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New Midtown Wal-Mart will cater to urban tastes
By PATTI BOND
The Atlanta Journal-Constitution
Published on: 10/13/06
The world's largest retailer has given a Wal-Mart-sized makeover to its first store inside Atlanta's city limits.
From the hardwood floors to the rooftop parking lot, you'll see little trace of the retailer's suburban big box when the doors open Wednesday. The Midtown store sits below street level, out of sight from the traffic on Howell Mill Road. Inside, Wal-Mart has ditched the bargain-basement atmosphere for a more upscale air, complete with sushi bar.
Wal-Mart, the retail giant that some people love and others love to hate, is showing off a new sensitive side — one that just happens to coincide with its march into city settings.
The dramatically different look at the Howell Mill store, as well as its spruced-up merchandise mix, is due partly to local neighborhood activists. In order to set up shop in coveted urban cores such as Atlanta and Chicago, Wal-Mart has learned that it has to bend, and sometimes over backwards.
It's a big switch from Wal-Mart's one-size-fits-all formula.
"We used to say, 'Here's the battleship gray box,' and that's it," said director of corporate affairs Michael Mills, pointing out the Atlanta store's brick-and-stone exterior. "But, as we move into cities, we're building stores that fit the needs of the neighborhood."
Cheese, not guns
The new urban format is one piece in a puzzle that Wal-Mart hasn't had to solve until recently.
Like Home Depot, Wal-Mart has opened stores at a breakneck pace, but it is starting to run out of room in some markets — and faces fierce opposition in others.
In response, Wal-Mart is ramping up its "store of the community" strategy, designed to reflect the tastes of local demographics.
At the Howell Mill location, Wal-Mart will try to woo the up-and-coming Midtown consumer set with organic clothing and plasma TVs to go along with the softer color palette.
Instead of a gun case, you'll find a gourmet cheese case. And there's no oil-change center, but there is nearly 70 linear feet of wine.
Just inside the entrance to the grocery section, a prototype bakery "island" will greet shoppers with the aroma of fresh bread.
"The neighborhood wanted a more upscale store," said store manager Chuck Rushing, who started his Wal-Mart career 23 years ago corralling shopping carts in the parking lot. "In general, customers have been telling us they want better products, but still at Wal-Mart prices."
While urban stores have some higher-end products that other stores don't carry, Mills said pricing for most goods are about the same in a given geographic market, whether urban or suburban.
Rushing and Mills both are quick to point out that the proper "urban" product mix is still a major work in progress.
Initially, the localized merchandise, such as an expanded ethnic hair-care section, represents just a fraction of the products that will be carried in the store.
The mix will fluctuate once store managers get a better handle on shopping patterns.
"We'll learn a lot in the first year," Rushing said. "The good thing about [Wal-Mart] is, we can change on a dime. We can make a couple of phone calls and a week later we'll have new categories of merchandise."
'Granular' variation
The urban format, up and running at only a handful of the chain's 3,700 U.S. stores, is an amplification of a localized strategy that's rolling out across the country, Mills notes.
The new local approach could pay off big for Wal-Mart, which has seen sales growth at existing stores slide due to competition from Target.
According to retail consulting firm Bain & Co., major retailers that design stores and products around neighborhoods can double their store profits.
"A lot of retailers vary their merchandise regionally, but now they're starting to go to a much more granular level," said Ritch Allison, a partner in the Atlanta office of Bain & Co.
"Retailers are realizing that localization means that a store in one section of Miami, for example, may look more like a section of New York than it does in nearby Palm Beach."
At Wal-Mart, that means a local store manager knows which one of the dozens of private-label brands of chili to carry.
Managers also tailor colors in the apparel section to match local sports teams, Allison noted.
The combination of different store formats and varying product mixes can be tricky, particularly in a cross-section of the city such as the Howell Mill district, but it's better than a cookie-cutter approach, he said.
"Customers will come back more often to a store that has a pleasing shopping experience. ... so that's going to help sales," Allison said.
"Plus, one of the big costs retailers face is markdowns. If they have the right merchandise in the right places, they're going to see results on the top line and bottom line."
And as neighborhood relations go, Wal-Mart is dealing with being, well, Wal-Mart. Neighborhood activists did not make the same design and decor demands upon TJ Maxx, Office Depot, PetSmart or other retailers at the Howell Mill shopping center.
"Wal-Mart is always looked at as the 800-pound gorilla, but they've been incredibly flexible and adaptable," said Scott Selig, vice president of Selig Enterprises, the developer of the 600,000-square-foot mixed-use development.
"This store has all of the most forward-thinking elements that Wal-Mart is doing right now, and I think you're going to see more stores of this type as they expand elsewhere."
