Wal-Mart Stores Inc. is looking at potential store sites in New York City, according to published reports.

Wal-Mart, New York City, discount store, Gateway II, Jamaica Bay, Russell Redman

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Walmart reportedly eyeing New York City sites

April 27th, 2010
Wal-Mart's closest stores to New York City are in New Jersey and New York's Long Island.

NEW YORK – Wal-Mart Stores Inc. is looking at potential store sites in New York City, according to published reports.

The discount store giant, which currently has no stores in New York City's five boroughs, is eyeing locations including the Gateway II shopping center project in Jamaica Bay, Brooklyn, the Wall Street Journal reported Monday.

However, the report quoted a Wal-Mart spokesman saying that the retailer has no projects to announce in the city's boroughs, and a spokeswoman for the Gateway II developer, Related Cos., commented that no leases have been signed for the project thus far. The Journal article said the possible move by Wal-Mart was first reported by Crain's New York Business.

Wal-Mart has yet to crack the New York City market. Rival Target Corp. opened its first store in Manhattan late last year at East River Plaza, a multilevel shopping center in neighborhood of East Harlem. Discounter Kmart, part of Sears Holdings Corp., has locations in the Bronx, Staten Island, Queens and Manhattan, including a multilevel store that connects to the city's Pennsylvania Station transit hub.

A few years ago, Wal-Mart sought to set up stores in Rego Park, Queens, and Staten Island, but the plans fell through after the company encountered stiff union, community and political resistance. According to some published reports last year, Wal-Mart had checked out spaces vacated by Circuit City and Virgin Megastore in Manhattan's Union Square and had shopped for space along Sixth Avenue in Manhattan's Chelsea district.

Wal-Mart's closest stores to New York City are in Secaucus and Kearny, N.J., just a few miles from midtown Manhattan. The retailer's closest store in New York state is in Valley Stream on Long Island, roughly 15 miles away.

One metropolitan New York location, however, shows how a Wal-Mart store might look if it comes to the metropolis. The chain's 180,000-square-foot discount store in downtown White Plains, N.Y., about 20 miles from midtown Manhattan, is vertically configured to fit on two floors of a remodeled nine-story building.

"This store represents an excellent example of how well the Wal-Mart concept can fit into an urban setting," Steve Mitchael, director of design for Wal-Mart's North-Central division, stated when the store opened in July 2006. At that time Wal-Mart had about 20 multilevel stores and was planning to open at least another 50 over the next several years, according to published reports.

Stores formatted to fit sites in cities — not just New York — could be a lucrative growth avenue for Wal-Mart, according to retail analyst Mark Miller of William Blair & Co.

"We believe urban markets represent a significant opportunity for Wal-Mart, and we estimate smaller formats can provide returns that are well above the cost of capital," Miller wrote in a research note in response to a Wall Street Journal article this week titled "Beyond the Big Box: Wal-Mart Thinks Smaller."

"Wal-Mart estimates that the urban U.S. sales opportunity ultimately could be as large as the company's overall international business — i.e. more than $100 billion annually," Miller stated.

*Editor's Note: Analyst comment added to article on April 28.