LOS ANGELES — Wal-Mart has a new identity: urban retro.
This story first appeared in the January 23, 2003 issue of WWD. Subscribe Today.
The world’s largest company unveiled a three-story urban prototype here Wednesday, placing its first door within city limits in an eye-pleasing Art Deco building, circa 1947. The unit at Baldwin Hills Crenshaw Plaza is in the heart of the inner-city Crenshaw District, one of the city’s most underserved regions. It fulfills the strategy of the Bentonville, Ark.-based behemoth to expand from rural areas to major urban cores.
No question Wal-Mart is giving a much-needed morale boost to the neighborhood, home to two million people packed into a seven-mile radius. For four years, residents looked at a shuttered Macy’s West store that was closed because it was “under-performing” in January 1998, two years after it had been converted from a Broadway store. The move was an economic blow to the area and started an avalanche of community backlash against Macy’s West for its departure.
“To have a big, empty department store wasn’t good for the community or the mall,” said Ned Fox, chairman and chief executive officer of the Plaza’s owner, Center Trust, which two weeks ago merged with real estate investment firm Pan Pacific.
On Wal-Mart’s first day, an estimated 1,500 shoppers, mostly African Americans and Hispanics, flooded the store in the opening hours. Of Wal-Mart’s 2,845 units, there are 131 stores in California, but only two stores set in the far reaches of Los Angeles County — one in Porter Ranch and one in Panorama City — previously served this market.
Attracting the anchor that joins Sears, Robinsons-May and the 12-screen Magic Johnson Theaters wasn’t easy, according to Fox. Center Trust executives had a difficult time getting a face-to-face interview with Wal-Mart’s West Coast real estate manager. It took some creative thinking on the part of the Center Trust’s vice president of assets. “Joe Paggi found a flight that he was on and booked a seat next to him,” Fox said. “By the end of the flight, he had convinced him to move Wal-Mart here.”
Fox said he expects the store to do between $50 million and $75 million in sales in its first year. Wal-Mart executives would not confirm the figure. Bob McAdam, vice president of corporate affairs for Wal-Mart, said before the doors swung open: “You can tell from the support we’ve got from the community here that they are eager to get inside, and I think we’re going to see a lot of good sales.”
Structurally, Wal-Mart has broken out of its big flat box. The store is average in size, with 150,000 square feet of selling space, but is the first three-story unit in the U.S. and only one of a handful of stores that are connected to a shopping mall. Typically, Wal-Mart stores are sprawling one-story, freestanding boxes occupying between 130,000 and 150,000 square feet.
But the store came with a slew of challenges associated with retrofitting an old building, noted McAdam. Plumbing, mechanical and electrical upgrades were among the improvements. He declined to reveal the company’s total investment, but said it “is a lot more than we would normally spend. The questions that we ask going in are whether we can build a store at a cost so that we can offer low prices to those customers. This happened to be a situation where the numbers all added up.”
Among the unique features of the store is Wal-Mart’s first custom store-signage in Forties-era rounded Art Deco typeface to match the building’s rounded edges and awnings. Inside, there is a cart conveyor, similar to an escalator, that can move up to 800 carts an hour from floor to floor and a Cartronics system that electronically stops carts from leaving the site.
There are three entrances to the store, two of which open into the mall. Store layout had to be tweaked somewhat, placing heavier merchandise close to escalators. Apparel, handbags, jewelry and shoes are located on the first floor while on the second level, there is a pharmacy, a health and beauty department, a vision center and a section for pet supplies. Fabrics and crafts, home fashion and sporting goods are on three.
McAdam said local store management has a strong influence on the assortment. Apparel occupies about two-thirds of the first floor. On Wednesday, customers grabbed Jennifer Lopez-style floppy hats at $4.24, Faded Glory denim jackets with white pinstripes for $14.92 and track suits, with hoodies and sweat pants selling separately at $12.88 each.
“Were doing a better job of catering to individual stores within a community,” noted Larry Tompkins, regional vice president of Wal-Mart, who oversees stores in Southern California. But for now, the company will stay away from regional advertising, letting national TV spots spread the word.