When the new Walmart Supercenter opens in Ceres on Friday, it will be the culmination of more than a decade of development plus a showcase for everything the retail giant has learned about what gets shoppers into its stores.
The 187,000-square-foot store will offer consumers a greatly expanded grocery department, with a supermarket-size selection of fresh fruits and vegetables. The center’s food selection rivals that of standalone groceries with its own deli for sliced lunch meats, prepared hot foods, in-house bakery items and more.
The new store also will offer more self-checkout lines and exclusive Walmart+ membership express lines. Plus, the center was designed with a new drive-thru pharmacy and covered parking stalls for online order pickup.
Indeed, the store’s online ordering capacity has been bulked up considerably, in part because of the expansive grocery selection, which will now be available for same-day pickup. The store has 99 employees — about a quarter of its workforce — dedicated to shopping for and preparing online orders. The old Ceres store had two people working online orders.
Still, as a sign of the times, the store’s grand opening has not gone on without a hitch. The plan was for the Supercenter to open Nov. 17, but Walmart representatives said ongoing supply chain issues meant some merchandise shipments were delayed. So in an effort to open without several empty shelves, the date was moved back two days.
Along with its upgrades and increased selection for shoppers, the long-awaited new center already has attracted other retail developments to the intersection, with hopes of more to come. Still, along the winding 14-year-road to opening day, the retail landscape and consumer expectations for big-box retailers like Walmart have changed significantly.
While Walmart had a flurry of area store openings in the late 2000s and mid-2010s, new stores have been few and far between for it and other big-box retailers in the region in recent years. E-commerce has gained steadily on traditional brick-and-mortar retail, a trend only hastened by the pandemic.
E-commerce jumps during pandemic
In 2020, U.S. consumers spent spent 32.4% more on online retailers than the year before, according to data from the U.S. Department of Commerce.
As the new Walmart prepares for its Friday opening, shoppers likely will have to wait a long time before another big-box retailer opens a store in Stanislaus County.
Indeed, as shopper habits shift online, the demand for fulfillment centers and distribution warehouses grows as the rush to build new stores slows. CoSol Commercial Real Estate partners Tom Solomon and Tim Bettencourt founded their company in 1987 and have seen the ups and downs of the region’s commercial retail market.
The big-box retailers “are competing with online retail. And every year, they’re getting more and more gun shy about opening new stores. I don’t think we’re going to see a huge demand for that in the future,” Solomon said in a joint phone interview with Bettencourt for The Bee. “But you will see Walmart and Target and the rest continue to ramp up online business. They’re going to cater to that and make it available.”
Walmart opened a series of stores in the region starting in 2008 with the new Supercenter on Modesto’s McHenry Avenue and including two smaller Neighborhood Market locations (one in Modesto in 2012 and one in Turlock in 2013). The last Supercenter to go up in Stanislaus County was the Patterson location in 2013.
New retail store models emerging
While the new Walmart offers shoppers the tactile experience not available in e-commerce, economic experts say consumers should expect fewer big-box store openings and more experimentation from major retailers.
Jeff Michael, the director of public policy programs at Pacific McGeorge School of Law and former executive director of the Center for Business and Policy Research at the University of the Pacific, said while some store models will go big like the new Walmart — as a one-stop shop for household, grocery and other needs — other stores will be smaller.
Walmart already has launched its Neighborhood Market, a smaller grocery store model, in Modesto and Turlock. Other retailers have pivoted to “dark store” models, which means instead of being open for public shopping, a store is used as a home base for online sales. They’re a form of sometimes smaller regional warehouse, where employees shop and prepare orders for pickup or delivery.
“We’re going to see a lot of different models. Some retailers are experimenting with smaller format stores, particularly in larger urban areas and not just using the suburban big-box mode,” Michael said in a recent phone interview. “We’ll see a lot of different notions and aren’t sure how it’s all going to play out yet.”
What is known is that some of the larger vacant retail spaces, including empty big-box retail and other midsize spaces, have been having a difficult time finding tenants.
The struggle to find tenants
In Ceres, the former Kmart building just off the busy Highway 99 exit on Hatch Road has sat empty for three years. Plans were approved in October to convert the 84,000-square-foot building into a new self-storage facility. The new development also will build new, smaller commercial retail buildings in front of the existing structure, including a new Dutch Bros Coffee kiosk and Raising Cane’s fried chicken franchise.
Indeed, public storage operators have scooped up some high-profile empty retail spaces in Stanislaus County recently. In addition to the Kmart site being converted into a Public Storage self-storage facility, two vacant buildings on Modesto’s McHenry Avenue are become new indoor self-storage facilities for U-Haul.
And even those who once strongly opposed the arrival of more big-box stores, including Stockton-based attorney Brett Jolley, who represented Citizens for Ceres against the Walmart Supercenter, say the same fights over the issue haven’t happened recently. Jolley, who has represented clients fighting Walmarts in 10 other cities including Lodi, Tracy and Sonora, said it’s largely because the company isn’t starting a lot of new construction projects.
What he called the “explosive expansion” of the corporation into California from the early 2000s to 2010s has largely stopped.
“As the economy has changed, and Walmart has seen increased competition on the digital front from the likes of Amazon and other online retailers, and competition on the brick and mortar side from mini discount stores like Dollar General …. Walmart seems to have substantially slowed its growth in California,” he said in an email interview with The Bee. “I am not involved in any litigation against Walmart at this point, and, to my knowledge, very few new Walmart Supercenter projects, if any, have been approved in the state the last several years. Ceres was one of my last Walmart cases.”
Residential growth, retail growth tied
Part of that is because the lack of housing growth in Modesto and the surrounding area. Solomon and Tim Bettencourt, whose CoSol Commercial Real Estate has been operating for more than three decades, said they wouldn’t expect a Walmart or Target or other big-box retailer to stick it out 14 years for a future store project.
“Quite frankly, this area hasn’t grown. We haven’t grown in any fashion whatsoever and specifically residential (growth) to justify new neighborhoods where can put those sort of stores,” Solomon said.
While there’s been public interest and hopeful rumors about trying to attract a Costco to Riverbank’s new Crossroads West shopping center and subdivision, which would expand upon the successful Riverbank Crossroads shopping complex, there’s been no official movement on the development yet. But the CoSol business partners said any move like that would still be “a ways off.”
“I don’t even think, if you had every home built out in Tivoli (a new planned 454-acre housing development in northeast Modesto), I’m not sure that’s enough for these guys to say let’s go build another store out there,” Bettencourt said.
What the region might see instead of new big-box stores being built is the continued proliferation of warehouses and distribution centers for the online shopping side of many online giants from Amazon to Walmart and beyond. Stanislaus County already has a number of fulfillment centers along its western edge, in cities like Patterson.
This year, Amazon announced plans for a million-square-foot fulfillment center in Turlock, the first Amazon facility to be built in Stanislaus County. The facility is expected to hire 1,000 workers to staff the site, which is slated to open in 2022.
Indeed Solomon, of CoSol Commercial Realty, said that in the near future, we’re more likely to see another distribution warehouse open from major retailers like Walmart or Target than another of their stores in Stanislaus County.
“I think the biggest underlying thing is that there hasn’t been any growth in the last 15 years,” he said. “So if they had to do it all over again, would Walmart make the same decision today about building a Supercenter here? I question whether they would.”
This story was originally published November 18, 2021 5:00 AM.