Growing Number of Big-Box Retailers Focus on New Y
New York, NY, Feb. 9--New York City is a wonderland for shoppers who seek out small, unique shops, retail gems that sell nothing but bathtub fixtures or handmade shoes.
But more and more, big-box retailers like The Home Depot and Wal-Mart are eyeing the city and brainstorming ways to enter the market, particularly Manhattan, coveted for its dense population and high incomes.
Though city stores are more expensive to run, with higher rents and operating costs, it's worth the additional cost, according to Steven Greenberg, president of the Greenberg Group, a real estate advisory business. Sales in urban stores "usually run twice or triple the amount of a suburban store," he said.
The Home Depot has signed leases for its first two Manhattan sites, one in the Flatiron District and the other near Bloomingdale's, both set to open this summer. And last month, Wal-Mart opened a Supercenter in Tampa, FL, that is half the size--99,000 square feet--of its usual Supercenters, to test an urban format that could open the New York City market.
"They've been studying the [New York] market for the last several years," said Faith Consolo, vice chairman of Garrick-Aug Worldwide, a retail leasing service in Manhattan.
She said Wal-Mart has looked at sites near the West Side Highway, the Con Ed development on the East Side, upper Manhattan, downtown Brooklyn, Bay Parkway in Brooklyn and other spots, but has passed on all of them. "Wal-Mart will look very smart. They're going to learn from everybody else's mistakes," Consolo said.
Mia Masten, Wal-Mart's spokeswoman for the East region, was coy about the company's intentions. "Right now, we don't have any plans to move into New York City, but we're always looking to expand," she said.
Some residents would prefer that such stores stay out of the city, seeing it as a quality-of-life issue. "I wouldn't want some huge big box generating tons of traffic on my block or in my neighborhood," said Andrew Berman, 35, who lives on the West Side.
And companies used to dealing with wide expanses of land face other challenges in moving to cities, such as the shortage of large commercial sites, high rents and delivery headaches.
In addition, with smaller stores, they have to cut down on their merchandise assortment and customize it to the local market.
When The Home Depot opens its store on 23rd Street between Fifth and Sixth avenues, there won't be any lawn tractors, said John Simley, a company spokesman. Instead of snowblowers and fencing, the store, along with the second one on Third Avenue and 59th Street, will emphasize items like paint, pesticides and cleaning supplies.
"You can't just take a store and plunk it in Manhattan," Simley said.
Like Target and Lowe's, The Home Depot opted first for stores on the cusp of Manhattan, in the outer boroughs and New Jersey, drawing many city shoppers with and without cars.
In planning for the Manhattan stores, the company was relieved of parking requirements, but it had to deal with the fact that New Yorkers will arrive by cab, public transit and on foot.
That means providing more delivery options for customers. It also means rearranging the schedules for its own deliveries to the store.
"I was having dinner late one night in Manhattan, and down all the avenues was a parade of trucks," Simley said. "Manhattan gets resupplied at two in the morning, and we expect we'll be doing most of our deliveries at about that time period."
Not that The Home Depot and Wal-Mart are the first to get the bright idea of taking Manhattan, but some of the earlier examples do not bode well. Discounters Bradlee, Caldor and Kmart all tried it within the last decade; only Kmart is left and just barely.
A more recent success is Staples, which has been aggressively dotting the city with its resized Staples Express stores, said Joel Evans, a marketing professor at Hofstra University.
The wild card is customer acceptance, especially in a city with fierce neighborhood loyalties and an attachment to personalized shopping.
But Wal-Mart and The Home Depot may not feel they have any choice but to try their luck in New York's competitive environment.
"In this day and age, in order to continue their growth, they've got to get into these markets," Greenberg said.
