Sign Up Now!" to begin receiving your e-mail newsletter Get the Newsletter!
- YEA! Greendale school program to recruit business-minded students
- Bus shelters coming to Bluemound Road in Brookfield
- Greendale police report: April 16, 2015 issue
- Greendale Veterans Memorial Committee to welcome back flags of support in ceremony
- Greendale Village Board hires architect to begin fire station location, design (1)
- Greendale's annual 'Celebration of Education' to honor community members, students
- Comiskey and Crapitto elected to Greendale School Board
- Chadwick and Sikorski to stay on Greendale Village Board
- Greendale police report: April 9, 2015 issue
- Germantown resumes plans for full-time fire department referendum