Wal-Mart's Ankle Biters
Keily
Barron, Forbes Magazine, 1 CM 8,99
WHO ISN'T AFRAID OF Wal-Mart these largest retailer opens super centers at a relentless clip of 150 a year, challenges Procter & Gamble with a private label premium detergent and sets up to repair computers, everyone fi-L, to unions to small-town nostalgias feel threatened.
A little-noticed group of hard discounters, though, have for surviving the Bentonville Express. Retailers like Save-A-Lot and Dollar General sell a limited assortment of groceries or merchandise in small, no-frills stores at prices ' those of Wal-Mart and Kmart. This is hardly a new market Woolworth's exploited it a long time ago-but in an age when size supposedly rules, and Main Streets are littered with the victims of
Sam Walton and his heirs, it's big news that a $20 billion carter exists in their shadow. Unlike the failed five-and-dimes these stores effectively compete against supercenters and traditional grocers with a sharp eye on operating costs and a laser focus on low-income consumers.
"We don't hesitate to locate next to a Wal-Mart,” brags Karen Moss, spokesperson for the 4,000-unit Nashville, Tenn. chain Dollar General.
And why not? Dollar General, which sells a mix of basic? motor oil, blue jeans and snack foods, saw its earnings g $182 million last year on sales that grew 23% to $3.2 billion. More, Dollar General's net profit margin is 5.7% , versus a 3.2-/o nei profit margin for Wal-Mart. Dollar General, which can profitably put its 6,000-square-foot stores in towns with populations of less than 15,000, is adding 500 stores annually.
Save-A-Lot, the limited-assortment grocery subsidiary of Minneapolis, Minn.-based Super Value, a $17 billion food and general merchandise retailer and distributor, doesn't flinch either When Wal-Mart recently announced plans to open three more super centers in Indianapolis, Save-A-Lot licensee Thomas Juba, 46, fielded nervous calls from his golfing buddies asking whether he'd read the news in the local paper. Juba, a 25-year grocery industry veteran who operates seven Save—A-Lots, just chuckled. Sales at his store, located in a 30-year-old strip center five miles from a super center, are up 10% this year from 1998.
Dollar Store Services
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