BIG-BOX MAY GET BIGGER.

Byline: Edward Russo The Register-Guard

CORRECTION (ran 9/19/03): An article about Wal-Mart on Thursday on Page B1 contained an error. The Wal-Mart Supercenter in Woodburn has a department that sells meat. Wal-Mart no longer has meat-cutting departments. Wal-Mart eliminated its meat-cutting departments after the butchers at a Wal-Mart in Jacksonville, Texas, voted in 2000 to join a union.

The day Lane County grocers dread may be approaching: Wal-Mart is considering expanding its west Eugene discount store, perhaps by adding a huge grocery store.

Representatives for the Bentonville, Ark.-based retailing giant on Oct. 1 will meet with city planners to discuss adding 69,367 square feet to the Wal-Mart on West 11th Avenue.

The addition would boost the store to a massive 218,012 square feet, making it the largest store in Lane County.

Wal-Mart spokeswoman Amy Hill said the firm hasn't decided if the store will become a combined grocery store and discount outlet - what Wal-Mart terms a Supercenter - or simply an expanded discount store. If it is to be a Supercenter, it would be Lane County's first. Wal-Mart has four discount stores here.

"Based on our store's performance, which has been great, we are exploring the opportunity to expand it," Hill said. "But we have made no decision on what kind of merchandise we would carry or whether it will be a Supercenter."

Creating a Supercenter in Eugene would, however, fit Wal-Mart's pattern across the country, where it is rapidly increasing grocery sales and putting pressure on Fred Meyer parent Kroger, along with Safeway, Albertsons and other chains.

In the six months ended July 31, Wal-Mart opened 98 Supercenters, 71 of them by enlarging regular Wal-Marts. During the same period, the retailer opened just 11 of its regular discount stores, which sell a limited lineup of groceries. In Oregon, Wal-Mart has opened six Supercenters since 2001, all of them by expanding its regular discount outlets. Earlier this year, the firm announced plans to build a Supercenter in Salem in 2006 and to expand an existing Wal-Mart in Salem to a Supercenter by 2005.

With Wal-Mart's well-known discount prices, a Supercenter in Eugene would siphon customers from the area's other grocery stores, observers said.

Safeway, Albertsons, Fred Meyer and WinCo have one store apiece in west Eugene, within a few miles of the Wal-Mart. In Veneta, west of Eugene, Ray's Food Place has an outlet.

"They all will be impacted," said Robin Thomas of Portland, a former executive with grocery distributor Unified Western Grocers. "It's another store in the market taking another piece of the pie that is not getting any bigger."

Wal-Mart's strategy is not necessarily to have the lowest grocery prices on all items, said Thomas, now a business consultant and principal of the Centre for Strategic Management. "They are not going to come in and undercut" competitors, he said, but they will match the lowest prices in the market.

Grocery stores that fit niches, such as WinCo, which appeals to price-sensitive shoppers, and Market of Choice, which offers organic as well as conventional groceries, should be "pretty well protected" from the new competition, Thomas said.

Stores that don't offer compelling reasons for shoppers to remain loyal, however, may lose more customers to Wal-Mart, he said.

The arrival of Wal-Mart grocery stores in Lane County has long been anticipated by executives at Fred Meyer, Safeway and Albertsons, as well as by union officials who represent workers in those chains.

Last year, during labor contract negotiations, Fred Meyer, Safeway and Albertsons cited the increasing competition from nonunion stores, such as WinCo and Costco, plus the expected entry of nonunion Wal-Mart in the market, in their push to win concessions in health care benefits from the United Food and Commercial Workers Union Local 555. The employers also succeeded in getting unionized workers to accept lower wage increases than in the past. The three unionized chains said their pay and benefit packages are much superior to those at WinCo, Costco and Wal-Mart.

Wal-Mart offers health insurance to employees, but UFCW representative Jeff McDonald said the company's low wages make it difficult for many Wal-Mart employees to afford the premiums.

"When people go in and save a few cents purchasing things at Wal-Mart, there are other hidden costs to society that are rolled into our tax base from companies like Wal-Mart," he said. "People need to look at the bigger picture."

Wal-Mart doesn't disclose its pay levels. Critics have said the low pay at the chain may leave some Wal-Mart employees seeking public assistance in the form of Oregon Health Plan medical coverage.

Wal-Mart representatives said an employee with a family of four pays $104 a month for health insurance, with varying deductibles that employees must pay.

"It's a very affordable plan," Huntsville, Ala.-based spokeswoman Daphne Moore said. "The company pays two-thirds of the cost of health care coverage, and there is no limit on medical coverage for associates who have been on the plan for one year, including long-term illness."

What does a Supercenter look like?

The Woodburn Supercenter, north of Salem, next to Interstate 5, has the same general merchandise and clothing departments as a typical Wal-Mart, plus a grocery department. Signs in Spanish show the store aims to attract Hispanic shoppers.

Up front, there are 31 cash registers, 18 of them near the grocery department.

With white linoleum floors and a high warehouse ceiling, the no-frills food department is bigger than many stand-alone grocery stores.

Wal-Mart sells national brand-name foods, plus its own private label, Good Value. It also has an extensive food lineup geared for Hispanic customers, such as tortillas, corn masa mix, pork tongue, beef oxtails, jalapeno peppers, hot New Mexico chili pods and dried corn husks.

The grocery area has a seafood department, bakery, deli and counter that sells chicken dinners and lunches. Wal-Mart at one time had meat departments in its grocery stores, but eliminated them all when employees in a meat department at a Wal-mart in Texas voted to unionize.

Customers Ruby Williams and Buelah Bryan, residents of a nearby retirement center, said they shop at the Supercenter mainly for convenience.

With the pharmacy and grocery store, "I can get everything here," Williams said. "And some of the prices are lower than Safeway."

WAL-MART STORES INC.

Supercenters in Oregon: Coos Bay, Woodburn, Grants Pass, Pendleton, Ontario, Hermiston

Number of stores in U.S., July 31: 1,508 Wal-Marts, 1,356 Supercenters, 528 Sam's Clubs, 53 Neighborhood Markets

Sales, six months ended July 31: $119.3 billion, up from $107.9 billion

Profits, six months ended July 31: $4.3 billion, up from $3.6 billion

CAPTION(S):

Loraine Donnelly of Florence, during a recent visit to the Wal-Mart Supercenter in Woodburn, says she and her husband shop at the Supercenter because they can get everything from clothes to tools to groceries in one spot.