SuperCenters challenge local businesses

By: Shelby Anderson and Richard Moore

Contributed photo This drawing was presented to the Minocqua Planning Commission last week by Wal-Mart as an example of what the town’s proposed SuperCenter could look like. Although not the typical big, blue box such as those in Rhinelander or Wausau, town officials nevertheless didn’t think it captured the look of the Northwoods.

If the proposed Wal-Mart SuperCenter in Minocqua is approved, there’s no doubt area businesses will undergo significant economic changes.

The question is whether those changes will be good or bad.

According to a Wal-Mart community impact report, businesses surrounding a Wal-Mart enjoy an improvement in sales because of the large numbers of shoppers a Wal-Mart draws to an area. A SuperCenter, the company argues, will draw even more people.

However, others dispute that notion, saying that that’s not necessarily been the case in Oneida County.

Take Rhinelander, for example.

In 1989, there were approximately 45 auto parts stores, pharmacies, appliance retailers, jewelers, hardware stores, shoe stores, sporting goods stores and variety stores in town — about the same number that were still there three years later, in 1992, when Wal-Mart opened. The following year, the number had dropped to 27— a drop of 40 percent.

That figure matches trends in other communities across the country.

An Iowa survey in 1995, for example, showed 50 percent fewer clothing stores, 30 percent fewer hardware stores, 25 percent fewer building materials stores, 42 percent fewer variety stores, 29 percent fewer shoe stores, 17 percent fewer jewelry stores and 26 percent fewer department stores than before Wal-Mart’s arrival in 1983.

In Wisconsin statewide, hard numbers are more difficult to come by, but several surveys have also reported significant losses to local retail revenue when Wal-Marts have opened, at least initially.

A Wal-Mart SuperCenter usually offers grocery prices that are between 17 and 19 percent lower than average supermarkets. Though this can mean a big savings for customers, it can spell disaster for other grocery stores.

A Viroqua grocer, Village Market, experienced a significant loss of business when a SuperCenter opened there. According to Ingrid Mahan, executive director of Viroqua Partners, the supermarket struggled to stay afloat.

“Village Market, a big multiplex with other businesses in it, had a hard time, “ Mahan said. “Their sales dipped, but they were good enough businessmen to get out of it.”

Village Market’s manager wouldn’t comment as to how Wal-Mart affected business.

A Cub Foods in Onalaska closed after Wal-Mart announced it was going to open a SuperCenter nearby. Though the new SuperCenter didn’t directly cause the closing, it certainly didn’t help prospects for the struggling grocer.

In an interview with the La Crosse Tribune, Dave Skogen, the owner of several grocery stores in the La Crosse area, said that the Cub Foods store had been working to make ends meet and having a Wal-Mart SuperCenter slated to open made the challenge virtually impossible.

“When you add the fact we’ll have another 60,000-square-foot supermarket (SuperCenter) in the area, it makes some sense,” Skogen stated in the article.

Likewise, Cirilli’s County Market in Rhinelander closed when a SuperCenter was scheduled to open. Though Wal-Mart critics point to this closing, some industry observers say that the store was in trouble before the advent of the SuperCenter.

Success stories

Other businesses in SuperCenter communities report no decrease in customers.

Denny’s Market, a well-known institution in Sparta, has been thriving since a SuperCenter was built there.

“We’ve gained business because people don’t like going to Wal-Mart,” Kelly Manpzke, manager of Denny’s Market, said. “We have dedicated customers.”

Manpzke said Denny’s Market has a deli that makes fresh sandwiches and made to order meat and cheese platters. Manpzke also said the store provides an atmosphere that customers won’t find at Wal-Mart.

“I think we’re doing well because everything is so personal,” Manpzke said.

Viroqua Food Co-op didn’t lose business either after the SuperCenter opened. Co-op members believe their strong customer base and high-quality merchandise are reasons they have retained customers.

Wal-Mart: The good

In the end, it may be impossible to know what Wal-Mart’s real impact is, Oneida County Economic Development Corporation Executive Director Jim Kumbera told The Lakeland Times in a 2003 interview, adding that a bigger issue might lie with the retailers themselves, and how they view their businesses.

“You can argue it every possible way you want,” Kumbera said. “You can document it every possible way you want. Is it going to hurt some businesses? Yes, unless they have the vision to redirect their efforts.”

Indeed, Kumbera said, it’s possible for local retailers to compete if they do it with vision and foresight.

“Any time you have a major retailer move into a market, the other retail market is going to have to adjust,” he said. “There’s no way that local retailers in many cases can go head to head with them. The retail market has to look at what products and services they’re selling, adjust appropriately, and find a niche.”

One advantage to having a Wal-Mart in town is that Wal-Mart increases a town’s drawing power.

Wal-Mart and other big-box stores can help local businesses by attracting an ever larger group of shoppers to the area, Kumbera said. He estimates Oneida County’s potential retail market to be 200,000 people at any given time, and growing.

“What is actually happening is that we are drawing from a larger retail market, and you may come to Home Depot and have your kitchen designed and they give you a price on it,” he said. “And you’re walking out with the drawing with all the numbers on it, but what is to preclude you from going to another business to buy?”

For example, Rhinelander is profiting from its SuperCenter, he said, from increased traffic from places like the Upper Peninsula of Michigan. While day shoppers from that outlying area traditionally traveled to Duluth-Superior, he said, many have opted for the smaller town atmosphere and less congestion that Rhinelander provides.

“And when they’re here, it’s a day adventure,” Kumbera said. “They’re not just going to go and shop at Wal-Mart and go home. They’ll eat at a restaurant or take a walk in downtown Minocqua. It gives the retail community greater access to greater dollars.”

This week, Bruce Bullamore, the economic development director for Sauk County, echoed Kumbera.

“A major impact of the big-box store is that it brings people in,” Bullamore said. “On the other hand, stores need to find a niche to compete.”

In Viroqua seven shops closed downtown when they weren’t able to find that niche. In response, community members took advantage of the Wisconsin Department of Commerce’s Main Street Program and formed Viroqua Partners to help maintain a healthy downtown business district.

Viroqua Partners comprises a committee of volunteers from the community who work on filling empty business spaces downtown. The program has been quite successful and Viroqua businesses cite the active committee as one of the reasons the town has bounced back.

Wal-Mart: The bad

More shopping traffic and vision aside, however, there’s no denying the shrinking number of stores selling products similar to those marketed by Wal-Mart, at least in some sectors.

In the Rhinelander area, after the SuperCenter opened, the number of sporting goods stores dropped from 11 to four, pharmacies have dipped from seven to four, hardware stores, from three to two, and those appliance stores have slipped from five to four.

But other sectors bear out Kumbera’s point: The same number of jewelers are in business today as in 1989, and there is actually one more shoe store in town now than 14 years ago. Even the number of variety stores has remained steady.

Similarly, other communities in the state have found that Wal-Mart produces a set of mixed results.

Sharon Folcy, executive director of the Sparta Chamber of Commerce, said Wal-Mart has the ability to help community projects.

“I suggest the community befriend the Wal-Mart manager,” Folcy said. “Wal-Mart can provide the community with grants and help out that way.”

However, Folcy also said Sparta has lost all of its retail clothing stores.

“I think that Wal-Mart has been good and bad for Sparta,” Folcy said. “I think that is true with most of the communities that Wal-Mart is in.”

Published: February 28, 2006