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Business Observer Friday, Jun. 4, 2010 10 years ago

Grocer Super Battle

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A move to turn more Walmarts into supercenters that sell groceries is afoot nationwide, with a focus on the Gulf Coast. Publix, the king of Florida supermarkets, is in for a fight.
by: Mark Gordon Managing Editor

REVIEW SUMMARY
Business. Walmart.
Industry. Retail
Key. Company recently expanded a Sarasota store into a supercenter that now sells grocery and produce.
At a Glance. Click here.

Paul Wilcox liked his $4 an hour job pushing carts in a Walmart parking lot just fine back in 1990, save for one thing: The sizzling heat of a Florida summer had grown intolerable.

So Wilcox, then an 18-year-old community college student, jumped at the chance to move inside the Port Charlotte store when his boss offered him a position in maintenance. Wilcox figured he'd put together bikes, maybe fix some broken merchandise.

“I didn't realize it would be cleaning toilets,” Wilcox says. “But at least it got me inside.”

It also was the first of a string of promotions at the giant global retailer. In 1997 Wilcox was named store manager of a Walmart in Altamonte Springs, outside Orlando. He later ran two other stores, including one in Jacksonville, before he came back home to Sarasota in 2005.

“I guess they thought I was doing things pretty well,” says Wilcox, who had been attending Manatee Community College in the early 1990s to study physical therapy. “They decided to keep giving me more money and promotions.”

In Sarasota, Wilcox was appointed store manager of a busy Walmart on Cattlemen Road, west of the Bee Ridge Road exit of Interstate 75. The 139,000-square-foot store was recently upgraded to a supercenter, which means it now sells a full line of groceries and produce.

The store's new features include an exterior built out of fiberglass; a new layout with wider aisles; and lower shelves designed to help customers find products faster.

“About every third person that walks in the door is just like 'wow,'” says Wilcox. “The only people who have not been positive about it is probably a couple of competitors. I think we hurt them a little bit.”

Indeed, a mini-price war has broken out between Wilcox's Walmart and a Publix across Bee Ridge. In fact, Wilcox says he regularly takes a team of department managers across the street to check out what Publix is up to, in everything from prices to product placement.

Publix, at least from a corporate level, is aware of Walmart's aggressive move to pick up market share in Florida, says Shannon Patten, a spokeswoman for the Lakeland-based grocer. Still, Walmart is a distant number two in Florida, with a 25% market share to 37% for Publix, according to research compiled by the Gainesville, Ga.-based Shelby Report.

“We always say that competition is good for our business,” says Patten. “We work hard to make sure we make good [buying] decisions to pass on savings to the customers.”

Wilcox, meanwhile, sat down with the Review a few weeks after the transformation of his Walmart, in a rare look behind the scenes at how an individual Walmart operates. Here's an edited transcript of the conversation.

Q. Why did the company change this Walmart from a regular store to a supercenter?

A. I think all the stores are eventually going to be supercenters. The food business is the biggest growing piece in the company. Last year was the first year we actually sold more [grocery] merchandise than we did general merchandise. Everybody eats, but not everyone works on the car and not everybody sews.

In the changeover from regular to supercenter, this Walmart became one of the first in the country to include fiberglass in the exterior parts of the building. In a company known for being frugal, how does that draw in more customers and lead to higher sales volume?

I've seen some [Walmart] stores with nice brick and glass, but nothing like this. They did a great job with the lighting and the tiles in here.

Clean and presentation is what's important. If it looks good people are going to buy it. If it doesn't look good people probably aren't going to buy it. You're not going to go buy a used car with dirt all over it.

It's like our parking lot, which has 175 palm trees. Walmart put some money into it to make it look good and make it look like it belongs in the neighborhood versus some retail outlet store. This is the best-looking Walmart I've ever seen.

How has the Publix across the street reacted to the supercenter conversion?

The Publix people are in here everyday [to monitor prices.] They do a good volume there, or at least they used to. My wife actually shopped there until we became a supercenter.

But we are about 25% or 30% cheaper across the board. We have already gotten into in a couple of price wars. They have strawberries there that usually sell for $3.50. If you look at the front door when you walk in here [on April 8] I have them here for $1.14.

They are trying to be competitive and I don't blame them. If you're not competitive, you are going to get pushed away and someone is going to go in front of you.

How often do you monitor Publix?

I go there every other day. Competition is good for everybody. And most important, it covers Wal-Mart's motto: Save Money, Live Better. When we get into a price war to see which store has the lowest price, the customer makes out and gets the best value.

I brought a couple of my department heads over there the other day just to check them out. Not only on prices, but to see what they have that we don't have.

What do they have that's selling? How's our variety compared to theirs? How's their front? Do they have lines or does it run smoothly? Does the parking lot have a million buggies on it or is it nice and clean? Is the store well lit?

What are some examples of what you have learned in the price battle?

Publix is big on the buy one get one free. I went over there the other day and bought some mayonnaise under the buy one get one free.
I'm in the business and I thought it was a great deal. I paid $4 for two of them.

But I come back to my store and I see that we sell the jars for $1.98 everyday. So I spent four cents more and I thought I had a great deal, but it wasn't a great deal. Even I fell for it.

The store hired more employees for the supercenter conversion. With unemployment levels high, how much of a challenge has it been to weed through the applications and find the right people for the right jobs?

We hired 85 people in [early April] and will probably hire another 30. It's mostly in stocking, the food areas and some cashiers.

I have people who you could say are overqualified. I have an assistant manager who was a financial planner for a bank three years ago. But when the economy took a dive, he went to Walmart.

My training coordinator ran her own trucking company. But when gas prices went up and some other economic things happened she came to Walmart. We made her a cashier, but when we found out more about her background, we made her the training coordinator. Now she's in charge of all the hiring at the store.

Walmart has many loyal and passionate customers worldwide, but some communities, especially in urban areas in the U.S., have fought Walmart either expanding or opening a new store. How does that love-hate image impact what you do at your store?

I think there are some people who are against Walmart, but there are some people who are against anything, no matter what it is. When you are the biggest at what you do, whether that's the Super Bowl champion or whatever, everyone is always picking on number one.

Walmart is a big company and a good company. There are a lot of people like me, who started when they were 18 and are still there at 38 years old, and it's the only job they've ever had.

Walmart has more positive things to offer than negative things for a community.

going super

Walmart Stores Inc. has been busy on the Gulf Coast.

The transformation of the Sarasota store on Cattlemen Road from regular to supercenter is just one of at least half-a-dozen upgrades and renovations that are ongoing or planned for the region. A Walmart supercenter sells a full line of groceries.

Stores in Palm Harbor, Clearwater and West Tampa have also undergone renovations, a company spokeswoman says. The Palm Harbor store is expected to be ready by June, while the others will be redone by the end of the summer. The company is also renovating some stores in Lee and Collier counties.

A busy supercenter in east Manatee County is also in the middle of an extensive renovation. The store, on State Road 64, is being modeled after the Cattlemen Road conversion. That means it will have a cleaner and brighter look, with lower shelves and wider aisles. Signs will be rewritten and bulky product placements will be minimized, the company says.

That project could be completed by June.

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