ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 7, 1996 TAG: 9601110140
SECTION: BUSINESS PAGE: D7 EDITION: METRO
SOURCE: MEGAN SCHNABEL STAFF WRITER
For many Roanoke-area retailers, 1996 may be remembered as the year the Wal-Mart supercenters moved in.
The first store, which will occupy 200,000 square feet next to Valley View Mall, is scheduled to open Jan. 24. A second supercenter will open in Christiansburg in early spring, a third in Rocky Mount later this summer.
That Wal-Mart is increasing its presence in Southwest Virginia is certain. What isn't so certain is what effect these new stores of the nation's largest retailer - which will include grocery stores, automotive centers and beauty salons - will have on existing businesses.
Expect to see small mom-and-pop stores - those that cannot take advantage of volume discounts from suppliers and, therefore, can't compete with Wal-Mart's prices - taking the hardest hits, said Kenneth Gassman, a retail analyst with Davenport & Co. of Virginia in Richmond. But larger retailers with established niches shouldn't be in too much danger, he said.
Ken Jones, assistant manager of the Hills Department Store on Hershberger Road, said arrival of the supercenter doesn't worry him too much. Although Hills is just a short drive from the Valley View Wal-Mart and carries many of the same product lines as the giant store, he thinks the new Wal-Mart already may have one strike against it. The traffic getting into the Valley View Mall and Wal-Mart parking lots will be so heavy, he said, that customers will give up and return to their established shopping habits.
That doesn't mean Wal-Mart won't be a force to be reckoned with, Gassman said. He cited as an example women's apparel sales, which increased industrywide by $10 billion from 1993 to 1994. Of that increase, Wal-Mart claimed $3 billion.
"That giant sucking sound is Wal-Mart taking away market share," he said.
But even supercenters won't be enough to snap American consumers out of their current spending "malaise," he said.
"The consumers kept their purse strings tight in the last half of the year," Gassman said of 1995. And he doesn't foresee a change.
"Statistically, we're not in a recession, but it feels like we are," he said. Inflation is in check, the gross national product is growing modestly, and unemployment is low. But Americans built up huge amounts of debt over the last several years, and as long as they're making hefty monthly credit card payments, they aren't going to step up their purchases.
The continuing threat of corporate downsizing and restructuring also has kept retail sales soft. Uncertainty about job security has the largest negative impact on consumer spending of any factors that analysts have studied, Gassman said.
Consumers will need some clear sign that the economy is recovering and new jobs are being created before they'll return to their old spending habits, he said. He doesn't see such a sign coming in the first six months of the new year.
What he does see happening is increased consolidation of retail stores. The less successful retailers will close, and the larger ones will take over their market share, he said.
While the growth of superstores and the poor 1995 Christmas season may be pushing some retailers out of business, the impetus for most of the consolidation came during the 1980s. That's when retail square footage grew four times as fast as the U.S. population. The current consolidations and closings, he said, mean the market now is trying to return to equilibrium.
The stores that will be under the most stress will be catalog showroom retailers, regional discounters and women's mass-market apparel stores, he said.
"There will always be competition nipping at their heels," he said.
LENGTH: Medium: 68 linesby CNB