Thursday, January 12, 2006

Big Box Wasteland? Moscow and Wal-Mart, Part II

What is clear to me is that how Moscow deals with the Supercenter problem is going to have a huge impact on its economic future. And then there's the Pullman Supercenter. My bet is that the Supercenter in Pullman is going to happen on schedule, despite the efforts of those who don't want it there.

I have a hard time believing that two Wal-Mart Supercenters could be supported by Moscow, Pullman, and the surrounding towns. I have heard that the addition of these two stores will double the amount of retail square footage in the two towns. That seems like quite a jump, and not one that local stores would be able to weather comfortably.

There is the concern that the close placement of the two stores is an example of one of Wal-Mart's nastiest business practices. Al Norman of Sprawl Busters explains:
People are surprised that Wal-Mart would even want to locate a store at Ashland, with another one 10 miles away. But that's part of the Wal-Mart saturation strategy. They place their stores so close together that they become their own competition. Once everybody else is wiped out, then they're free to thin out their stores. Wal-Mart has 390 empty stores on the market today. This is a company that has changed stores as casually as you and I change shoes.

That sounds a little too familiar for me. On the other hand, even if this brings Wal-Mart a net gain, it's an expensive practice. If I were Wal-Mart, this would not be my first choice for expansion strategies. But, on yet a third hand (I think Wal-Martians have three hands, right?), with Wal-Mart's ubiquity in this country, they have to get creative if they're going to continue to grow - and if not everyone buys everything at Wal-Mart, they have room to grow, right?

What I see as the worst-case scenario is both Wal-Marts coming to Moscow and Pullman, each relying on the larger corporate structure to sustain them while they sell goods at deeper discounts than normal and attract large amounts of business from other stores. Other stores fold, and at the point when Wal-Mart is essential to each town's economy, it comes out that Wal-Mart can't sustain both stores and it has to close one. Which one? After each town tries to outbid the other with tax breaks and other benefits for Wal-Mart, Wal-Mart takes the best deal and leaves the empty shell of its old store unsold so as not to invite in competition.

This would be Bad News.

This isn't all the possible Bad News I can forsee, unfortunately. There is some more big box development on the horizon for the Palouse, and it's not on this side of the state line. If more large retail is going to quickly follow Pullman's Supercenter, and Moscow does not end up with a Supercenter, Pullman stands to pull a crucial amount of retail business away from us and to them.

What would be the best-case scenario? Or even acceptable? Read Part III to find out.

Also, in case you missed it, part I.

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