
DATE: Friday, October 17, 1997              TAG: 9710170604

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY MIKE ABRAMS, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:   83 lines

SUPERCENTERS COMPETE ON THE SAME TURF

Her family had trouble with a Kmart photo session, so Sharon Pucci took her business to a nearby Wal-Mart Supercenter.

She swears she'll never go back to Kmart.

``Every check in my checkbook's to Wal-Mart,'' the 43-year-old Beach woman said.

Switching customer loyalty from one giant retailer to another became easier last week at the Beach. Three of the nation's major discounters - Kmart, Wal-Mart and Target - have built stores in a tight, competitive triangle, within minutes of each other in the city's southern developed area.

The retail triangle is new to the resort city, but analysts say it mirrors a national trend: newer, bigger stores in clusters.

And though the Beach's first Target opened last week without the full-service grocery found in the competing stores, the analysts predict the new outlet will do just fine.

``Consumers like sparkling new stores,'' said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co., a Richmond brokerage firm. ``Old stores, if they aren't remodeled, are left in the lurch.''

Troy, Mich.-based Kmart Corp. formed the triangle's first point when it abandoned an older store in favor of a 190,000-square-foot Super Kmart on Holland Road. It features a garden center, grocery and traditional discount section.

In July, Wal-Mart Stores Inc., headquartered in Bentonville, Ark., formed the second point with a 198,000-square-foot ``Supercenter'' at Princess Anne Road and Lynnhaven Parkway. It includes a grocery, hair salon, pharmacy and photo lab.

Last week, Minneapolis-based Target Stores completed the triangle when it opened a 122,000-square-foot store where South Independence Boulevard meets Princess Anne Road. The retailer, a division of Dayton Hudson Corp., also opened a store in Newport News.

The region is attractive to discounters because median incomes trail state and national averages, said John W. Whaley, director of economics for the Hampton Roads Planning District Commission.

He quoted an August survey by Sales and Marketing Management magazine, which listed Hampton Roads as the 33rd most populous region in the country.

Yet the area's ``effective buying power'' ranked 44th.

At more than $104 billion in annual sales, Wal-Mart is the dominant international retailer. Its sales leadership globally or locally, however, isn't forever ensured, Gassman said.

``A basic tenet of capitalism,'' he said, ``is that we virtually don't let one retail company dominate.'' Over time, he said, sales leadership may change hands.

In many retail sectors, Gassman said, ``three is a crowd.'' So each discounter has to carve out its own niche.

Target, for example, has succeeded by billing itself as an ``upscale'' discounter, even if the marketing strategy has earned it a sarcastic French pronunciation: ``Tar-jay.''

Carol Vollrath, the Beach Target team leader, said her company succeeds by selling quality items, from picture frames to clothes, at low prices.

``We feel our products are more on the cutting edge of fashion,'' she said.

Wal-Mart's niche - if that word applies to the huge retailer - has been to match a broad range of products with ``always'' the lowest prices. In recent years, Kmart has put less emphasis on clothing and boosted its selection of pantry items such as bread, snacks and milk.

Customers, meanwhile, will vote with their feet.

Holly Adams of Virginia Beach calls herself a Super K fan. ``I like the variety,'' she said after a quick trip through the store last week. She had purchased a pantry item or two.

At the Target, William Thompson said he had a good experience on the store's first day. He bought a phone.

``I would buy other things here,'' he said.

And Pucci?

The Wal-Mart shopper says she'll keep writing checks at her store. ILLUSTRATION: [Color Photo]

L.TODD SPENCER

Sharon Pucci checks out at the Super Wal-Mart off Princess Anne in

Virginia Beach.

DISCOUNT CITY

GRAPHIC

The Virginian-Pilot

[For a copy of the graphic, see microfilm for this date.]

SOURCE: Individual companies; Virginia Beach Department of Economic