Why Wal-Mart is Not Coming
No Deal of Any Kind in the Works,
Property Owner Says
By David S. Lewis
Through a published report and by word of mouth, speculation has arisen recently about the prospect of a Wal-Mart store coming to Liv-ingston on a 40-acre parcel proposed for annexation to the city near Printing for Less and the I-90 Interchange. Known for having sapped the economic vitality of small business communities elsewhere, Wal-Mart’s supposed plan to set up shop in town has raised concerns. Citing an unnamed source, and without having spoken to the owner of the property where Wal-Mart would allegedly locate, the website of a Livingston-based weekly newspaper wrote that an “informal contract” with the retailing giant was reportedly in the works with a purchase price of $7 million, provided the property is annexed to the city.
In an April 24 telephone interview with the Montana Pioneer though, the property owner, Margie Jesson, said no such deal was in the works or ever has been. Jesson said that the report of an agreement or understanding of any kind with Wal-Mart is false, especially with a sale price set at $7 million, a figure far beyond the market value of the parcel. Jesson suggested that such a price strained the boundaries of common sense, pointing out that pending sales and real estate prices are matters of record that can be verified through simple fact checking. In a subsequent report in the Livingston Enterprise, a Jesson family member referred to the earlier report in the weekly publication as “lies,” and directed further questions to a lawyer. Jesson told the Pioneer that previously she had had certain parties interested in her property, but to no avail, and that no deal was in the works at that time.
While it is conceivable that a buyer could purchase the Jesson property and enter into a contract with Wal-Mart without Jesson’s knowledge, our conver-sation with Jesson, the unrealistic purchase price quoted in the on-line report, and the use of an unnamed source, make any alleged deal involving Wal-Mart seem improbable at this time or in the near future. Furthermore, situating a Wal-Mart store in Livingston seems to run contrary to the location strategy the retailing giant has adopted in recent years.
While it is true that Wal-Mart has historically opened stores within a certain proximity of existing stores, which it justified through a strategy it called the economics of density (in order to save costs related to shipping and other logistics), it found that doing so often put new stores in competition with those already established. In that Liv-ingston area residents already patron-ize the Bozeman Wal-Mart, as do many Park County residents, and given Liv-ingston’s modest population compared to Bozeman and other Montana locations supporting Wal-Mart stores, a new location in the area seems an improbable move for the retailing giant. Moreover, Wal-Mart’s current strategy to avoid competing with itself is to open Super Centers, expanding existing stores with massive super markets that compete in a separate business (groceries), but from the original location rather than by opening new stores nearby.
In a March 2006 interview with FedGazette (published onine by the Federal Reserve Bank of Minnesota), eco-nomics professor Thomas J. Holmes explained Wal-Mart’s location strategy in recent years. Holmes is also a research consultant at the Federal Reserve Bank of Minneapolis, and author of the paper The Diffusion of Wal-Mart and Economies of Density.
“Wal-Mart,” Holmes said, “is mainly growing right now through the grocery business, because it has pretty much saturated the market in its traditional business. This saturation means that Wal-Marts are often competing with themselves.…virtually every new store takes business from existing stores.”
The locations Wal-Mart has already chosen in Montana support Holmes’ conclusion. Wal-Mart stores are currently set up in Billings, Bozeman, Butte, Great Falls, Havre, Helena, Kali-spell, Laurel, Missoula, and Polson. Livingston, for the most part, does not fit the pattern for a new Wal-Mart store in Montana. Existing stores are located in either sizable cities or smaller towns that are geographically isolated (Polson, population 4,000, being the possible exception, yet the drive to Kalispell, where the nearest Wal-Mart is located, is hardly convenient, making Polson a remote location in practical terms). Liv-ingston, by contrast, is a relatively small town along Interstate 90 with a new nearby Super Center in Bozeman to the west, an easy commute, and then with Super Centers in Laurel and another in Billings to the east. As Super Centers, these stores were built or expanded instead of building new stores nearby, the pattern for Wal-Mart in Montana and across the country.
None of this absolutely excludes the possibility that Wal-Mart might one day pursue a Livingston location, but given the nature of the report citing an “informal contract” with the retailer, and the fact that the Bozeman store expanded to a Super Center only recent-ly—to avoid competing with itself—Livingston is an unlikely location for a new Wal-Mart.