Here Come "Malls Without Walls"

By Barbara Rudolph

Are these prices for real? Ground beef, 87 cents per lb. Oranges, eight for $1. Car batteries, $25. Videocassette recorders, $180. Yes, but that is just the beginning of the surprises. Here comes a clerk -- whooosh! -- on roller skates. And just look at these 20-ft. mountains of merchandise, from catsup to cameras, mustard to mufflers. Disoriented yet? This is the green zone, where groceries are sold. For everything from mouthwash to antifreeze, go to the blue zone. Tired? Here, sit down on one of the convenient wooden benches and sip some free cider or coffee with other weary shoppers.

What is this place? Welcome to Hypermart USA, where the floor space (222,000 sq. ft.) and the discounts are both breathtakingly huge. The suburban Dallas emporium belongs to a booming category of retail store called the hypermarket. "I've never seen so much under one roof," says Martha Mason, a homemaker visiting Hypermart USA. "I could spend days in here." Sam Walton certainly hopes so. The founder and chairman of booming Wal-Mart discount stores opened his first Hypermart USA last December as a joint venture with the Cullum retail chain. Last week he opened a second in Topeka. "It's a test," says Walton, whose 1,114 Wal-Marts are generally a third the size of the Hypermarts. But as he tells his troops, "I'm more excited about this than anything in the history of our company. This new store could revolutionize the way America shops."

A lot of competitors agree. Suddenly hypermarkets, which can cover five football fields, are springing up across the U.S. in places as diverse as New Orleans and Kalispell, Mont. The oversize stores provide the ultimate in one- stop shopping: customers can get a haircut, buy a refrigerator and stock up on paper towels in one trip. Most "malls without walls," as Walton calls them, draw crowds with an old-fashioned lure: everyday discounts. Prices are reduced as much as 40% below the full retail level. Hypermarkets make money even at such thin profit margins because they sell such an enormous volume of goods. Hypermarket sales average at least $1 million a week, compared with $200,000 for a conventional-size discount store.

While the idea of a store so big seems quintessentially American, the idea for hypermarkets comes from France. A small-town haberdasher and a grocer, taking advantage of their country's lack of American-style supermarkets, teamed up in 1960 to start the first hypermarket at an intersection just outside Annecy, in the foothills of the Alps. They named their store Carrefour, the French word for crossroads, and it was an instant success. Their prices were so low that shoppers expected them to go out of business, a rumor they gleefully perpetuated by keeping their front windows coated with whitewash. Carrefour launched dozens of outlets, as did copycats. Today France has more than 600 hypermarkets that together account for some 14% of the < country's retail trade. Carrefour, which now operates hypermarkets in Spain, Brazil and Argentina, plans to open its first U.S. outlet this week, in suburban Philadelphia. Among the store's innovations: a rubbery floor surface to ease the punishment on shoppers' feet.

While hypermarkets have spread across Canada, which has 22 such stores, they have only now become a hot concept in the U.S. One reason is that America has so many competing discount stores and supermarkets that the Carrefour concept had trouble gaining acceptance. Analysts estimate that Bigg's, a Cincinnati hypermarket opened by Euromarche, a French firm, has lost at least $9 million since it was opened three years ago. But the large U.S. chains believe they can make the idea work by selling name-brand goods at paper-thin markups. K mart announced last September that it will form a joint venture with Bruno's, an Alabama-based grocery-store group, to open a national hypermarket chain. Archrival Wal-Mart, meanwhile, hopes to open 50 Hypermart USA stores during the next eight years.

Even successful hypermarket operators will encounter limits to expansion. The sheer size of the megamarkets will restrict growth, since a city of 500,000 can support only about two stores. Also, hypermarkets may face disaffection from customers who expect assorted brands of any one product; thus well-stocked hardware stores or grocers are unlikely to be run out of business by the invading hypermart. Cases in point: Hypermart USA's sporting- goods department offers fishing poles but no lures or other tackle. The paint department sells only one color: white.

The hypermarkets are doing their best to help shoppers feel comfortable in what is sometimes a disorienting space. Dallas' Hypermart USA installed hot lines in its aisles so shoppers can get information and directions. Its bakery can churn out 20,000 tortillas a day. To make sure cranky toddlers do not prompt their parents to hurry too much, Hypermart offers a Ball Room, where parents can deposit their children to be supervised. But anyone who wants to shop in a 200,000-sq.-ft. store should remember to don jogging shoes. Says Melba Lincoln, a Dallas homemaker: "Shopping here is like running a marathon."

With reporting by Mary Cronin/New York and Richard Woodbury/Houston