THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, August 4, 1996 TAG: 9608030517
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: 124 lines
Suddenly these are heady times for local shoppers.
There are new Target discount stores, Harris Teeter grocery stores and even Baby Superstores. And more are on the way, including ritzy department store Nordstrom.
National retailers continue to aggressively expand here and nationwide despite analysts' warnings of saturated markets and lackluster sales.
``In the last decade, retail square footage has been growing faster than personal income,'' said Michael M. Via, a retail analyst with Anderson & Strudwick in Richmond. ``Something has got to give.''
Big retailers believe they can woo consumers away from competitors by offering spicy new ideas and better services. If they're right, they'll be the winners. So will consumers.
Lately, the losers have been small merchants and regional chains, who need to beef up their services or lose out, analysts said. Already, shakeouts are apparent in several retail sectors, including discounters, home-improvement companies and music retailers.
Hampton Roads: overcrowded or underserved?
For every retailer that discovers the Hampton Roads market, there is a local merchant who says there aren't enough shopping dollars to go around.
Both are correct, said Larry Ring, a retail consultant and business professor at the College of William and Mary in Williamsburg.
There are only so many office-supply stores, discount outlets and grocery stores that a market like Hampton Roads can absorb - even if the local economy continues to grow moderately, Ring says.
Among discounters, regional chains like Rose's, Caldor and Hills Stores have been struggling with titans Wal-Mart and Target. Even bigger threats are here or on the way: Super Wal-Mart and Super Kmart.
In the home-improvement industry, several local hardware companies went out of business when HQ Home Quarters Warehouse and other big guys began staking their claims. Now, HQ is watching as Home Depot and Lowe's flex their muscles.
In the music industry, Blockbuster Music, monster-sized Planet Music and The Wall Music, are among those making small merchants' lives difficult. Circuit City, the largest appliance and electronics retailer nationwide, is taking a piece of the market, too, by selling compact discs.
Barry Friedman, co-owner of Birdland Records, Tapes and Compact Discs in Virginia Beach, says small retailers have to work harder these days to retain customers. At the same time, he said, they should watch the big retailers with a mixture of respect and caution.
``The first thing that happens is they'll hurt the little guy,'' Friedman said. ``Then, they'll pound each other into the ground. . . . All the small retailers can do is sit on the sideline and do their business, so when the dust settles, they'll still be there.''
Retail development continues to grow.
A survey by Harvey Commercial Real Estate tallied 33.7 million square feet of retail space in Hampton Roads last year. That's up from 32 million square feet in 1994.
More retailers - many of them superstores - and shopping centers are on the way. The biggest will be Norfolk's MacArthur Center, which will add 1.2 million square feet of retail space when it opens in 1998.
The real-estate industry once considered 15 square feet of retail space per person to be adequate. But the national average was 18.9 square feet per person last year, according to the National Research Bureau, a Chicago-based research company.
In Hampton Roads, that ratio is much higher - 24 square feet per person, up from 23 square feet in 1994, according to figures from the Harvey Lindsay study and the Weldon Cooper Center for Public Service at the University of Virginia.
Local real-estate officials don't dispute the figures, but say they can be misleading. For example, the rise of big-box retailers like Wal-Mart has artificially inflated figures, they say. Others say Hampton Roads' population figures don't include large numbers of military personnel, tourists and nonresidents who regularly drive to Hampton Roads to shop.
The new breed of retailers isn't afraid of crowded markets.
Even if the area is getting crowded, the new retailers don't mind. They have deep pockets and gargantuan stores. They believe there's no such thing as a saturated market - only an underserved one, consultant Ring said.
``They're looking at the market and saying, `We can do as good or a better job than the guy who's already there,' '' he said.
Target Stores, which recently opened discount stores in Chesapeake and Newport News, says it offers a more upscale selection in apparel and other soft goods than its direct competitors, as well as everyday low prices on traditional discount items.
``It's really a different niche,'' said Tom Sands, senior vice president for Target's eastern region. ``What we offer is an alternative to what shoppers have today.''
Nordstrom, which will anchor Norfolk's MacArthur Center, thinks the same way. While there are many Hampton Roads retailers that sell upscale clothing, Nordstrom says it gives consumers more choices and a level of service that has made the chain famous.
Real-estate brokers add that Hampton Roads is playing catch-up. They say local consumers have been demanding new services and more choices.
``We don't do retail square footage per capita,'' said Sharon Ryals-Taylor of Goodman Segar Hogan Hoffler, a Norfolk-based real estate firm. ``We look at it from the supply and demand angle.''
What do local consumers want?
Retail analysts might point fingers at Wal-Mart and Target for making smaller, regional chains like Caldor, Hills and Bradlees suffer. But the big guys aren't taking the blame.
``They would struggle or continue to struggle whether we came or did not come,'' said Tom Sands, executive vice president for Target's eastern division. ``Caldor, Bradlees and Hills - they had inherent problems. We may have pushed them over the edge. But that's all.''
Successful retailers, big and small, offer something that others don't - whether it's low price, unique product, better service or convenient location.
A good example might be CarMax, a massive used-car dealership owned by Richmond-based Circuit City Stores Inc. Consultant Ring says CarMax reaps sales because it gives customers what they've been asking for: set prices, no dickering and little stress.
And look who is complaining, Ring says.
``All the local used-car dealers are saying it's not fair,'' he says.
Dealerships offering consumer-friendly service will survive CarMax's onslaught, Ring says.
Even shoppers who like the idea of supporting their home-grown retailers admit the big chains have advantages.
``I prefer smaller businesses - not the big outlet chains,'' said Kristina Williams-Neukrug of Norfolk, as she headed for a store at Janaf Shopping Center last week. ``Overall, I don't think the big chains are good for society or the economy.''
But the big retailers, she says, are more convenient.
``As a matter fact, I'm getting ready to shop at one now,'' she said. ILLUSTRATION: JOHN EARLE/The Virginian-Pilot by CNB