Hypermart--Shopping on a Grand Scale
Hypermart USA is big, really big. So big it could hold a football field, a baseball diamond, a basketball court, an Olympic pool, three tennis courts and a par-three golf hole.
And it makes people do crazy things, like drive to it in the middle of an ice storm on roads as slick as a card shark. Much to the delight of tow truck operators, thousands did that in early January, a few days after Hypermart opened its doors in this Dallas suburb. The freeways were deserted and airlines were grounded, but Hypermart was full.
Who, after all, could pass up the chance to see what is being billed as the largest retail store in the country, one that bragged that no store in all of Dallas could beat its prices?
Who could resist seeing 222,000 square feet of merchandise all on one floor--from bananas to refrigerators to fine jewelry--under one roof? Not to mention the movie rental store, the shoe repair shop, the health food joint, the deli with its 15-cent cup of coffee, the tortilla factory, the bank and on and on.
Being one of the first to see this behemoth of a store does have its price, however. Even with 58 checkout stations, the lines in these opening weeks have ranged from long to seemingly eternal. The aisles have been jammed with oversized carts. The weather has sometimes kept the store from maintaining a full stock of goods. In short, things have been a bit of a mess.
“You wouldn’t want to go with small babies--or your husband, unless he’s a good shopper,” said Barbara Evans, who stood in line for almost an hour and a half before reaching the checkout counter on her first trip to the store.
What people came to see was a mall without walls--a huge full-service grocery combined with the warehouse approach for selling just about everything else. It is the grand scale, the variety, and the cut-rate prices that separate hypermarts from the discount store pack.
The term hypermart is a fairly new one in the American lexicon, but the hypermarche has been a part of the European shopping scene for years.
Started in France by entrepreneur Edouard Leclerc in the 1960s, the stores sell not only a complete selection of grocery items, but also perfume, tires, furniture, clothing, hardware and other goods--the ultimate in one-stop shopping. Everything sells for less than in specialty shops, and the hypermarts have made Leclerc something of a national folk hero in France--except, of course, to the owners of specialty shops.
One of the driving forces behind the Garland hypermart is Wal-Mart Stores, founded by billionaire Sam Walton of Bentonville, Ark., himself an American business legend and the richest man in the United States. The other half of the duo with Wal-Mart Stores is Cullum Cos., which owns a chain of food stores in the Dallas area.
They are embarking together on the Garland project, and one in nearby Arlington, hoping to add another dimension to the way Americans shop. Within the next several years, more hypermarts will be joining the handful already sprinkled around the country.
Wal-Mart is going it alone in building smaller hypermarts in Oklahoma, Missouri and Kansas. K mart, the second-largest retail chain in the United States, has announced that it will build its first hypermart, with 225,000 square feet of space, by the end of 1988, somewhere in the South. Other hypermarts and their hybrids dot the American landscape from Pennsylvania to Oregon. Biggs, a 200,000-square-foot French-American joint venture near Cincinnati, has been in operation for more than three years.
Financial gurus, however, are keeping a particularly close eye on the Garland venture because of the Walton connection and Walton’s marketing prowess.
“Almost no one executes as well as Wal-Mart,” said Donald Trott, a retail industry analyst with the investment firm Dean Witter Reynolds Inc.
It is not just the analysts who are are curious. The Garland hypermart is teeming with retail spies, some speaking English, some French, as they wander the aisles carefully examining everything, but buying nothing. This caused Hypermart manager Bill Sheffield to muse the other day that if all the spies would just buy a little something, the store would be doing a land-office business. Sheffield should know about spying. He’s done a bit himself and can show reports he has drawn up, complete with pictures, of other discount stores.
At mid-morning recently, as the 1,600-space hypermart parking lot was beginning to fill up, Tom McCarthy, Hypermart USA’s president, was having one of those 15-cent cups of coffee from the deli. (Another counter deep in the store offers free coffee and hot cider to tired customers.) Like those of all other employees, the identification tag on McCarthy’s jacket bore only a first name. Like other employees, he knows the Hypermart USA cheer (“Hypermart’s a store that’s out of sight, etc.”). And, although he was soft-spoken and direct, it soon became apparent that McCarthy was playing it close to the vest.
No cameras are allowed in the store. Neither are interviews with store customers on the premises. No figures are available on the cost of building Hypermart USA, except that its 36-acre site was bought at fair market value. McCarthy would not disclose the sales volume the store needs to break even, saying only that industry experts generally agree that $100 million a year is about right, compared to about $16 million for a standard supermarket. He said the store was keeping up with its sales projections but would not say what the projections were.
(Hypermart USA was not alone in its reluctance to discuss figures. A spokesman for Biggs, the Cincinnati store, said he was under orders not to give out any information at all about the hypermart, even its square footage.)
But McCarthy is not hesitant at all about saying the success of Hypermart USA remains in question. “The jury is still out,” he said. “It still remains to be seen what we’ve really got here. What we’ve got today might not be what we’ll have down the road.”
The key to success, he said, is to sell cheap, keep turning over the merchandise, while at the same time driving the customer purchases up. That certainly is the French experience, where the average shopper spends roughly $33 on each trip to a hypermart, compared to only $15 at a regular grocery.
McCarthy began his tour of the store with the “Wall of Values,” an entire aisle of bargains. Among other things, black-and-white television sets were being sold on this particular day for $39.95. In other parts of the store, a package of Parkay margarine was going for 27 cents and a package of 100 corn tortillas was selling for $1.29.
Fresh-baked blueberry muffins were a dime apiece. A JVC video camcorder was selling for $488 and a can of racquetballs was $1.74.
Dennis Telzrow, a Dallas retail analyst, completed a select study last week, comparing Hypermart USA food prices with a local Kroger store and hypermart toys with a local Toys R Us. The results were impressive. A basket of food at Kroger was $81.18, with 10 of the 22 items compared on sale. The Hypermart price, with three sale items, was $60.11. At Toys R Us, the price for 11 items was $366.44. Hypermart’s total was $319.92. Telzrow has not yet finished his comparison of housewares and clothing.
Even with the savings, there are still varying opinions about Hypermart USA. Ned Myers, the manager of the tire store across the street from the big store, isn’t pleased by the new competition, but he still buys fried chicken from the deli because eight pieces are $1.99. He is also thinking of buying a new color television at the hypermart.
Thedra Arnold, a word processor for a Dallas bank, said she would go back for the bargains. And Betty Lynn McHam, a public relations executive, said, “It does make shopping an event.”
But Charlie Reynolds, a Garland resident, said the store was too big and impersonal for his taste, not to mention what it had done to his normal route to work.
“It’s really screwed the traffic up,” he said.
A COMPANY THAT RALLIES TOGETHER
All Hypermart USA employees are expected to be able ro recite the company cheer. That includes Thomas O. McCarthy, president and chief operating officer, below.
Hypermart’s store that’s out of sight.
The prices are low and the star is bright.
America’s new way to shop and save.
Hypermart, Hypermart, USA.
Who’s No. 1 now?
Who’s No. 1 now?
Competition, get on down!