Big-Box Stores Set Sights on Valley

As retailers head into what is traditionally their busiest time of year, San Fernando Valley shoppers won’t only be heading for the malls.

They’ll also be heading for a proliferation of big-box stores like Wal-Mart and Costco, out-sized specialty retailers like Sport Chalet, and so-called “power centers” that include collections of both.

While hardly any new regional malls have been built in recent years, free-standing big-box stores and power centers have been popping up all over the Valley.

The new retail center called the Plant, at the former General Motors Assembly Plant in Panorama City, has an Office Max and a Home Depot, along with a host of smaller shops.

Porter Ranch Town Center features a new 43,000-square-foot Sport Chalet that opened this summer, along with other large retailers--and it will get a Wal-Mart next year.

Fallbrook Mall is considering a make-over that could emphasize big boxes. Santa Clarita already has one power center within the city limits--and another nearby. And big boxes have arrived in both Lancaster and Palmdale in the Antelope Valley.

Big-box chains continue to expand while traditional malls struggle to define themselves because of the ever-changing nature of retailing, according to John Golisch, partner in the retail practice at business consulting firm Arthur Andersen in Los Angeles.

Regional malls have been around for decades and long ago matured as a retailing concept, while the big-box concept developed more recently when “someone came up with the idea that they could deliver products more cheaply and gain market share by offering something unique to the consumer,” Golisch said.

But that uniqueness is already wearing off, Golisch said, so the growth of big boxes, while continuing, has slowed. “The life cycle of the big warehouse clubs was only about five years before they consolidated into Costco and the few other chains that remain,” Golisch said.

Nonetheless, big-box retailers said they remain eager to expand their presence in the Valley and environs.

Home Depot knocked down an entire block of buildings in Hollywood to build its store there, a relatively expensive way to acquire a site but well worth it to enter the market, according to Rick Krause, a Home Depot district manager.

The company is on the lookout for more sites, Krause said, although properties big enough to accommodate one of its 14-acre operations are hard to find--and other big-box retailers are competing for the same sites.

Wal-Mart is also on the hunt for potential locations.

“We are definitely looking at the Valley. We would like to open more stores there,” said Cynthia Lin, a Wal-Mart spokeswoman.

Wal-Mart now has a Sam’s Club in San Fernando and Wal-Marts in Panorama City, Simi Valley and Valencia, with plans to open another next year in Porter Ranch Town Center, Lin said. “Considering the Valley’s population and customer base, we think it represents a good opportunity for us to continue growing,” Lin said.

Expanding on the Valley floor is tough for big-box retailers, however, because of the lack of land, Golisch said. So, he added, the big boxes generally find it easier to expand into areas like Porter Ranch and the Santa Clarita and Antelope valleys.

Within city limits, Santa Clarita has a Costco, a Home Depot and a power center that includes Best Buy, a Petco, an Orchard Supply Hardware and an Office Max, situated at Newhall Ranch Road and Bouquet Canyon Road, said Fred Follstad, a senior planner at the city. Follstad said the only other announced big box possibly coming soon within the city is Lowe’s home improvement chain, which has an application pending.

Outside city limits, Follstad said, there is an 800,000-square-foot power center on the Old Road near McBean Parkway includes Wal-Mart, Toys ‘R Us, Circuit City, Sport Chalet, Bed, Bath & Beyond and other retailers.

The nearest regional mall to these Santa Clarita big boxes is Valencia Town Center, one of the relatively few new regional malls to be built in recent years--as is the Antelope Valley Mall in Palmdale.

One of the questions the big-box phenomenon raises in retail circles is how much the big-boxes and power centers cut into regional mall sales. Dan Selleck, president of Selleck Development Group, developer of the Plant, said competition between his center and regional malls is minimal. “Although there has been a saturation of regional malls within the Plant’s immediate trade area, the center’s big-box tenants fulfill a retail component which was lacking prior to our developing the project,” Selleck said.

Due to the density of customers located within the Plant’s trade area, “We do not view surrounding regional malls as our competitors,” Selleck said.

Craig Levra, CEO of Sport Chalet Inc., said he doesn’t consider regional malls his competitors either. Sport Chalet is equally comfortable within a mall, at a free-standing site, or in a power center, Levra said.

But, to some extent, power centers are bound to compete with malls because there are only so many shoppers with so many dollars to spend, Golisch said. He also said that competition could intensify because some big box retailers--notably Costco--add seasonal items for the holidays and are constantly experimenting with new lines to see what sells.

Other events in the retail world also suggest that power centers are making a dent in malls:

* In Orange County, Anaheim Plaza was torn down earlier this decade and reopened as a power center.

* Nationally, sales at the largest malls--measured on a square-foot basis--slipped 1.3% between 1995 and 1997, according to an Urban Land Institute survey. During that same time, however, most of the big-box chains expanded and reported increased sales, as most continue to do today.

* Dayton Hudson Corp. raised the prospect last year of closing its Mervyn’s stores--many of which are mall anchors--because of lagging sales. But the company is expanding its Target stores, which are typically located in power centers.

At least one Valley mall, Fallbrook Mall in West Hills, seems to be considering switching sides--converting from a regional mall to more of a power center concept. The mall is planning a major renovation, and that project could include several new big-box retailers in addition to an existing Kmart and Target, The Times reported in March.

However, “nothing is confirmed” about the renovation, according to Lauren Navarro, assistant general manager at the mall. “We’re planning on doing something, but we’re still working out the details,” Navarro said.

Regardless of whether malls and power centers compete head-to-head, Arthur Andersen’s Golisch pointed out that the big boxes have nonetheless introduced more competition into a Southern California retailing battle that was already fierce before the big boxes arrived.

“We’ve been over-stored for the past 15 years anyway because retail square footage has expanded every year but the population hasn’t expanded with it. That means either that some retailers are taking market share away from others, or else everyone is doing less business than they otherwise would,” Golisch said.