Wal-Mart abandons piggyback proposal

By Andrew Gomes
Advertiser Staff Writer

Wal-Mart Stores Inc. has ceased negotiations to purchase the "Ke'eaumoku superblock" near Ala Moana Center on which it planned to build a Wal-Mart topped by a Sam's Club.

The value retailer, which struck a deal to buy the 8.5-acre property in January 2000, let a purchase contract expire this month, but at the time said it was continuing talks and still hopeful of reaching a new agreement.

Yesterday, representatives of the Arkansas-based retailer and the kama'aina landowner said negotiations have fallen through.

A representative of the Wichman Family Trust, which owns the parcel bordered by Sheridan, Makaloa, Rycroft and Ke'eaumoku streets, said they considered the deal dead.

Jon-Eric Greene, a broker representing Wal-Mart, said that negotiations to advance the deal are no longer active, but added that Wal-Mart remains interested in the site.

Wal-Mart officials did not respond yesterday to a request for comment.

In a recent interview, a Wal-Mart spokeswoman said undisclosed issues inhibited the company from completing the purchase April 4 as expected.

A Wichman official said Wal-Mart expressed concern about sales projections for Sam's Club, though the spokeswoman for the retailer said she was not aware of that concern.

Local retail analyst Stephany Sofos of S.L. Sofos & Co. said stacking a 150,000-square-foot Sam's Club on top a 150,000-square-foot Wal-Mart was ambitious.

Indeed, the company, the world's largest discount retailer with more than 3,000 domestic stores including almost 500 Sam's Clubs, had never built stores one on top of another before.

"Historically, it has been very difficult to do vertical shopping," Sofos said. "It has always been hard to get shoppers up to second levels."

But Wal-Mart had to, if its planned purchase was to pay off, according to Sofos, because 8.5 acres of prime land in the center of Honolulu valued at $35 million is much more than Wal-Mart is accustomed to paying.

Wal-Mart had anticipated building the double-decker stores and having them open in 2002.

Many nearby retailers who feared their prices would come under assault by the big-box discounter are relieved that Wal-Mart's plans have fallen through. So are residents who envisioned traffic nightmares in the area.

Other consumers who welcomed more shopping convenience and competitive prices from a centrally located Wal-Mart/Sam's Club are disappointed, as are some retailers who anticipated extra business from Wal-Mart's customer traffic.

"We were actually looking forward to Wal-Mart moving in," said Dean Okamoto, electronics manager at Sam Sung Electronics on Ke'eaumoku Street. "We were hoping to get a lot of cross-shopping."

Wal-Mart operates three stores on O'ahu (a Sam's Club in Pearl City and two Wal-Mart stores in Mililani and Kunia.)

Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser.com