Impact of new Walmart will reach beyond Saline area
Walmart anchors the largest retail development in Washtenaw County that’s been completed in recent years, adding more than 200,000 square feet of store space to the US-12 corridor at South State and overnight converting the Saline area into a regional shopping destination.
That Walmart will convert the area around the store into a high-traffic retail center is not in doubt. But who will gain or lose amid that transformation is undetermined.
The store’s scheduled 8 a.m. grand opening on Wednesday will be celebrated by many shoppers, who experts say likely will travel from a 35-mile radius.
Yet area retailers and other business leaders will be watching the opening and its aftermath for signs of how the discount retailer - an aggressive competitor, thanks in part to its pricing leverage with suppliers - will alter the county’s shopping patterns.
The 177,000-square-foot Supercenter will generate over $100 million in sales per year, according to projections by Regency Centers, the Jacksonville, Fla.-based publicly held developer of the adjacent State Street Crossing strip center.
That projection, said leasing agent Ryan Ertel of Regencys, “is based on the demographics and trade area, and the fact that the Ypsilanti store is not a Super Walmart.
“This one will be a little more successful than the other Walmart projects that we’ve done.”
Photo slideshow by Angela J. Cesere
Groceries face the most competition
The Supercenter’s full line of groceries carries the most risk for other area retailers.
“It’ll have its greatest effect on the closest food operators,” said Becky Maccardini, a national retail expert based in Ann Arbor.
The nearest groceries are both outlets in local chains: Country Market and Busch’s. Two of three Ann Arbor-area Meijer Inc. stores are within seven miles of Walmart; nearly as close are two Kroger stores, in addition to Whole Foods.
“Any of the grocers in the area will have to have a clear understand of who their current customer is and why they shop at their stores,” Maccardini said. “If it’s price, they’re likely to be hurt.”
Yet while smaller retailers’ fears about a new, proximate Walmart have been well documented across the United States over the last two decades, downtown Saline may be in a good position to weather the shopping shift.
Bill Kinley, a local developer of both downtown Saline buildings and The Oaks, a strip center along Michigan Avenue, said most operators of downtown Saline storefronts already have made the switch to unique concepts or the types of services that a big-box retailer can’t replicate. Instead of being a feared competitor, he said, Walmart “might bring more people downtown.”
But in the shopping centers between downtown and Walmart, the smaller stores that depend on the grocery anchors for traffic could feel the biggest impact.
“The strip malls will experience some intense competition from the grocery store end of it, “ Kinley said, “… and the secondary stores close to them that depend on them for a draw will see some effect.”
Larry Oesterling, president of the Saline Area Chamber of Commerce, has studied the impact of Walmart moving into a community since the store was proposed - and fought by many nearby residents - several years ago.
“I think they’re not so much in competition with the community (retailers) as they are with other box stores,” he said, citing as an example the Walmart location between two Ann Arbor area Meijer stores.
Reaction among Michigan chambers to Walmart entering a community “has been across the board,” Oesterling said. “Some felt they were not engaged. Some felt it revitalized (shopping).
“It certainly changes the rules,” he said. “…So far we have nothing but positive signs from them.”
Changing growth patterns
The county’s development outlook has changed dramatically since Walmart plans were submitted to the township in 2004.
Home development - once projected to grow rapidly as communities near Saline fielded requests for 1,000-home-plus subdivisions - now may not top 100 new units in 2009.
And both commercial development and leasing have dramatically slowed in response to multiple factors, including a drop in available credit, the lack of market growth and tightening consumer spending.Retail vacancy is up to about 10 percent in the county, said Jim Chaconas of Colliers International in Ann Arbor. Large chain retailers have closed - like Circuit City and Linens N Things - leaving major voids in shopping centers, and some smaller retailers are struggling to pay their rent. National outlets, which once heavily shopped this region because of its high household income and growth potential, now are contracting expansion plans.
Pittsfield Township Supervisor Mandy Grewal said she and her staff are treating the store like any business in the township, servicing permit requests and supporting it with other services as needed.
But, as a supervisor who wants to drive economic growth in the township, she’s also building on some of the concern expressed during the divisive years in the township to pursue a unified development vision.
Pittsfield just launched a master plan revision, which should come before officials by the end of 2010 with “the types of land use we want in Pittsfield Township.”
There will be space for commercial development and land preservation, she said.
“When the economy picks up, we will face development pressures again,” she said. “We want to be ready for when the pressures come.”
Room for more stores
State Street Crossing is ready to absorb additional retail demand as the Michigan and State intersection builds traffic via Walmart.
The center - located in front of the Walmart store on the same corner - was developed and opened before Walmart. Some stores signed leased and opened, anticipating a high-traffic center.
But as the economy turned and construction was extended into this fall, the wait has taken its toll on progress in the center.“(It’s been) phased in a strange way,” Maccardini said. “That’s probably more indicative of the economy.”
The site, she said, “will function primarily as a Walmart as opposed to a shopping center until they’re able to fill some of the other spaces.”
An indicator of how Walmart’s opening will affect the center can be seen in leasing activity: “We did two deals this month,” Ertel said.
That’s despite, as Kinley said, about the overall market, “retail is not expanding anywhere.”
Of the three buildings, the middle is fully leased, one has 2,800 square feet available and the third - the southernmost- remains vacant.
There also are five outparcels available for development, Ertel said, that likely will end up restaurants - including fast-food drive-thru - or banks.
“Initially when the project kicked off, (interest) was really strong and we were 50 percent pre-leased before we started construction,” Ertel said. “Things changed when the economy turned.
“We expect with Walmart opening, a lot of retailers will re-look to open there.”
Rental rates tell the story
Another indicator of expected Walmart-fueled demand at the property is the rental rate: State Street Crossing spaces rival some of Ann Arbor’s higher-traffic established centers. State Street Crossing has asking rates of $21 per square foot, compared to about $19 at Westgate on the west side of Ann Arbor.
In comparison, Country Creek - about 30,000 square feet just south of Michigan Avenue - asks $14 per square foot.
The highest non-campus retail rates in Ann Arbor are found along Washtenaw Avenue, where Arborland, at over 400,000 square feet, can ask up to $40 per square foot for smaller spaces and Huron Village is asking $35 per square foot. Traffic counts drive that asking rate, thanks in part by the US-23 exit. Daily traffic counts near Huron Village, for example, are about 34,000 vehicles. That compares to about 24,000 vehicles per day on Michigan Avenue near State.
But those numbers will climb simply because of Walmart. Marketing materials at Lakritz-Weber, the new leasing agent for State Street Crossing, said the location could cater to 80,000 cars per day.
“We expect traffic at that site to (grow) exponentially from the site today,” Ertel said.
That surge in traffic should feed ongoing development at the corner, experts said, even with the slowdown in household growth.
Impact on Ann Arbor
There is a big question over how successful Walmart will be in drawing customers from the Ann Arbor market, which remains the region’s population center and retail driver - thanks to high incomes and population density. There are 1,541 people living within one mile of the new store, but nearly 75,000 within five miles.
The location on South State will give access from the I-94 exit, while traffic from the east can use Michigan Avenue. Still, Maccardini said, it’s not a primary location for most Ann Arbor shoppers.
“It will be interesting to see whether folks will be drawn from the south side of Ann Arbor,” Kinley said. “…It may affect some of the south side Ann Arbor businesses more than people can anticipate.”
The Briarwood Mall and Arborland may be insulated from the effects, Chaconas said. Unclear is the Oak Valley Centre near Ann Arbor-Saline Road, and the Carpenter Road corridor.
“That size store will definitely change shopping habits,” Maccardini said. “Walmart is an extraordinarily competitive retailer.”
Oesterling says it’s inevitable that national chains would enter the Saline area.
He and others in the region are looking to judge Walmart’ success not just on sales, but on how it forges relationships in the community.
“As long as they’re willing to play fair and compete openly and honestly,” Oesterling said, “there’s room for them.”
Paula Gardner is business news director for AnnArbor.com. Contact her at PaulaGardner@AnnArbor.com or 734-623-2586.
Comments
Paula Gardner
Thu, Oct 15, 2009 : 9:36 a.m.
Since this story was written, we've posted several more stories about the new Walmart. Here's one that addresses the Ypsilanti Township store: http://www.annarbor.com/business-review/paula-gardner-column-oct-15/ And our shopping blogger, Angela Smith, wrote about her impressions of the store on its first day: http://www.annarbor.com/business-review/first-impressions-of-salines-walmart/
Arboriginal
Mon, Oct 12, 2009 : 9:09 p.m.
Peopleofwalmart.com Cue up Sayleen!!!!!!!
treetowncartel
Mon, Oct 12, 2009 : 8:01 p.m.
Hardware stores have items you need, not want.
BigSexy76
Mon, Oct 12, 2009 : 5:15 p.m.
For everyone that trashes Busch's and other local retailers. They have goods and services that not even Walmart can compete with. Vision and Innovation wins every time
BigSexy76
Mon, Oct 12, 2009 : 5:06 p.m.
Look at the location where walmart is That area is congested enough as it is. the "road improvements will not solve the traffic jams that happen daily. I hope people people thik twice before the stampede on wedsnesday.
Salineman
Mon, Oct 12, 2009 : 3:13 p.m.
viva la walmart. I hope it crushes Busches and that no item I need ACO hardware.
A2K
Mon, Oct 12, 2009 : 11:47 a.m.
It's funny how Walmart attracts a certain kind of *ponders* Red State shopper? I don't see many personal web sites dedicated to Kroger, Safeway, Meijer, or Bush's...but peopleofwalmart.com is just one of many dedicated to the train-wreck that is Walmart.
Pat Ivey
Mon, Oct 12, 2009 : 9:37 a.m.
I have been a Busch's grocery shopper for 15 years and I intend to stay loyal to Saline's finest market.
treetowncartel
Mon, Oct 12, 2009 : 9:33 a.m.
If you can't afford Zingerman's try the Back Alley Gourmet on South Main near Madison. Their Sandwiches and salads are right on par, almost half the price and you don't have to wait in line. I agree with KJ, lets get some of our colorful Washtenaw county natives on people of walmart. I don't shop at Walmart, but I do quite a bit of people watching there.
Arboriginal
Mon, Oct 12, 2009 : 9:27 a.m.
Oops! peopleofwalmart.com
jlkddd
Mon, Oct 12, 2009 : 9:16 a.m.
That's great and all that Zingerman's does all this fine stuff and treats their employee's so well and donates to charities, but I can't afford to eat at Zingermans. Espeically at the Roadhouse which is extremely overpriced. I will be shopping at Wal-Mart when I'm in Saline because your only other options are Busch's, which is extremely overpriced and Country Market, but you can't get everything you need at Country Market. I would rather shop at Meijer, but if Wal-Mart is right there, and proves to be worth the price I will be shopping there.
Arboriginal
Mon, Oct 12, 2009 : 9:14 a.m.
Peopleofwallmart.com Cue up Sayleen!!!!!!!
KJ
Mon, Oct 12, 2009 : 8:59 a.m.
If cheap is what you want, cheap is what you'll buy but maybe you ought to review your spending habits - do you really need all the stuff you're buying? Walmart preys on that mentality - why else would they set up exclusive deals for products? You can't buy them anywhere else so you have to go to Walmart. Myself, I'm suspicious of a company that is so afraid of it's employees that it would rather close a store than let them unionize.
Julie
Mon, Oct 12, 2009 : 8:11 a.m.
Topcat... "leftists?" I don't see anyone saying that there should be a government take-over of walmart. I see people stating why they hate it, and urging others to spend 5 minutes figuring out what they are supporting, and why "cheap" acutally isn't cheap in the big picture. How is this somehow a terrible thing? Are we not supposed to have this conversation? Is it somehow an undemocratic process to speak out against aggregious business practices???
Phillip Farber
Mon, Oct 12, 2009 : 7:58 a.m.
I invite those of you who so highly value the opportunity to pay the absolute lowest prices to view this piece on the true cost of those low prices. The Story of Stuff: http://www.storyofstuff.com/
Hot Sam
Mon, Oct 12, 2009 : 7:13 a.m.
I am an unapologetic capitalist. I firmly believe, that even with it's flaws, our system in the US is the best that has ever existed. With that said, I must add that one of the benefits of our system is our ability to make choices. Walmart chooses to use a model of "cheap". They pinch suppliers, employees, and service providers until they bleed. They sell brand names with different products in the package. We can "choose" to not support such unbridled greed. There is a reason why FIVE of the top ten richest people in the WORLD are Waltons...
Neo
Sun, Oct 11, 2009 : 8:21 p.m.
Funny how this one store makes some people's blood boil. Good article about Walmart: "Many of Wal-Mart's critics are socialists who probably resent the fact that Wal-Mart provides an increasingly clear example of how capitalism can shower abundance on its entire population, as their socialist utopias never could. Many of the critics seem to be motivated by fear of change and fear of economic progress. They have a deep distrust of economic freedom and see doom and gloom around every corner as an economy is advancing. In the past, people like this denounced innovations like the assembly line and mass production for many of the same reasons that they denounce Wal-Mart today. They said that these new methods of production would reduce us all to miserable cogs in a machine enslaved to our employers. It is ironic that their intellectual descendants now panic at the thought of losing assembly-line manufacturing jobs overseas because of Wal-Mart. The next generation of ignorant critics will probably complain about the loss of Wal-Mart jobs to more efficient producers." http://mises.org/story/2219
Marvin Face
Sun, Oct 11, 2009 : 8:18 p.m.
Condensed version of the anti-Wal Mart shopper: All I care about is the sourcing, labor, and business practices of the stores I shop at. I am always angry about something. Anything, really. I will gladly pay $24/lb for salmon because it is not farm-raised and because I can afford it. I shop daily at Zingerman's for my staples. I won't shop at Wal Mart because I might brush up against someone who is poor. And dirty.
StartupGeek
Sun, Oct 11, 2009 : 7:38 p.m.
The condensed version of the pro-Walmart shopper: I don't care about a company's business practices, labor practices, sourcing practices, or the implications on my community. What's important is that I save money. I will not invest 10 minutes to learn more - I don't want to know. I may even belong to a union like the MEA, but I have got my protection and don't have time to think about how my purchasing behavior affects others. This is America. USA. USA. USA.
sampson
Sun, Oct 11, 2009 : 7:22 p.m.
This saddens my heart...
David Briegel
Sun, Oct 11, 2009 : 6:43 p.m.
Paper Tiger, the slave masters of the world are thankful for that type of thinking!
PaperTiger
Sun, Oct 11, 2009 : 5:13 p.m.
Well, Fred, you truly hit the nail right on the head. If a business wants to survive, they WILL become creative with their prices, no matter what the competitor. It's all about competition, no matter if it's Walmart or Meijer. Especially in these days and times, and if people have a family, everyone is looking for a deal, especially when you compare the exact same products, i.e., shampoo, makeup, etc. Makes no sense to pay a higher price for the SAME THING. Again, you are just encouraging that business to keep charging the higher prices. If you will pay it, they will never lower their price. Same thing with the housing market - as long as you pay the top dollar, they will keep charging it. Doesn't take a genius to figure that out.
Fred Posner
Sun, Oct 11, 2009 : 1:57 p.m.
Negativity towards Walmart to me, has never truly been justified. If you're looking for a high-end product, you're not going to go there. If you're looking for expertise, you're not going there. The same people who complain that Walmart takes business away from local stores, in my experience, never yell about the business lost to online sales. It's competition. And it's healthy. A local business could never have survived the delay Walmart faced while opening. They were ready to open doors a month ago, but the road conditions would not allow it. I live walking distance to the Meijer's on Ann Arbor-Saline and hate shopping there. It's dirty, the staff are never friendly, and the freshness of the food is nothing special. I'm welcoming a new choice that will hopefully make some of the others put their best foot forward and outshine a new competitor. For local shops, there's ways to survive and thrive when a Walmart comes in. And honestly, if the only reason a local store could survive was because of high prices charged by not having competition, then my heart won't bleed. I'm a small business owner myself. And I welcome competition. People will always find a way to undercut a competitor... a true small business knows they will certainly fail if their only offering is price. I welcome the new Walmart with open arms.
David Briegel
Sun, Oct 11, 2009 : 12:55 p.m.
Mr Galt, How can you complain that America is heading toward communism while supporting the Communist Chinese and Walmart? Please explain that (il)logic? I like to use Zingermans as an example of thinklocalfirst. They pay a living wage, offer benefits to their employees, serve nothing but top quality products and give back to the community! They started and still support Food Gatherers, a fine local charity! Supporting Walmart will continue America on our downward spirsl towards the lowest common denominator and Third World Nation status!
Lynn Liston
Sun, Oct 11, 2009 : 12:20 p.m.
I will not be shopping at the new (or any other Walmart) for several reasons. First, we already have enough places to shop- what made Walmart think we needed another mega-store? Second, when you shop at a national chain like Walmart and others, 60% or more of your dollars leaves your community forever. Wouldn't it be better to shop at locally owned businesses where that 60% or more remains in the community, circulating 7-9 times among community members? We have a lovely business community here of uniquely diverse and interesting locally-owned businesses. What can Walmart offer to compare with this- low paying, dead-end, part-time jobs and cheaply made imported goods. I will continue to shop locally at the Farmer's Market, Arbor Farms, Zingerman's, Food Co-op, Teahaus, Kerrytown, downtown Ann Arbor, Saline, Dexter, Chelsea, Ypsi...at businesses that offer outstanding service to customers and quality goods, and who give back to the community in many ways, and who support families who live here. Want to find out more about really great local businesses- look here. www.thinklocalfirst.net.
peter
Sun, Oct 11, 2009 : 12:18 p.m.
Nice, well written comment A2Writer. I think that rational thinking is important for this kind of discussion.
John Galt
Sun, Oct 11, 2009 : 12:16 p.m.
I LOVE the fact that a new business is opening in this depressed State. AND the fact that the left-wing "progressives" (progressive to what? Communism?) that inhabit Ann Arbor, are driven to distraction. News flash: Many people will shop at Walmart becasue they cannot afford to pay higher prices for the same products. And, as 15 percent of Michigan is unemployed, I'm sure they will find plenty of people willing to work there. But, don't worry, it is outside the city limits. Like most new businesses.
Old Salt
Sun, Oct 11, 2009 : 12:14 p.m.
I am a WW II Veteran and in my mid 80's married 60 years and we have never spent one cent at a Walmart Store yet all of the clothers on our body today including shoes,all of our major kitchen appliances our TV, Sterio, Fax, printer even some furniture were manufactured in a foreign country But yes our automobile was made in the good old USA.So tell me why should we not give Walmart a try and see if we can save a few dollars especially on Fresh produce and meats. We have always shopped locally, Penny's Sears, Big George ABC Warehouse Kroger, Bush, Art Van and many downtown locally owned stores. We will chek out Walmart and them make our decision since Walmart is only a few miles from our home
A2Writer
Sun, Oct 11, 2009 : 12:05 p.m.
The likely truth of this headline makes me sad. I find it interesting that so many of the commenters here defending Walmart compare it only to other large, corporate, non-Michigan based stores or frame the discussion in divisive political terms without offering thoughtful or constructive context. And yet we continue to bemoan the demise of the Michigan economy and the unique and interesting character of the region. We speak with our dollars, folks. Regardless of income level, time constraints, family needs, etc., we all have a say in what we want our community to look like and the values we want to support. Hopefully, we will collectively land somewhere above the lowest common denominator of cheap and easy above all else.
mtlaurel
Sun, Oct 11, 2009 : 11:18 a.m.
Walmart has poor quality control. Reporter compared procedures in farm raising shrimp sold by various retailers. the water in the Walmart shrimp farm was full of bacteria and sludge.I just can't eat WalMart food no matter how cheap.
Kristine
Sun, Oct 11, 2009 : 10:35 a.m.
I have been in one Wal-Mart in my life and will never return (for myriad reasons). I will continue to spend my grocery dollars at Country Market (a Michigan-based store). Busch's, while also a Michigan-based store, is priced way out of my league. When I need sundry items, I shop at Target, or I'll wait until I'm truly low on stuff and drive to Costco in Livonia to REALLY stock up.
David Briegel
Sun, Oct 11, 2009 : 10:34 a.m.
An I'm an Atheist. FYI Please write in and celebrate the values of Communist China and why Reagan was wrong. I have been to Walmart and find it cluttered, dirty, with mostly unhappy, underpaid emplyees. There has been much documentation over the years of the labor and environmental practices in Communist China. I notice you did not refute any of my assertions. It is so easy to use lazy ideas like talking points, liberal propaganda etc. The whining seems to come mostly from those who were supporters of Raegan and his disciples, the Bush Crime Family who can't get over the simple fact that the American people, in their infinite wisdom repudiated those philosophies and chose a different direction. As we stand in the ruins of the abject failure of those policies it becomes more and more apparent that the American people were correct!
ownrdgd
Sun, Oct 11, 2009 : 10:19 a.m.
You don't have to shop at wall mart to support 8yr olds in china.99% of whats in everyone's houses and the clothes on your backs and shoes on your feet are all made in a foreign country.Wall Mart is just flaunting their wares and making a big deal about their low prices and everyone is falling for it.Its true they sell inferior wares but you'all have been buying that junk all along so whats the big deal now I see very few persons on their high hoarse when this county puts tax increases up for vote or school millages
PaperTiger
Sun, Oct 11, 2009 : 10:13 a.m.
You have got that RIGHT about the out of sight prices at Buschs. I can't believe that people STILL shop there. And, if you check some of their products, they are also made in China, along with the stuff from Macy's, JC Penney, etc. So, what's wrong with paying LESS for the same products. Do you check out how those retailers treat their employees, their benefits, etc., before you shop there? I doubt it. There's a lot of jealousy with the retailers and, unfortunately, anyone else that is successful in this world. They should be taking a look at WHY and HOW they are so successful and try to be like them, instead of trying to manipulate people and steer them away from Walmart. Geesh.
elpasogal
Sun, Oct 11, 2009 : 10:02 a.m.
I will not shop at Walmart. Never have and never will and I am no "freaking liberal"
An
Sun, Oct 11, 2009 : 9:59 a.m.
David, Do you have absolute proof or are you basing your opinions on liberal propaganda? An (Btw, Godless is not bad IMO)
jrigglem
Sun, Oct 11, 2009 : 9:26 a.m.
Didn't your mother teach you, 'If you have nothing nice to say, say nothing at all?.' Everytime there is an article about Wal-Mart all I ever see is constant criticism. And those criticizing have never set foot in the retailer, worked for the retailer, and spend far too much time believing what the news says. And stop acting like Wal-Mart is the only company doing any outsourcing. If you're so concerned about 8 yr olds in China making products, then you probably should never leave your house and as a matter of fact sell everything in your house, because I can guarantee everything in your house does not say "Made In America"
sh1
Sun, Oct 11, 2009 : 9:17 a.m.
Support Walmart. Eight-year-olds in China don't want to lose their jobs!
rosewater
Sun, Oct 11, 2009 : 8:15 a.m.
Too bad the new Walmart doesn't have a new corporate image to go with it. It has been littered with low wages, limited benefits, countless lawsuits filed by associates, and culpable corporate citizenship. And thanks to the steady stream of petro, we can choose from thousands of Chinese products.
walmartsevil
Sun, Oct 11, 2009 : 7:59 a.m.
I'll keep shopping at Country Market
Craig Lounsbury
Sun, Oct 11, 2009 : 7:27 a.m.
If one shops at Walmart to save money do your homework. I recently bought a 12 double roll package of a major brand name toilet paper at Walmart. It was the same packaging and brand that I had recently bought at Rite Aid. When I opened the Walmart version of the name brand toilet paper something didn't seem "normal". Sure enough the roll's were 1/2" shorter and the cardboard liner had a bigger diameter. I then read the actual square footage of paper on the wrapper. It was considerably less than what I thought was the same product from Rite Aid.
PaperTiger
Sun, Oct 11, 2009 : 6:38 a.m.
I can't wait for Walmart to open, so that I can get more bang for my buck. Who doesn't want to save a dollar here and a dollar there, especially when they are selling the SAME ITEMS as they do at CVS, who always is overpriced. And, their Pharmacy is a joke. No matter what time you drop off a prescription at CVS, it's always an hour wait. That kind of customer service is not at Walmart. And, maybe the owners of the other grocery stores in Saline will be forced to be competitive. No wonder they are complaining, as they have a monopoly right now. Competition is the name of the game in business, especially when you're selling the SAME ITEMS. When you continue to shop at these places and pay the higher prices, they have no reason to be competitive. You're just encouraging them to keep doing it. Most of the people complaining about Walmart probably have relatives that own the stores in Saline. Go figure.
bs
Sun, Oct 11, 2009 : 5:27 a.m.
I hope that the people of Saline carefully consider who and what they are supporting by shopping at the new Walmart...