Putting aside their big-box ways, giant retailersWal-Mart Stores Inc.andTarget Corp.are going urban with a new look and a metro-oriented feel as they expand in Southern California, starting this weekend.
Locally grown produce is in plentiful supply. Grab-and-go sandwiches are ready. And many of the shopping carts are smaller. Grand opening signs are in place. Patio furniture is nowhere in sight.
The discount chains are hustling to expand as big-box retailers race to slide smaller stores into dense city neighborhoods, putting them head-to-head against dollar stores and local markets already there. Retailers such asBest Buy Co.are also eyeing urban centers as drivers of growth.
“Retailers once opened a lot of stores in rural areas because that is where people were going,” said Brian Sozzi, chief equities analyst at research firm NBG Productions in New York. “Now as people move back to the city for higher-paying jobs or lower commuting times, they are trying to get into cities.”
On Friday, Huntington Beach residents will see a new grocery-centric Wal-Mart Neighborhood Market opening on Beach Boulevard not far from the ocean. On Sunday, shoppers in Westwood will be able to start browsing at the new CityTarget on Weyburn Avenue near UCLA.
Both retailers plan to open downtown Los Angeles stores in the months to come, CityTarget in October and Wal-Mart Neighborhood Market in Chinatown early next year.
To penetrate the urban core, Wal-Mart and Target are opting for smaller-than-normal footprints and a carefully selected assortment of goods.
At 31,000 square feet, the Neighborhood Market in Huntington Beach is about one-sixth the size of a Wal-Mart Supercenter and takes over a space formerly occupied by a Rite Aid pharmacy. The supermarket concept carries fresh produce, bread and general merchandise, part of a push by the world’s biggest retailer to open 20 such grocery stores in California in the next year.
A day before opening, fresh peaches were stacked in a pyramid and pineapples lined up in neat rows in the produce department. Steaks and chickens glistened under cellophane in the meat section. A pharmacy is tucked to one side, next to the magazines and beauty products.
“Huntington Beach is the first among several Neighborhood Markets announced in California,” said Steven Restivo, Wal-Mart’s senior director of community affairs. “Similar to the downtown site, it will have a focus on full-line groceries with a limited assortment of health and beauty, cleaning products, pet supplies, pharmacy.”
In contrast, CityTarget stores are essentially a smaller version of the standard Target with a heavy emphasis on household basics for urban residents on foot and commuters taking public transportation.
The 92,000-square-foot Westwood store opening Sunday, which sits across the street from a Trader Joe’s and underneath a Ralphs supermarket, has the feel of a Target tweaked to maximize efficiency.
Shopping carts are small. There is no children’s or patio furniture. Bags of pet food go up to only 17 pounds, unlike the 40-pound packages that can be found at standard Target stores. A digital screen at the entrance updates shoppers on the local weather.
Cary Strouse, the company’s vice president of stores for the Western region, said that urban shoppers tend to buy less per trip than their suburban counterparts but frequent their local stores more often on an as-they-need-it basis.
“It’s about what the guests can or can’t carry home. Often, they ride mass transportation,” Strouse said. “So you see a lot of household basics.”
Analysts say retail chains are rushing into cities after saturating suburbia throughout the country, following dollar stores that have proved urban cores can be extremely profitable with the right assortment of goods.
“You have retailers like Family Dollar or Dollar General going to urban areas that have been very, very successful,” said Britt Beemer, a retail expert at America’s Research Group. “What’s made Wal-Mart and Target begin to rethink their position has been the success of dollar stores that go into these urban centers. They are their best-performing stores.”
Elise Perlmutter, a longtime New York resident who now lives in Westwood, thinks it’s about time. Despite the years spent in car-centric Los Angeles, Perlmutter, 42, said she has always pined for an all-purpose store within walking distance from her home, just like in her old neighborhood in Manhattan.
“I have been waiting for this for a long time,” said the online ad saleswoman, standing outside the CityTarget a few days before opening. “I’m a regular Target shopper, but I have to drive to the nearest one and take the 405. It’s so crowded that I just can’t go over the weekends. Now I can just walk here.”
But as many former suburbanites can attest, adjusting to urban life is not always a smooth transition. Neither the CityTarget in Westwood nor the Neighborhood Market in Huntington Beach has prompted much local controversy, but Wal-Mart’s plans for a grocery store in L.A.'s Chinatown have generated angst.
Organized labor and local advocacy groups, which have long accused Wal-Mart of offering poor wages, blocking attempts to unionize its workforce and running out mom-and-pop businesses, have tried vigorously to block the retailer from moving into the neighborhood. A protest last month drew thousands of people who marched behind a banner that read “Wal-Mart = Poverty.”
Restivo said that excluding management, the chain’s full-time hourly employees in California earn $12.79 an hour on average, above the state’s $8 minimum wage. Both full-time and part-time employees who work at least 24 hours a week on average qualify for health benefits.
Target has largely ducked the same outrage, even though it also has a non-unionized workforce and, labor experts say, comparable wages.
Unions and community advocates have chosen to take on Wal-Mart because the discount chain dwarfs Target, which has also done a better job of managing its brand, said Mike Shimpock of SG&A; Campaigns, a Pasadena media and political consulting firm representing the United Food and Commercial Workers union.
“We are certainly not giving Target a pass,” Shimpock said. “Target just has done a much better job of marketing themselves as a kind of design-oriented store in a way that sidestepped the way employees are treated.”
Strouse declined to comment on details of Target’s compensation and benefits packages, saying only that they are “competitive with the marketplace.”
Despite the voices of opposition, analysts say that the only people Target and Wal-Mart really have to convince are its shoppers.
Peering up at the construction crew putting finishing touches on the Wal-Mart Neighborhood Market, Nancy Arriola, 55, said she’s normally a Target shopper, but only because one was near her Huntington Beach home.
“I’m definitely going to check out this Wal-Mart when it opens,” the teacher’s aide said. “If the prices are low, I’ll come and shop here.”