Wal-Mart Cancels 45 Superstore Projects

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Posted March 30, 2008 | 02:03 PM (EST)



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"Cannibalization Factor" Eating The Company's Future

According to a list released this week, Wal-Mart Stores has abandoned a record-shattering 45 proposed projects over the past 10 months -- often leaving local officials dejected and confused. Another 19 Wal-Mart projects have been killed by local citizen's groups. In total, the world's largest retailer has suffered an historic loss of 64 projects.

The list of store cancellations was compiled by Sprawl-Busters, which has maintained a database on Wal-Mart battles for more than a decade. Since June, 2007, the Arkansas-based retailer has delayed or killed its own stores in the following communities:

Aledo, IL; Arlington, WA; Belfast, ME; Bonita Springs, FL; Brooksville, FL; Chico, CA; Concord, CA; Crowley, TX; Derry, NH; Elyria, OH; Fircrest, WA; Garden Grove, CA; Gilbert, AZ; Glen Carbon, IL; Hadley, MA; Hemet, CA; Hilo, HI; Isle of Wight, VA; Knightdale, NC; Lake County, FL; Lakeland, FL; Lawrence, NJ; Lewiston, ME; Liberty, OH; Pennfield, MI; Hillsborough, NH; Kilbuck, PA; La Puenta, CA; Marietta, GA; Marysville, WA; Memphis, TN; Morganton, NC; Neptune Beach, FL; Oakley, CA; Oxford, NC; Portland, OR; Raleigh, NC; Ravalli County, MT; Rutland Charter, MI; Spooner, WI; St. Peters, MO; Sioux Falls, SD; Stoughton, WI; Sunrise, FL; Waukesha, WI.

These store withdrawals usually come with little advance notice, and even less explanation. In September, 2007, for example, when Wal-Mart suddenly folded its tent in Lancaster, Massachusetts -- 3 miles from the construction site of another Wal-Mart superstore -- the company issued a terse, four paragraph press release which stated, "The decision is related to Wal-Mart's recently announced plans to moderate growth of U.S. supercenters as part of leveraging capital resources through a strategy designed to improve returns and sales within U.S. stores." Such dense statements left local officials scratching their heads in disbelief -- sometimes following months, even years, of lobbying by the retailer to get a project approved.

Up until 10 months ago, Wal-Mart was planning to open a new store in America every 26.5 hours. But all of that changed on the morning of June 1, 2007. On that Friday morning, Wal-Mart stunned 18,000 stockholders assembled in the Bud Walton Arena on the campus of the University of Arkansas in Fayetteville. The retailer announced its growth plan for 2008 -- in what the New York Times described the next day as a "turning point" for the company.

In their laps, stockholders held Wal-Mart's 2007 Annual report, which said, under the heading "Future Expansion," that the company's "planned expenditures will include the construction of...265 to 270 new supercenters..." But in the weeks between sending their Annual Report to the printer, and their stockholder's meeting -- Wal-Mart popped its own growth bubble.

For several years, Wall Street's reaction to the retailer's overly-aggressive U.S. construction forecast had been less than encouraging. In 2005, for example, Bernstein Research Call issued a 13-page report warning stockholders of the downside of Wal-Mart's superstore plans. The analysts noted that Wal-Mart's growth "is under siege in several regions of the country from growing opposition by local communities...Local opposition has successfully squashed numerous plans among big box players in different parts of the country." Bernstein noted that "heightened resistance could negatively impact these retailers by slowing their square footage growth rates." Even modestly slower long-term square footage growth could have both an earnings per share and valuation impact, researchers said.

Because of grassroots anti-Wal-Mart groups, Bernstein warned, "it is clear that (discount retailers) will need to pursue a substantially larger number of permits going forward to hit their internal square footage targets given the likelihood of many opportunities failing."

Not only had Wal-Mart suddenly slammed on the brakes for 2008, but the company said it would open "only" 170 superstores per year for the next three years, and 80 supercenter would be deferred into 2009. In its 2007 Annual Report, the company explained, "We are focused on prioritizing capital spending to the projects that produce the highest returns. We want to improve our Company's return on investment, or ROI, improve our comparable store sales and improve our working capital productivity. The outcome is a focus on the most capital efficient opportunities."

In part due to the company's pale 1.9% growth in same store sales in 2007, John Menzer, Wal-Mart's Chief Administrative Officer, admitted, "We also have been focused this year on reducing cannibalization of existing stores via our more strategic selection of U.S. real estate projects." Same store sales indicates the performance of existing stores by measuring the growth in sales for such stores during a particular period, over the corresponding period in the prior year. Wal-Mart's same store sales have been dropping for 20 years, but this past year was the worst. The 1.9% growth rate in 2007 compares to 5% in 1997, and 13% in 1987.

Every store site that Wal-Mart proposes is reviewed by its executive-level Real Estate Committee, which looks at a number of benchmarks to see if each unit meets the retailer's Growth Model: the state of the economy, the local trade area, competition in the area, local demographics, real estate and construction costs, and: "potential impacts on neighboring Wal-Mart stores." This last metric -- the cannibalization factor -- has had a major impact on the deep-sixing of many superstore projects this year.

"As we continue to add new stores in the United States," the company told shareholders, "we do so with an understanding that additional stores may take sales away from existing units. We estimate that comparable store sales in fiscal 2007, 2006 and 2005 were negatively impacted by the opening of new stores by approximately 1% in fiscal years 2007, 2006 and 2005. We expect that this effect of opening new stores on comparable store sales will continue during fiscal 2008 at a similar rate."

To measure Wal-Mart's retrenchment another way, the corporation added 42,000,000 square feet of store space in 2007, compared to 39,000,000 square feet in 2006. It's current growth plan cuts new square footage to 20,000,000 for 2008. As projects get cancelled, square footage growth drops, sales growth slows, all of which can impact earnings and company valuation. The last thing Wal-Mart wants is for investors to see the company for what it really is: a middle-aged corporation choking on its own domestic appetite for growth. If it weren't for China and India, Wal-Mart's growth prospects would be problematic. Yet Wal-Mart's future as a colonial retail empire is far from certain, if places like Indonesia, Germany and Japan are the yardstick.

Sam Walton explained that his growth strategy was "to saturate a market area by spreading out, then filling in...We became our own competition." He once boasted that Springfield, Missouri, for example, had 40 Wal-Marts within 100 miles. But Wal-Mart has paid a price for competing with itself. Today, the saturation card has been overplayed, and the retailer has been forced to go on a superstore crash diet. While hundreds of sling-shot coalitions have been hurling rocks at this retail Goliath for years, ironically, it is now the giant itself which is reeling from its own self-inflicted excesses.

This has created a wonderful 10 months for anti-Wal-Mart groups in 21 states, who have woken up in their small towns to read that another proposed Wal-Mart superstore has dissolved, as suddenly as the morning mist.

Al Norman is the founder of Sprawl-Busters. Forbes Magazine has called him "Wal-Mart's #1 Enemy."


 
 

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- matapat See Profile I'm a Fan of matapat permalink

Wal-Mart Supercenter threatens Supawna Meadows National Wildlife Refuge

Supawna Meadows NWR is located in Pennsville Township in Salem County New Jersey. Established by the US Fish & Wildlife Service in 1971, the refuge was created to protect Mill Creek, a tidal estuary that serves as a critical feeding area for nearly 6,000 pairs of Colonial wading birds representing nine different species that nest on nearby Pea Patch Island. It is the largest such rookery on the Atlantic Flyway north of Florida.

A Wal-Mart Supercenter was approved by the Pennsville Township Planning Board in September of 2006, despite fierce public opposition by a coalition of environmental groups, citizen groups, and labor groups. Currently, plans to construct the mega-shopping center are on hold until the DEP makes a final determination as to whether or not this project can go forward.

The 77-acre tract is keystone in the Refuge acquisition puzzle. Its fate will either knit the Refuge into an ecological whole or irrevocably fragment and degrade it for all time.

The US Fish & Wildlife Service have submitted letters and provided public testimony raising their emphatic concerns regarding issues related to habitat loss and stormwater run-off. The tract is habitat to several threatened and endangered species.

The Littoral Society has called on Wal-Mart to abandon this environment-unfriendly project and donate the tract to the US Fish & Wildlife Service for inclusion into Supawna Meadows NWR.

Matthew Blake " Manager
Delaware Bay Program
American Littoral Society
www.littoralsociety.org

    Favorite    Flag as abusive Posted 11:30 AM on 04/04/2008
- shelleybear See Profile I'm a Fan of shelleybear permalink

Wal-mart could be doing great good for the people and neighborhoods it opens in.
It chooses not to.
I hope they rot.

    Favorite    Flag as abusive Posted 02:14 PM on 04/03/2008
- Boris See Profile I'm a Fan of Boris permalink

Walmart needs a new slogan....'destroying Main Street, one store at a time.'

    Favorite    Flag as abusive Posted 11:22 AM on 04/02/2008
- ashleybaines See Profile I'm a Fan of ashleybaines permalink

I won't shop Wal Mart - I have been there, maybe twice in the last year - screaming babies, long lines - and better produce at my local stores.... I hope Tesco destroys the beast.

I think Wal Mart is a horrible phenomenon - and the savings just aren't there. The stuff is awful.

    Favorite    Flag as abusive Posted 10:44 AM on 04/02/2008
- pawl442 See Profile I'm a Fan of pawl442 permalink

I think this is more proof that the US economy is hurting. Walmart is saying why spend all that money when no one can afford to shop. It was recently reported that Walmart customers were using Xmas gift cards for food instead of durable goods. Even more so the American people have been serviced "FEE'd right out of existance. While at the same time we've seen MILLIONS of our jobs lost. There is a point when an economy based on consumerism and war has to fail. Worse we are controlled by a finite product. OIL! It controlls our entire cycle of life. From the fertilizers for our food to the power it takes to eliminate our huma waste. Our policy has been to murder everyone and every living thing to aquire this product. That's causing voulenteers to commit suicide to end our conivorous greedy ways. It is not Democracy these people dislike. It is they way we go about supporting it. By no means am I supporting suicide bombing. It is a horrendous act. We need to address the problem that would cause a human being to kill themselves and countless millions of innocent people. Walmart is part of the blame because of its slave labor policies. It sickens me sometimes that I am forced to shop at Walmart because they drove stores out of buisness that I have shopped for twenty years. If Walmart is starting to feel the pinch that their own policy has created I say......... "SO"

    Favorite    Flag as abusive Posted 08:02 AM on 04/02/2008
- dawlishgal See Profile I'm a Fan of dawlishgal permalink

I believe that Wal*Mart has recently cancelled another store construction in a suburb a little N. of Pittsburgh. Their diddling around on what was basically a small mountain caused a giant landslide that landed smack on top of a busy highway. We had just moved here when it happened and we loved it when cool PIttsburghers just diverted the traffic and christened the mess "Mount Wal*Mart."

    Favorite    Flag as abusive Posted 09:04 PM on 04/01/2008
- noamjunior See Profile I'm a Fan of noamjunior permalink

They aren't going to Build there? I thought they were just moving it somewhere else closeby

    Favorite    Flag as abusive Posted 09:04 PM on 04/02/2008
- Anciano See Profile I'm a Fan of Anciano permalink

Good!
All people that are concerned with the loss of local small businesses might want to write a
"Local List", that is a list of local small businesses, who owns them, what's good about them and the hours and phone numbers. You can print these and give them away to recent arrivals or travelers. Here's an example that I found when I googled 'alternate economy':
http://www.verdant.net/alternate_economy.htm
""Here's some examples of the kind of information we put on our list:
* Joe's Organic Foods: 122 Greenway Lane 444-1232, 8:00 AM to 8:30 PM, 7 days. Home bakery-their wheat bread is incredible, sandwiches and fruit juices to go or eat in the patio. Large selection of small brand Organic products and fresh produce delivered everyday from the Willamette Valley. Owned by Joe Jones and his family since 1978. Full benefits for full time employees-partial for part-timers. Free delivery to shut-ins. *
* High Creek Lumber: 1432 Railroad Avenue 444-3456, 6:AM to 6 PM Mon thru Sat, Sun 10-5. High quality building materials and a through working knowledge of carpentry and building. 1 day special orders of odd size lumber. Free sawdust for your garden. Popcorn for kids. Picnic table behind office great place to sit and watch trains. Owned by the Bensen Brothers since 1988. All employees have medical and dental. 3 blocks past Home Depot when coming from town.
* Millie's Cafe: Route 6 at Williams. Since 1972."

    Favorite    Flag as abusive Posted 01:16 PM on 04/01/2008
- ibsteve2u See Profile I'm a Fan of ibsteve2u permalink

Me, I'd guess that Wal-Mart's own people realized last year that they'd hit critical mass in that Wal-Mart itself had driven so many retail and service jobs into the void and so many manufacturing jobs offshore that America's consumer base simply didn't and wouldn't have the money to make their expansion schedule profitable.

At least for this year, if ever.

    Favorite    Flag as abusive Posted 01:11 PM on 04/01/2008
- Ken Volok See Profile I'm a Fan of Ken Volok permalink

Ah I see we've hit "A New Hope" phase with Walmart., who seem to go out of their way to prove themselves the epitome of the term "evil corporation". In the next chapter look for the Walmart merger with Halleburton.

    Favorite    Flag as abusive Posted 06:00 AM on 04/01/2008
- ErnestineBass See Profile I'm a Fan of ErnestineBass permalink

WalMart, whether it likes it or not, is still subject to the law of supply and demand. As Americans are forced to cut back on their shopping habits (demand) out of economic necessity, WalMart (supply) will be forced to rein in its expansion juggernaut.

Simply too many wolves for so few rabbits.

Time to bring back "Made In U.S.A."!

    Favorite    Flag as abusive Posted 02:38 AM on 04/01/2008
- Jey See Profile I'm a Fan of Jey permalink

Maybe since they've scratched all these superstores they can pay the disabled girl her deserved $400,000+ settlement she so deserves.

    Favorite    Flag as abusive Posted 07:41 PM on 03/31/2008
- noamjunior See Profile I'm a Fan of noamjunior permalink

To be fair- Wallmart has already agreed to drop their suit to recoup her settlement

    Favorite    Flag as abusive Posted 09:06 PM on 04/02/2008
- IngeniousGirl See Profile I'm a Fan of IngeniousGirl permalink

Leave it to their Human Resources outsourced corporation to pull the policy line about collecting from this Gold Star Mom. We should have pickets at their headquarters by Friday morning. Disgusting example of waste and glut, and any board member there now should be judging their decisions in light of their pitiful example of how to ruin an American town and a Gold Star Mom as well. May no one have mercy on their souls.

    Favorite    Flag as abusive Posted 01:41 AM on 04/01/2008
- nomoredead See Profile I'm a Fan of nomoredead permalink

I was just in Puerto Vallarta, Mexico where you have many families trying to make a meager living by selling trinkets to the tourist, and lo and behold, what do you have across the street from where the huge cruise ships dock but a Wal-Mart ! It just seems so wrong. Let the little man make some money.

    Favorite    Flag as abusive Posted 10:27 PM on 03/31/2008
- victoria See Profile I'm a Fan of victoria permalink

Well, very glad to hear that Walmart is eating it's own. It is a blight on American towns and workers. It's the old company store for the sharecroppers. OK they give people jobs but it is ruining cities. Of course, they screw people on benefits because of minimum works hours. They are abandoning projects after razing building sites and ruining open spaces or the character of small towns. In addition, the traffic. OK they are cheaper (sometimes - not always) so people are abandoning small businesses. Blight is the least of it. Now we have lead and food poisoning from unregulated NAFTA policies. Walmart ruins the American entrepeneurial spirit. After all, how can we compete in small businesses with the buying power of Walmart in China? It is also ruining our manufacturing base. Chinese manufacturing companies have taken a loss many many times just to establish a relationship with Walmart. Who suffers? Our towns, cities, workers, residents and businesses.

    Favorite    Flag as abusive Posted 12:23 PM on 03/31/2008
- esbee See Profile I'm a Fan of esbee permalink
Moderator's Pick

HuffPost's Pick

Walmart also supports the USDA program called NAIS...haven't heard of NAIS? NAIS (national animal id system) that will require every American who owns even one farm animal, pony, pet pot belly pig, even fish and parakeets, to register their premises with the govt, microchip every critter they own and file movement reports and when the animal dies. Should animal disease even be suspected, the USDA can come in and depopulate an entire 6 mile radius area...the reason: so corporate ag can tell the world what a safe food supply we have and sell beef to japan, but THEY do not have to tag and track every animal they have, they just get one lot number per groups of animals...see nonais.org for more info on how this program will affect every one who eats.
NAIS can best be explained like this..Corporate Ag wants to show the world what a safe food supply we have, so NAIS was implemented to keep track on every livestock animal in the US EXCEPT the ones on the factory farms...while those who own a few chickens or horses or llamas or pigs or other critters have to register their premises, tag and track every move those animals make, Big Ag gets ones lot number for their groups of animals and does not have to tag/track every critter...
Yet, NAIS tracibility ends at the moment the animal goes to slaughter, which is when most food safety issues occur.

    Favorite    Flag as abusive Posted 09:47 PM on 03/31/2008
- Meah See Profile I'm a Fan of Meah permalink

Sorry, I don't buy it. Microchipping everything would be THEIR goal.

The Waltons have enormous greed.

As Lewis Black says of CEO types " HOW MUCH SHIT DO YOU NEED?!"

A scourge upon our land, our earth, it should be called ExploitMart.

Everyone on this earth needs to use less and waste less.

WalMart does not agree with that, do they?

    Favorite    Flag as abusive Posted 09:54 PM on 04/02/2008
- BP1 See Profile I'm a Fan of BP1 permalink

You can add the abandoned supercenter in Derry, NH to the list. It was going to be built right across the street from the existing Wal-Mart (no word on what might happen to the old abandoned property once the new store opened), but the company pulled out recently without much explanation. Town residents were objecting to paying for the additional road improvements that were part of the deal, and Wal-Mart wasn't offering up additional subsidies, so that probably had something to do with it.

BP

    Favorite    Flag as abusive Posted 12:15 PM on 03/31/2008
- joebhed See Profile I'm a Fan of joebhed permalink

Dear Sam and Family,
For some reason, you seem to have left out the totally unnecessary mega-plex planned for Onley, Virginia.
PLEASE reconsider.
Thanks.
A Harbortonian

    Favorite    Flag as abusive Posted 11:35 AM on 03/31/2008
- DemandTruth See Profile I'm a Fan of DemandTruth permalink

The good news is we now have owls in our neighborhood. My medium sized town had just spent a ton of money and time to fix up houses in a few low income, lower class neighborhoods. They fixed them up, painted them beautiful colors and are helping elderly and lowerclass people live in them. Then Super WalMart came and decimated the heavily wooded lands right next to those cute quiet neigborhoods, and ruined them again with soon to be heavily trafficked and heavily littered streets. The animals have fled to our nearby neighborhood. Thanks Wally.

    Favorite    Flag as abusive Posted 07:49 PM on 03/30/2008
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