Magnolia Unsure if Wal-Mart Helps, Hurts

Like many communities across the country, Magnolia has greeted the impending arrival of a Wal-Mart Supercenter with mixed emotions.

Wal-Mart supporters look forward to the new jobs and a likely increase in sales tax revenue that the world’s largest company will bring to the Columbia County seat. Opponents fear for the vitality of local grocery stores and mom-and-pop shops that dot the south Arkansas town of 11,000.

Which will the Supercenter be, bane or blessing?

City officials and retailers in similar cities where Supercenters have joined the market mix suggest that doubters may come to repent of their anti-Wal-Mart mantra.

Wal-Mart officials and city leaders broke ground this month on a 20-acre site near U.S. Highway 79, the U.S. Highway 82 bypass and Warnock Springs Road on the east side of Magnolia. And — in keeping with Wal-Mart tradition — the 156,000-SF Supercenter will be open in eight or nine months, depending on the weather, Magnolia Mayor Lane Jean said.

The Magnolia Supercenter will employ 120-160 people, up from the 100 that currently staff the smaller Wal-Mart discount store on East Main Street.

Murphy Oil Corp. of El Dorado is also set to build a service station on the site.

An eight-store strip center is planned to accompany the store, but there’s no word on its eventual occupants, Jean said.

Based on calculations, Jean expects the Supercenter to generate an estimated $1.2 million a year in state, county and city sales tax at 7.375 cents on the dollar for Magnolia and Columbia County each year after the Supercenter opens in the fall.

“There are people who are against it, but they sure do shop there a lot,” Jean said.

Commerce Killer?

Wal-Mart founder Sam Walton said in a 1992 Time magazine article his company never aimed to be an enemy of small businesses, nor did he consider his chain much of a threat.

“Of all the notions I’ve heard about Wal-Mart, none has ever baffled me more than this idea that we are somehow the enemy of small-town America,” Walton said. “Nothing could be further from the truth: Wal-Mart has actually kept quite a number of small towns from becoming extinct by saving literally billions of dollars for the people who live in them, as well as by creating hundreds of thousands of jobs in our stores.”

Despite the reservations some Magnolia residents and small-business owners have about the Supercenter, city leaders across the state say nothing but good comes from the mega-addition.

In fact, when a Supercenter opened in Harrison in 1994, city leaders were encouraged by the “regional” reach Wal-Mart had. Shoppers would come into town to shop at the Supercenter and would often stay for a meal or shop elsewhere in the city, said Layne Wheeler, president of the Harrison Chamber of Commerce.

Other businesses, both large and small, often relocate to be near a Supercenter.

“Their theory is that if there’s a Supercenter there, Wal-Mart’s already done the marketing,” Wheeler said.

Indeed, even before the first shovel of dirt has been turned, national retailers have contacted Mike Juniker, executive director of the Magnolia Economic Development Corp. about the possibility of building new stores in the vicinity of the Supercenter.

“It’s absolutely amazing the effect that just mentioning Wal-Mart has,” Juniker said. “Given the number of commercial developers that have contacted my office and visited Magnolia, it’s going to [have] a tremendous effect on this community. I’ve never seen that type of activity surrounding the opening of a retail establishment.”

Juniker wouldn’t name any specific businesses that are considering locating in Magnolia but said there are a few companies looking at the city, including restaurants and “one large national chain drugstore.”

“Those [retailers] that are healthy now should remain healthy because of the amount of additional traffic that magnet store is going to bring to this area,” Juniker said.

Entire counties benefit from the collection of local sales taxes. Even smaller cities reap some rewards because of the county sales taxes paid at Wal-Mart and later dispersed throughout the county, Wheeler said.

The Harrison Supercenter is about three miles from the heart of downtown, separating the mega-store from its Main Street “competition.” Harrison merchants weren’t overly concerned, Wheeler said, when the store opened. They simply have learned to reorganize their priorities and their merchandise. They now have businesses that aren’t in direct competition with Wal-Mart. Instead, they have specialty items that the Supercenter likely doesn’t carry — they’ve found their own niche, Wheeler said.

A few of the local grocery stores saw business drop the first week or two after the Supercenter opened. Today, however, business continues at a pre-Supercenter pace, said Wheeler.

Regional Draw

This is exactly what Magnolia’s mayor hopes will happen in his town. Magnolia is about 45 miles north of Minden, La., a town of similar size that recently landed a Supercenter, Jean said.

“Competition is something that makes the strong stronger and the weak, well, weaker. [Wal-Mart is] pretty steep competition, but overall, it’s a plus because it brings people to your town to shop,” Jean said.

Currently, Magnolia residents often travel to Texarkana (53 miles) or El Dorado (34 miles) to shop. Magnolia’s retail centers serve residents in a 50-mile radius — Stamps, McNeil, Stephens, Waldo and others. Having a Supercenter in town will keep Wal-Mart shoppers, and their money, in the city.

Although he doesn’t expect to lose any businesses, Jean admits it will be tough. Shopkeepers whose businesses are healthy will withstand the new neighbor’s influence, even with the store’s buying-in-bulk power. Those that aren’t as healthy might suffer until they find their niche and offer things Wal-Mart doesn’t, such as gift-wrapping and product assembly.

“We do a very nice job with our retail environment now, and I just see this as a major enhancement to that because of the anticipated increase in traffic,” Juniker said.

Magnolia’s existing grocery stores are all members of national or regional chains that have have experience elsewhere in the country dealing with Wal-Mart’s super-sized competition, the mayor said.

“I’m assuming they’re used to this. They’ve got a track record of competing against the superstores like Kmart, Target or Wal-Mart,” Jean said.

Hope vs. Experience

The city of Hope is no different. Its Supercenter opened in April 2000 and has affected each business in town. However, some business owners said the effect wasn’t as negative as they had expected.

Greg Martin, owner of Martin’s Clothing Store, doesn’t worry about the Supercenter today. In fact, he doesn’t really consider it competition as the two stores carry opposite-end quality clothing and accessories. Martin’s hasn’t lost many, if any, customers to the retail giant, but it has gained a few out-of-towners who shop Wal-Mart for household goods and stop by for new shoes, he said.

“When they come to town, you just have to find the niche they don’t serve because, no matter how big they are, they can’t serve every area,” Martin said.

Martin said he is disappointed by the loss of small, independently owned stores that once thrived in southern Arkansas towns. Now, cities seem to be cookie-cutter images. “How unique is [that]?” he said.

Elsewhere in Hope, Keenan Williams, owner of LaGrone Williams Hardware store, saw a 15-20 percent drop in sales for the first six weeks after the Supercenter opened. Today, Williams says his sales are better than ever, due in part to the Supercenter’s presence.

“The mix of products evidently has changed so that a lot of things they were carrying, they no longer carry it or their customers can’t find them there in that larger building,” he said.

Williams said his livelihood depends on keeping up with his customers’ specific needs. “The key is we just don’t go head-on with [the Supercenter].”

Wal-Mart currently operates 1,179 Supercenters and 1,603 Wal-Mart discount stores in the United States. The Bentonville-based retailer has 39 discount stores, 40 Supercenters, four Sam’s Clubs and six Neighborhood Markets in Arkansas, according to the company’s 2002 annual report.

Wal-Mart Stores Inc. will open a Supercenter at Greenwood (Sebastian County) in March.