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Wal-Mart’s Future: Will It Become Engine Of the U.S. Economy

Wal-Mart’s SuperCenters have become modern-day Main Streets, with all the requisite stores and services of a downtown shopping district.

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The Bentonville, Ark.-based giant is the country’s biggest property developer, with 550-million-square-feet of selling space in 2002, according to Therese Byrne, publisher of Retail Maxim.

“With a real estate portfolio that represents an estimated 3 percent of the world’s total retail space, Wal-Mart isn’t even at its halfway mark on store count,” Byrne estimated. “Given its global reach, it could easily double its square footage in five years.”

A Wal-Mart index may be premature, but not much. The company continues to outperform other retailers and is constantly testing new formats, upgrading systems and technology to facilitate product delivery to its stores and reaching out to more segments of the population.

SuperCenters have become communities unto themselves, the town squares of our time. There’s the dry cleaner, bank, travel agent, nail salon, tanning salon, McDonald’s, gas station, cell phone dealer, optometrist and video store. Add real estate broker if Wal-Mart gets into the residential real estate business, as it aspires to, according to reports.

Malls, which were previously the town squares, are losing their grip on customers, as the economy stubbornly resists a full-blown recovery and department store anchors continue to struggle.

Federated Department Stores, Inc. reported a 0.5 percent drop in total sales for the four weeks ended Aug. 2 compared with the same period last year. Target Corp.’s overall sales have been slowed by continuing problems at its Mervyn’s and Marshall Field’s divisions, and May Co. recently announced it would close 32 underperforming Lord & Taylor stores.

New brands such as Sony are drawing middle and higher-end consumers to Wal-Mart. Once in a SuperCenter, it’s not long before they buy apparel, although initially it may be for their children.

“One-third of all consumers buying children’s clothing, buy it most often at Wal-Mart,” said Lois Huff, senior vice president of Retail Forward. “One in every four people buying women’s, men’s and teen casual clothing, purchase it most often at Wal-Mart.”

“This is a warning to the apparel industry that all the marketing money is being spent on the runway and little is being spent on real Americans,” said Paco Underhill, founder and managing director of Envirosell, a testing firm for stores and banks. “People are going to Wal-Mart, Target, Labels for Less.”
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