Wal-Mart May Boost Canadian Expansion
Toronto A Monday Bloomberg report suggested that Wal-Mart Stores Inc. may up the number of Canadian supercenters it opens in 2008.
According to a BMO Capital Markets analyst cited in the report, Wal-Mart may expand with 40 or 50 Canadian stores, with half being new supercenters and one-third from conversions of other sites to the larger format, by the end of January.
Analyst David Hartley, who sourced unidentified people in the “real estate world,” said the Wal-Mart expansion could put more pressure on grocers in Canada to reduce food prices.
Wal-Mart, however, has declined to comment on the report. “Consistent with prior years, our new real-estate projects will be in the neighborhood of about 27 stores,” Wal-Mart spokesman Kevin Groh said. “Our focus is certainly supercenters.”
“The grocery battle in Canada may just be heating up,” analyst Hartley said in the report. “Wal-Mart’s entrance into Canadian food retail with its supercenter format represents the most significant risk facing the large grocers in Canada.”
Additive sales rise along with gas prices
Record-high gas prices—topping out at a $4.55 per gallon on average in California last month—have consumers searching for ways to get better gas mileage. And that’s why auto retailers are seeing a big increase in sales of fuel additives and other products designed to get maximum performance from car engines.
According to The NPD Group, sales of fuel additives increased 11% during the first four months of the year and are likely to climb even higher this summer. “There’s no doubt consumers are highly motivated to save money at the pump and one way they’re trying to do that is through fuel additives,” said David Portalatin, director of industry analysis for The NPD Group’s automotive division. “And that’s a really dramatic increase given the fact that total auto parts retail sales are up just 2%.”
Consumers are buying products like Lucas fuel-injector cleaner, Gumout and STP gas treatments that help clean engines and keep them running more efficiently. The products range in price from $2 to $12 and are carried at auto part retailers like AutoZone as well as mass merchants.
Those sales are also being driven by a reduction in consumer spending on new cars. “Consumers are putting off buying new cars so more people are driving cars with higher mileage, which is helping drive fuel additive sales,” said Portalatin.
But there’s some skepticism about whether those fuel additives work, something reflected in a study released by the Federal Trade Commission in 2006. “The EPA has evaluated or tested more than 100 alleged gas-saving devices and has not found any product that significantly improves gas mileage,” the study said. “In fact, some gas saving products may damage a car’s engine and no government agency endorses gas-saving devices for cars.”
CompUSA, back from the dead, grand re-opening in Fla.
MIAMI —To paraphrase a quote from Mark Twain, reports of CompUSA’s 2007 demise were greatly exaggerated.
While it’s true the once mighty computer retail specialist shuttered it last store in December 2007, more than a dozen locations in Florida are now back in business under the ownership of computer supplier Systemax Inc. The Miami-based company, best known for its Tiger Direct online and mail-order computer business, essentially bought the banner and has reopened 16 stores in Florida and Texas, with more on the way.
“During the [first} quarter, much of our attention was spent on the conversion, refurbishment, restocking and re-opening of 16 CompUSA retail stores,” said Gilbert Fiorentino, president and ceo of Tiger Direct during a first-quarter conference call on June 17. “This included all new point of sale and other IT systems, restocking of stores with new inventory and grand opening events and promotions.”
Though the relaunched CompUSA Web site and the few stores open before March 31 generated only $18 million in income for the quarter, the company expects sales to pick up this summer as customers rediscover the stores. Fiorentino also said the company has signed direct deals for CompUSA with more than a dozen CE suppliers including Sony, Nokia, Mitsubishi and Bose.
Systemax plans to build the CompUSA store base with several new openings this year and by integrating its eight Tiger Direct retail stores in the United States and Canada into CompUSA.
“We currently have plans to open three more stores, two in Canada and one in Florida,” said Fiorentino. “Long term, we intend to re-brand our Tiger Direct stores as CompUSA, leaving us with a single brand retail strategy in the [United States].”
What’s unclear is how Systemax plans to make its CompUSA stores stand out in an intensely competitive market that drove the original chain out of business. (Fiorentino could not be reached for comment about the company’s strategy.) The 23-year-old chain closed 126 stores in March 2007 and the remaining 103 stores last fall, amid heavy losses and sharp declines in same-store sales.
“Tiger Direct has a decent catalog and online business, but catalog companies usually don’t do very well at the store level,” said George Whalin, president of Retail Management Consultants. “They still have to contend with Best Buy, which continues to grow and get stronger, and even Circuit City.”
Whalin suggested the stores might try to replicate the Tiger Direct online business model, which sells private-label and name-brand computers and computer supplies at low prices.