In a letter dated October 23, 2015, Brandon Scholz, the President of the Wisconsin Grocers Association explains what happens in food retailing when a town gets saturated with stores:
According to Scholz, the owner of Daniel???s Sentry Foods in Whitewater, Wisconsin, was ???unable to compete with the Wal-Mart supercenter next door, ??? and announced that Sentry Foods in Whitewater will close December 16th, just in time to leave its workers unemployed for Christmas.
Daniel???s Sentry is located at 1260 W. Main Street, and the Wal-Mart is located at 1362 W. Main Street. Whatever ???new??? jobs Wal-Mart claims it will bring, 53 existing jobs will go down with the closed Sentry store.
Whitewater, Wisconsin is a community of only 15,040 people as of 2014. The city???s total retail sales per capita (2007) was $8,406, which is only 65% of the per capita retail sales for the state of Wisconsin of $12,984. Whitewater???s median household income (in 2013 dollars) was only $29,784, which is just 57% of the state of Wisconsin median household income of $52,413. So Whitewater is somewhat of a backwater economically, suggesting that disposable income to begin with in this small city is not robust.
The Daniels’ company is based in Walworth, Wisconsin, and owns a total of 4 stores: two in Janesville and one in Walworth, in addition to the Whitewater store. Ken Riley, the general manager of Daniel???s Sentry in Whitewater, told the Wisconsin Grocers Association that his store ???tried unsuccessfully for two and a half years to sell the 50,000-sf building,??? which is a slightly larger than the typical Wal-Mart Neighborhood Market. Wal-Mart took its existing discount store in Whitewater in 2011, and added on another 30,000 s.f. for groceries. Daniel???s Sentry saw its sales drop like a stone in the river.
Ken Riley says Whitewater???s population is deceptive, because it includes everyone on campus at the University of Wisconsin at Whitewater. The students, known as ???Warhawks,??? head home on the weekends, ???and come back with a car full of groceries from mom and dad.??? But this is just part of the challenge that was facing Ken Riley???s store. Wal-Mart snuck up on Sentry, and killed it.
The 53 people employed at the Daniel???s Sentry are going to have to apply for work at Wal-Mart, because Riley claims he can???t relocate his workers to another store, because the Janesville Sentry has a union, and positions cannot be filled by people who have less seniority. But the Walworth store does not have a union.
“It’s sad,??? Riley told the WGA. ???I’ve been with the company since 1970, and I’m used to opening, not closing stores. It makes it tough on individuals. We did our best to try to get a retailer in there, we tried to give low-lease rent and come up with a lot of scenarios, but no one wanted to give it a go.”
The Daniel???s Sentry building has been sold to an unnamed developer.
According to grocery retail analyst David Livingston, who studies the grocery market for a living, ???Wal-Mart will now be the only supermarket in Whitewater. At one time there were three supermarkets about 30 years ago: Piggly Wiggly, Sentry, and a small independent. Sentry always did great having walking access to students. The other two stores struggled and Piggly Wiggly closed.???
???Wal-Mart opened and the small independent was finished,??? Livingston recalls. ???Now it was just Sentry and Wal-Mart. Wal-Mart just hammered them on price. I’ve done several market studies over the years for a retailer looking to buy the Sentry and change the format, or to open a new store such as a natural foods store. There simply is no more room.???
According to Livingston, the key to survival in Whitewater is location. ???Critical is having walking access to students–and Wal-Mart has it. Trying to open a store anywhere else in town would be futile.???
Economists talk about ???creative destructionism,??? the fact that new stores often destroy the old ones. In Whitewater, the net job change from Wal-Mart expanding into a supercenter could actually be a net loss of jobs. It is a form of ???voo-doo economics.??? Studies since the 1970s have suggested that Wal-Mart kills existing jobs, and even cannibalizes its own competing stores in a trade area.
???I’ve seen Wal-Mart run stores out of town,??? Livingston says, ???but this is the first time I’ve seen Wal-Mart run them all out of town.???
Readers are urged to go to the ???Think Whitewater Buy Local??? Facebook page at facebook.com/ThinkWhitewater and leave this message: ???It???s too late for Whitewater shoppers to save Daniel???s Sentry, but its not too late to take your food dollars to one of the other Sentry stores near you.???
In a letter dated October 23, 2015, Brandon Scholz, the President of the Wisconsin Grocers Association explains what happens in food retailing when a town gets saturated with stores.