Wal-Mart explains plans for New Ulm

203,000 square-foot store would be located on Highway 14 west of New Ulm

By KEVIN SWEENEY

Journal Editor

NEW ULM -- A Wal-Mart official Wednesday confirmed rumors that the giant retailing company is interested in putting a store in New Ulm.

John Bisio, regional director of Community Affairs for Wal-Mart Stores, Inc., said Wednesday that while there is no project on the books today, plans to build a Wal-Mart Supercenter in New Ulm have been through an executive committee review and were approved. Wal-Mart has a real estate team working on finding a site in New Ulm and getting the property under contract.

Wal-Mart's most likely site is on Highway 14 west of New Ulm, west of the North Garden Street intersection. There are four different property owners involved, including the New Ulm Economic Development Corporation. Wal-Mart would have to go through some regulatory hoops to get the property properly zoned.

Bisio said once the site question has been firmed up and the company has land under contract, it will hold a public forum to address questions about the store and its operations.

Bisio met with some community leaders in addition to the media on Wednesday to answer some questions. He will meet with some members of the retail community today.

The store would be about 203,000 square feet and would provide about 475 jobs in its first year, and that about 75 percent of those jobs would be full time. It would be a Supercenter, offering general merchandise, lawn and garden, apparel, electronics, along with a grocery department.

Like other Supercenters, it would have a large vestibule offering a possible bank outlet, pharmacy, vision center, photo or portrait studio and other amenities and services. It could include an auto tire and lube express.

Wal-Mart estimates the store would provide about $400,000 in real estate taxes in its first year, about $2,275,000 in state sales taxes and about $175,000 in local sales taxes.

Bisio said Wal-Mart focused on New Ulm as a result of customer spending studies in its other stores. It has stores in Mankato, Redwood Falls and Hutchinson.

Wal-Mart, which can track customers through credit card and check purchases, found that in 2003, people from New Ulm and the area spent about $4.5 million with other Wal-Mart stores in the area.

"That's what put New Ulm on the map for us," said Bisio. "We found we have a significant number of New Ulm and New Ulm trade area customers travelling to our stores in places like Mankato and Redwood Falls to shop. That tells us we can probably be doing a better job of taking care of our New Ulm area customers by building a store here, and provide some relief for our stores in Mankato and Hutchinson and Redwood Falls."

Much of the buzz in town about Wal-Mart has been about its potential impact on local retailers. Economists, like Ken Stone, professor emeritus at Iowa State University, have been studying the "Wal-Mart Effect" for several years. The theory is that when Wal-Mart moves into a town, other retailers -- unable to compete -- go out of business.

Wal-Mart is the largest retailer in the country, with over 1,500 Supercenters and 1,400 Wal-Mart discount stores. It is expecting to open 230 Supercenters across the country in the fiscal year from Feb. 1, 2004 to Jan. 31, 2005, said Bisio. The company has the size and economies of scale to demand the lowest prices from its suppliers, and local retailers find it hard to meet their prices head on.

Bisio said Wal-Mart recognizes that it doesn't do business like other retailers. It sees its main competition as other discounters, like Target and Kmart.

"Target does manage to find ways to compete," he said, and smaller retailers can compete as well, by offering different goods and services.

Wal-Mart isn't interested in driving others out of business, said Bisio. In fact, its store managers often participate in meetings and seminars intended to show others in its trade areas how to compete with Wal-Mart.

Chris Hiller, president of the New Ulm Chamber of Commerce, said the Chamber is hoping to be a clearing house for information about Wal-Mart's plans, to hear concerns and provide facts as the plans develop.

Dan Beranek, president of the New Ulm City Council, was one of the city leaders meeting with Bisio Wednesday. He said he has heard concerns from local retailers about the negative impact of Wal-Mart coming to town, and he said, "I can't say I don't agree with them."

"This is a day I've been dreading for 20 years," said Beranek. "Wal-Mart is known as a tough competitor. It works with volumes that other businesses can only dream about. There has been a lot written about them in the news over the years, and it all tends to have a negative connotation.

"That said, I don't know if there is much we as a city council can do legally to keep them out," Beranek said. "If they need a rezoning, we would have to have a good reason to refuse it. We can't just say we're refusing it because we don't want Wal-Mart here. They've been in enough court rooms in enough communities to know what a city can and can't do."

Beranek said the site that Wal-Mart is looking at now is currently zoned as industrial, and is part of a new industrial park the city is trying to create.

"I think the council would be justified in saying we don't think it's a good idea to rezone part of our new industrial park for commercial use, but what's to stop them from going three blocks down to land that's zoned for agriculture and asking for rezoning there? That would be hard to deny without looking like we're just trying to keep them out."