H.J. Huneycutt

SuperValu: Is It Time To Go Shopping?

Wal-Mart has had extreme difficulty expanding supercenters into the DC Metro area (which is the area I was referencing in particular). There are a few in the outer suburbs, but that's it. Target does not seem to be overly eager to jump in (with supercenters) either.

I'm also not as high on Wal-Mart as others. Rising gas prices help undermine their business model. People are going to be less willing to drive 10 miles to go to the Wal-Mart Supercenter when the Shoppers is 1 mile down the road and only marginally more expensive. Which isn't to say that Wal-Mart won't do better than some others in a recession; they are still a low-cost leader and people will go there and bulk up, but their customer base will also shrink a little bit.

In general, Wal-Mart Supercenters tend to be in outer suburban areas, which are going to be the most severely hampered by rising gas prices (a long-term trend). I think inner cities are poised for a comeback over the next few decades and Wal-Mart is not an inner city outfit. I'd be extremely surprised to see them jump into places like Arlington, VA, Takoma Park, MD or any of the inner DC 'burbs.