"Grocery chains have taken a step back and are waiting to see what Wal-Mart's impact will be," says Stormy Basha, a senior vice president with Grubb & Ellis|BRE Commercial LLC who specializes in retail. "2005 will be a wait and see year for grocery chains."
Currently, there are more than 10 Supercenters open for business in the Valley, and the first Neighborhood Market opened recently in Tucson. Experts expect Wal-Mart will bring five more Neighborhood Markets tothe Valley.
Basha tells GSR that site selection and construction for Wal-Mart's Neighborhood Market has been on going in 2004. "The stores will be opening throughout 2005, and everyone is watching to see how the consumer receives the new stores," she says.
Bentonville, AR-based Wal-Mart has been the target of some resident displeasure in the Valley, but nothing compared to the outcries in neighboring state California. "The jury's out on what Valley residents feel about Wal-Mart," Basha notes.
With one eye on Wal-Mart and one eye on population growth, grocery chains are cautiously moving forward with their expansions. "We've seen a slowdown in choosing sites for expansion," she says. She points out that grocers like Fry's, Bashas' and Kroger are in danger of losing "a piece of the pie" to Wal-Mart. Moreover, organic grocers like Whole Foods and Sprouts have entered the Valley and cut into the market share.
"Conventional grocers are still going to grow in 2005 in the Phoenix area, but it won't be at the pace it has been recently," Basha concludes.
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