California: Wal-Mart Expansion Could Doom Competition
Posted on July 27, 2007 by webteam
Wal-Mart could doom Save Mart [Tracy Press]
Tracy’s Save Mart supermarkets could take a direct hit from Wal-Mart if it succeeds in expanding its Grant Line Road store to include a grocery store, according to a consultant’s report.
Emeryville-based Bay Area Economics concluded that Save Mart at 1950 11th St., which is already performing poorly, could be shuttered and that a second Save Mart at 2005 N. Tracy Blvd. might also be in danger of closing. The Tracy Boulevard market also is generating revenue below expectations, the report said.
Wal-Mart, which built in Tracy in 1993 at 3010 Grant Line Road, wants to expand its existing 125,689-square-foot store by 82,704 square feet to include a supermarket. It also wants to enlarge its existing garden center.
The city’s environmental impact report on the project was released this week. It included an economic study by the consulting firm on how the Wal-Mart expansion will affect the city’s five other supermarkets — the two Save Marts, the former Albertson’s (now also a Save Mart), Safeway and Food Maxx — and Costco.
The study was conducted before Save Mart purchased Albertson’s, 875 S. Tracy Blvd., making it the city’s third Save Mart store. Tracy’s Grocery Outlet, on 11th Street between Tracy Boulevard and Lincoln Avenue, is not considered a full-service supermarket.
City planner Victoria Lombardo was unavailable Thursday to comment on the report, which is available to the public for review and comment for 45 days.
The study paints a healthy economic portrait of the city with overall taxable sales increasing nearly 200 percent between 1995 and 2005, but notes that overall taxable sales at food stores climbed only 12 percent. Per-capita taxable sales dropped from $925 in 1995 to $601 in 2005, the report said.
The report acknowledges that quantifying food store sales is difficult because food is not taxed. The consultant combined the taxable sales data with information from an economics census, which includes all sales.
Last year’s overall average sales from Tracy’s five supermarkets and Costco is estimated at $155 million, or $468 per square foot, the study said.
However, the 11th Street Save Mart had “very weak sales of $251 per square foot” in 2004, while the North Tracy Boulevard store reported sales of $292 per square foot during the same year. Save Mart, which also owns Food Maxx, reported Food Maxx earned $493 per square foot in 2005.
“In fact, the 11th Street Save Mart’s performance, even without the proposed project open, indicates that this store has such weak sales that the store might face closure even without additional competition,” the study states.
Save Mart spokeswoman Alicia Rockwell did not return several telephone messages Thursday afternoon.
Albertson’s and Safeway did not provide sales data to the consultant.
The report estimated that in 2008, when Wal-Mart hopes to open its supercenter, the 11th Street store’s sales would drop to $221 per square foot while the North Tracy Boulevard store would fall to $257.
“The Food Maxx may see significant impacts, but its sales are at a relatively high per-square-foot level, indicating that it may be able to absorb losses more than the two Save Marts ….,” the report read.
