The Battle of the Marts, Part II: When Wal-Mart is too high-falutin, there’s always…

In Part I of this post, I explored locational decision-making between two of the nation’s biggest discount retailers, Target and Wal-Mart. While both corporations nearly always prosper in middle class suburbs, only Wal-Mart has achieved such national ubiquity that it can be found along the six-lane highway leading into just about any community of 10,000 people or more. Conversely, Target is far more likely to stake a claim in the dense, prosperous urban centers of the largest cities; Wal-Mart has attempted this multiple times but has nearly often confronted such deep-seated opposition that it surrenders. Labor unions objecting to the corporation’s treatment of workers may have something to do with Wal-Mart’s surprising impotence in places like Manhattan or San Francisco, but much of it derives from the general revulsion the affluent urbanites in such cities feel toward the company. The ability to organize and stymie Wal-Mart has consistently succeeded in big cities, often through the opponents’ claims of induced traffic, lowered property values, and environmental degradation. Yet all too frequently this same constituency welcomes Target with open arms, even though a new Target could induce the same negative externalities in their community. And Target has been no more pro-union than Wal-Mart.

Why such divergent attitudes toward the two companies? I don’t really think I need to explain further—others have mined the subject in the past, and I hardly have added anything new to the discourse. But the relationship between these two competing retailers strangely resembles a yin and yang superimposed on the larger fields of cultural consumption: not quite as simple as Target/liberals and Wal-Mart/conservatives, but not a great deal more complicated either. The two companies have their own consumer niches. In some suburban areas they butt up against one another, but much of the metropolitan landscape belongs to one or the other.

And then some regions, though quite populous, belong to neither. Felbram Plaza in Indianapolis provided the backdrop for the core of this analysis: Target, which is just as guilty as Wal-Mart of contributing to suburban sprawl (the bane of the urban progressive), no longer saw the inner-ring suburban area here on the near south side of the city as a viable place for its smallish outlet. It shuttered this store at Felbram Plaza about a year ago, and soon an up-and-coming new tenant, Shoppers World, will occupy it.



This part of town no longer suited the Target Corporation, and its forthcoming replacement is an intensively discounted mart, appealing to a more blue-collar demographic than the well-educated yuppies most associated with the red bull’s eye. But Wal-Mart hasn’t located in this part of town either. In fact, as much as we often perceive Wal-Mart as having saturated the entire national retail landscape, the world’s biggest retailer eschews two major components of metropolitan America: the trendy, fashionably wealthy downtowns and the economically distressed inner city. The neighborhood around Felbram Plaza is hardly the ghetto, but its economic situation does not augur a likely boom in the future, and Wal-Mart avoids the area, despite the fact that it would probably find an abundant clientele of working class, elderly whites, or young Latino families who could benefit greatly from its low prices. In general, Wal-Mart does not do the inner city, or the declining inner ring suburban areas. But one other mega-discounter does seem attracted to this part of town, and its name is older than Target, Wal-Mart, or Shoppers World.


Just a mile north—a mile closer to the inner city—sits a hulking Super K, the biggest variant of hypermarket within the Kmart Corporation. The faded giant of a company, founded by five-and-dime philanthropist S. S. Kresge in 1962 at the age of ninety-five, quickly achieved repute for driving many of its competitors out of business through its low prices and its quirky Blue Light Specials. But by the late 1980s, as the company focused attention on ancillary companies it had either acquired or created, its brand had sunk. Meanwhile, Target and Wal-Mart emerged the victors among several battling discount retailers; no doubt at least a few still remember such casualties as Venture, Ames, Hills, and Zayre. Kmart survived, but not without shedding over a hundred stores in the early 1990s and renovating many of the others. However, it never was able to re-assert its foothold, despite an improved second half of the decade. It became the largest retailer in history to file for Chapter 11 bankruptcy protection in early 2002, partly due to the CEO’s scandalous misappropriation of funds. A year later, it emerged from bankruptcy under new leadership as Kmart Holdings Corporation, closed 300 more stores, and commenced a radical alteration of its image. By 2004, it engaged in its most high-profile acquisition through the merger with another long-ailing former powerhouse, Sears, Roebuck and Company. Both brands have continued operation under the name of Sears Holdings Corporation, while escalating the remodeling initiatives that had already been long underway.

But has it been enough? Business forecasters had long been predicting the demise of both companies. Just a few weeks ago I observed that the Sears wing is often the least successful portion of a mall, and Kmart continues to close underperforming stores now and then. Who still shops at either of these stores anyway? However, in spite of these grim predictions, the Sears Holding Company posted a narrower loss than expected at the end of 2009, particularly impressive given the sour economy, and it was mostly due to an increase in same-store sales at the Kmarts, for the first time in four years. Perhaps a flicker of life remains in this retail pair that seemed to have fallen from grace.

The best example of where Kmart has found its niche might be in this long-standing, high-profile location on Indianapolis’ south side, just 2.5 miles from downtown, across the street from an architectural oddity I also blogged about in the past. Thousands of commuters pass this branch of the chain every day, and it is close to some of the south side’s most intact working and lower-middle class neighborhoods, such as Garfield Park and South Village. With the departure of Target at Felbram Plaza last year, this Kmart also remains the only big box department store—with a full grocery—in a huge swath of land on the near south side. Until Shoppers World arrives, this Super Kmart Center has virtually no competitors. It’s not the only one in the region to survive, and even to thrive, where Target or Wal-Mart fear to tread. In the Part I of this essay, I also pointed yet another long-vacant Target, this time on the near west-side of town.




Thousands more people pass this branch than the one on the south side; it’s visible from I-465, the beltway interstate, yet the building hasn’t been occupied in a decade. But lo and behold, just a mile west on Washington Street, in a gritty area too close to the din of Indianapolis International Airport ever to be desirable real estate, is another long-running Super Kmart Center.

Demographic studies generally support the postulate that KMarts are more prevalent in lower income areas. Check out this map of 2000 poverty levels by Census tracts, provided by the local community information center SAVI:



A map showing all the Kmart outlets in metro Indianapolis reveals that the chain, amidst its relatively few remaining locations, is more likely to tackle inner-city or economically stagnant parts of town.

Five of the seven locations are adjacent to the I-465 Beltway, generally a harbinger of depressed values associated with inner-ring suburbia. Three of those five are within the beltway, and only two of the seven locations are in outlying suburbs, with none in the predominantly affluent north side of town. (Kmart used to have a branch in the increasingly posh Noblesville suburb, but it was retrofitted to a Sears Essentials.) Of the five beltway outlets, three are particularly noteworthy: the ones immediately south and west of downtown (featured in earlier photos) are in areas with higher than average levels of poverty, and the one to the northeast of downtown is in a particularly high poverty census tract.

Compare the distribution of Kmarts to the Target locations in the metro:


Only five of the twelve are close to the I-465 beltway, and only one is close enough to downtown that it might be in a potentially economically distressed area. But that one Target, part of the reconfigured Glendale Mall, is in a generally stable middle and upper-middle class part of town. In fact, not a single Target location is in a high poverty area. As for the major domo of all discount retailers, Wal-Mart’s pattern is a bit more idiosyncratic:

The yellow smileys represent the 15 Wal-Mart Supercenter locations. Of the four branches within the I-465 beltway, only one—to the northwest of downtown—is in a relatively high poverty area. The company is almost as sedulous as Target at avoiding economic distress. One complicating factor, however, are the presence of Wal-Mart Neighborhood Markets, indicated by the two green smileys. This relatively new introduction is a low-cost grocery store measuring about a quarter the size of the average Supercenter. They merit a completely different consideration because they are not a true discount department store; they are a mere grocery store and not real competitors to your typical Target or Kmart. However, they are under full ownership by Wal-Mart Corporation, and in metro Indianapolis, both of the two locations—the southside one and the northeastside branch—rest within census tracts with considerably above average poverty rates.

If the greater Indianapolis region is a fair indicator of what is normal (and, let’s face it, this popular test market is nearly always indicative of national norms), then it would appear that Target locations eschew poverty most routinely, while Kmarts are more likely to gravitate toward it. Wal-Mart ranks somewhere between the two. The near southside of Indianapolis, home of a Super Kmart Center close to downtown, may offer the most fertile ground for the long-struggling company, simply by virtue of Kmart’s willingness to cater to low and moderate income neighborhoods. Wal-Mart wins among all retailers in the country (and the world) for its omnipresence, and its brand image as a champion of working and lower-middle class values becomes manifest by the location of its branches. It avoids affluent areas such as the huge northern suburb of Carmel, which has only one, no doubt in large part because it is not highly welcomed there, but it makes little outreach to the impoverished inner city where its relentless cost-cutting may be welcomed among households with particularly low incomes. In short, the poorest citizens of Indianapolis generally have a long way to go to get to a Wal-Mart. Target, meanwhile, shrewdly markets itself as a stylish yet unpretentious alternative, with prices that may be low—if only by the standards of its often well-heeled clientele. The corporation overwhelmingly avoids high poverty areas.

The often discussed dichotomy between Target and Wal-Mart becomes particularly compelling in the few situations where the two literally sit cheek-by-jowl. Generally a good mile or two separates the two competitors, but the Carmel branches sit across the street from one another, and, as one local resident observed, “It’s like two completely different worlds.” While many Target-goers spurn Wal-Mart by claiming that Target offers equally good prices but a much more appealing atmosphere, such assertions don’t hold water when one considers that a completely different demographic frequents the Wal-Mart. Clearly the Wal-Mart shoppers don’t agree that Target has what they need at the right price, and they return to the store that offers what they perceive is a better deal—ambiance be damned.

This trinity of megamarts operates on a sociocultural pecking order that spatializes itself across any metropolitan region. Only Kmart’s story may appear inauspicious, though. Once a stalwart of the discount retail industry, it has in some ways conceded that it can no longer compete for the same constituency as Wal-Mart or Target, and through a sort of national attrition it has staked a broader claim in economically declining regions. It may be a wise survival tactic on the part of Kmart, since the other two competitors are chary to enter these markets, but in due time, if more exburban Kmarts close, these blue collar locations may be the last ones standing. And when a formerly powerful company’s identity becomes linked with areas that have declined economically (and may be losing population), such a brand is unlikely to inspire new shareholder confidence. The Hoover’s Overview of Kmart indicates that the company still identifies its chief competitors as Wal-Mart, Target, and Kohl’s. But Kmart’s only chance at long-term viability may be to accept its self-demotion, so that its peer retailers could be the extreme discounters that operate almost exclusively in economically declining areas—such as A. J. Wright, the aforementioned Shoppers World, opening a mile south of southside Indy’s Kmart at the Felbram Plaza.