City plans show a Wal-Mart Supercenter moving into a building on McHenry Avenue in Modesto, but the Bentonville, Ark.-based retail giant would not confirm that this week.
The 100,000-square-foot store at 3848 McHenry is planned to open in late fall or early winter of this year, said Aaron Rios, a California spokesman for Wal-Mart. But the company is not disclosing what kind of store it will be, he said.
Plans at the city's building department describe the project as a supercenter, and they show areas within the building set aside for the sale of groceries such as meat and produce, and a deli counter, a key feature of supercenters.
Rios said supercenters are defined by their sale of grocery items, not their size.
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City officials said Wal-Mart has secured the necessary approvals for the store. Because the store is filling what was previously a large retail space, the project had few hurdles to clear, especially compared with building a store on undeveloped land.
The new Modesto store's size is at the bottom end of the range for Wal-Mart Supercenters, which can top out about 225,000 square feet, according to the company's Web site. A proposed Wal-Mart Supercenter in Ceres would be about 208,000 square feet.
Even smaller supercenters have a full grocery store, but they lack other features found in the largest stores, such as a bank and fast food outlet.
The new Modesto Wal-Mart will be in North Point Landing Center, formerly known as McHenry Square, between Meily Way and Coralwood Road.
Rios said consumers can expect the McHenry Avenue store to have many features found at other Wal-Marts and some they haven't seen. He would not be more specific.
He said he expected Wal-Mart to make a formal announcement about the Modesto store within two months and renovations to begin within three months.
Rios said Wal-Mart officials had not determined how many employees the store will have. Supercenters typically employ about 300 people, according to Wal-Mart's Web site.
Wal-Mart also plans to refurbish its existing stores in Modesto and Ceres, and move ahead with plans for the supercenter in Ceres, Rios said.
Supercenters have faced opposition in many California cities, where officials and residents have said they fear that Wal-Mart's low prices will stifle competition and force other stores, especially smaller, independently owned businesses, to close.
Critics, particularly labor unions, have said Wal-Mart's wages are far too low to live on, and that the company doesn't provide adequate health care coverage and limits employee work hours.
The Turlock City Council in 2004 approved an ordinance that banned discount stores of at least 100,000 square feet that devoted at least 5 percent of their floor space to grocery items.
The ordinance was designed to stop a 225,000-square-foot supercenter on Countryside Drive. Wal-Mart sued over the ordinance and lost.
Wal-Mart also had plans to build a supercenter in Ripon, but withdrew them after local opposition.
Difficult to compete
Bill O'Brien, vice president of O'Brien's Market and a member of the Stanislaus County Board of Supervisors, said there's no question Wal-Mart and smaller grocery stories such as his don't play on the same level.
"Wal-Mart Supercenters price some items below cost, absolutely," O'Brien said. "When you pay low wages, you can price items much lower, obviously."
O'Brien said he's uncertain whether a Wal-Mart Supercenter would affect his store, because his store emphasizes quality more.
Joy Madison, Modesto Chamber of Commerce chief executive officer, said Wal-Mart's decision to put a supercenter in Modesto suggests it has faith in the city's economic future.
"Obviously, they wouldn't put in a store if they didn't think it would be profitable," she said.
Modesto's economy has suffered recently, largely because of the housing market downturn.
Smaller profit margin
Bill Bassitt, chief executive officer of the Stanislaus Economic Development and Workforce Alliance, said a supercenter is a mixed blessing.
Consumers pay less for groceries and cities reap the benefit in sales tax revenue, Bassitt said. But competing grocers, particularly small ones, often suffer.
"In every community where a supercenter operates, usually over time it does force the mom-and-pop store out of business," he said.
Large grocery chains such as Save Mart and Safeway are big enough to compete with Wal-Mart, but smaller stores must find a niche with better customer service, for example, to stay alive, Bassitt said
But it's difficult because a smaller store has a narrower profit margin than Wal-Mart, he added.
"They're going to be pretty uneasy about this, I would guess, and rightfully so," he said of small, locally owned grocery stores in Modesto. "Prices are the big thing."
Modesto city officials said Wal-Mart has all the necessary approvals for a supercenter here, including a building permit. The project didn't require a study for parking or traffic impacts because it's going into an existing site, officials said.
Because the project is in an existing building that formerly housed large retail stores, the approval process is far simpler than if Wal-Mart were to build on undeveloped land, according to city officials.
Rios said Wal-Mart has opened stores in Southern California in buildings that previously were occupied by other retailers.
"This was an opportunity we came across," he said of the McHenry Avenue store. "We expand our retail offerings, and we remove two blighted buildings from the city at the same time."
Wal-Mart will occupy the building that had housed a Sav Max on one side and a Rite Aid drugstore on the other.
The Rite Aid has been closed since 1998 and Sav Max since 2002. The center's main draws now are a Hope Chest Thrift Store, a Perko's restaurant and Fuddruckers, a specialty hamburger restaurant that opened in October.
Fuddruckers franchise owner Kevin Bidlack said he welcomes the store.
"When Wal-Mart comes in, I think they always bring a crowd," Bidlack said. "It's nothing but good."
Wal-Mart also was welcomed by Community Hospice, which operates the thrift store in North Point.
"It looks like this center is being revitalized, and we welcome that change," said Marian Kaanon, the hospice's director of marketing and public relations.
"And there's been a shortage of retail on that part of north McHenry," she added.