Wal-Mart plans supercenter in Tempe

The Mervyns department store at Rural Road and Southern Avenue in Tempe will close to make way for a Wal-mart Supercenter.

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Officials with both companies said the transition will happen sometime next year.

Delia Garcia, a spokeswoman for Wal-Mart, said the store will open by fall 2008 inside Mervyns’ building, which is about 86,000 square feet. She said typical Wal-Mart Supercenters range between 100,000 to 200,000 square feet.

“So, it’s going to be smaller than your typical Supercenter,” she said. “We’re restricted by the size of the building.”

Due to the size restrictions, Garcia said the store would not have a drive-through pharmacy and a tire and lube center. It also may exclude a garden center, but it will include groceries, she said.

Diversified Partners, the company that owns the remaining real estate that includes a 99¢ Only Store, didn’t return phone calls on Monday.

Katie Winter, a spokeswoman with Mervyns, said the store lease will last through May 2008. She added that the company, which didn’t own the property, is searching for an alternative location. “We were in the process of renegotiating the lease when we learned that Wal-Mart purchased the building,” she said.

Winter said Mervyns, which is based in the San Francisco Bay area, intended to find an alternative location in the area but didn’t offer specifics.

She said Arizona remains a core growth market for the company, which is planning to expand here.

The company, which operates 255 locations in 13 states, has 15 stores in Arizona.

“It’s our second biggest market actually, next to California,” she said.

Garcia didn’t know exactly how many employees the new store would employ, but said supercenters of similar size hire 250 to 350 workers.

The new supercenter will compete with a neighboring Fry’s Food & Drug Store that resides across the street on Rural Road.

Tom Rex, an economist with Arizona State University’s W.P. Carey School of Business, said Fry’s would likely be able to withstand the pressure, but “certainly they’re going to be effected by it.’’

“Fry’s is a strong competitor,” he said. “They’ve got a lot of loyal customers. A good portion of (them) will probably just stay.”

Officials from the Kroger Co., Fry’s parent company, seem to be undaunted by a Wal-Mart’s growing presence in many of its major markets.

Kroger spokeswoman Kendra Doyel wouldn’t comment on the new Wal-Mart and

what it may mean. But in a March conference call, Chairman and CEO David Dillon said of 1,262 supercenters competing with his company, 1,000 are operated by Wal-Mart, representing a 125-store increase over the previous year. Still, Kroger continues to make gains in many of those markets, he said.