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Expansion Plans at Wal-Mart Rolling Along at Full Steam

NEW YORK -- There's no stopping Wal-Mart Stores Inc.<BR><BR>The Bentonville, Ark.-based retail giant said Wednesday it's speeding up its already rapid expansion with plans for next year set for 100 new discount stores and 100 supercenters in the...

NEW YORK — There’s no stopping Wal-Mart Stores Inc.

The Bentonville, Ark.-based retail giant said Wednesday it’s speeding up its already rapid expansion with plans for next year set for 100 new discount stores and 100 supercenters in the United States. The swell will be nationwide, though the Northeast and West Coast are targeted for most of the growth.

About 85 of the new supercenters will be relocations or expansions of existing discount stores.

Wal-Mart’s expansion in the Northeast could spell trouble for strong regional discounters like Caldor Corp., based in Norwalk, Conn., and Bradlees Inc., headquartered in Braintree, Mass. These chains have so far faced primary competition from Kmart and from local retailers, but not Wal-Mart in a big way. Nor have they faced competition from Target Stores, the third largest discounter in the country, behind Wal-Mart and Kmart. Target has not announced plans to enter the region.

Wal-Mart operates in 49 states and Puerto Rico, as well as Mexico and Canada. It will open its first unit in Vermont — its 50th state — next year.

Despite some caution in overall retailing, with retailers selling divisions or closing unprofitable stores, Wal-Mart’s expansion pace has gained steam. In the last 12 months, the megaretailer added 53 discount stores. As of Aug. 31, the company operated 1,969 Wal-Marts in the U.S. and 122 stores in Canada. The Canadian operation, headquartered in Toronto, is the result of acquiring the Woolco chain from Woolworth Corp.

It also nearly doubled the number of supercenters in the last 12 months to 100 units from 58. The supercenter format, which combines general merchandise with groceries, is Wal-Mart’s focus for the future. Units in that division more than doubled in the year ended January 1994 as well. Wal-Mart Supercenters are concentrated in the South and Midwest.

The company will also add 10 Sam’s Club warehouses this year. In the 12 months ended Aug. 31, the Sam’s division rocketed to 435 units from 317, including the acquisition of 99 of Kmart’s Pace Membership Warehouse Clubs.

Wal-Mart is the world’s largest retailer, with sales projected at $85 billion this year. It had sales of $67.3 billion in the year ended January 1994.

Over the last year and a half, Wal-Mart began opening discount stores and Sam’s Clubs in southern and central New Jersey, upstate New York and several New England states, including its first units in Rhode Island.

Wal-Mart’s impact on regional retailing is easily measured by looking at the results of other stores in its trading areas. For example, Venture Stores, which is based in O’Fallon, Mo., and operates mainly in the Midwest and Texas, has faced difficulties where it goes head-to-head with Wal-Mart. Analysts attribute it directly to the stiff competition posed by Wal-Mart and Target. When a supercenter opens, the impact is even greater than when a regular discount store comes into the area. Analysts estimate a discount store takes away 5 to 6 percent of business from a competitor during its first year in operation, while the supercenter saps 10 or 11 percent.

On the international front, 50 to 60 stores will be developed in Mexico, Canada, Brazil and Argentina. As reported, Wal-Mart is in a joint venture to cultivate warehouse clubs and discount stores in China and Hong Kong, although plans are not completed.

Through its joint venture with Cifra SA, Mexico’s largest retailer, Wal-Mart operates 39 units in that country, under such names as Club Aurrera/Sam’s Clubs, Bodega Aurrera, Almacenes Aurrera, Superama and Wal-Mart Supercenters.

Wal-Mart has begun exploring opportunities in Europe, although nothing has been set.