(Feb. 10) Produce vendors that deal with Wal-Mart Stores Inc. soon will have even more stores to supply and, apparently, more pressures under which to operate in meeting the needs of the world’s largest retailer.

Bentonville, Ark.-based Wal-Mart, since 2001 the largest grocery retailer in the U.S., says it plans to open more than 1,500 stores in the U.S. in the next few years and is on target to open 335-370 new units this year.

The company also said it wants to focus more on product quality, while maintaining its reputation for price points.

The company also wants a stronger presence in the urban cores of major cities, said Bruce Peterson, Wal-Mart’s senior vice president and general merchandise manager of perishables.

“Clearly, as Wal-Mart brings our value proposition to customers in more urban areas, it gives the opportunity for more customers to purchase produce at Wal-Mart,” Peterson said Feb. 9. “And, in the broad context, we can offer a value proposition that is very appealing to a broad consumer base, so we can potentially create consumption increases in traditional urban areas.”

For produce suppliers, that could translate into more opportunity for profits — and more sweat, said Neil Stern, a partner in Chicago-based retail consultant McMillan/Doolittle LLP.

“I think it’s going to be really interesting for Wal-Mart,” Stern said. “You’d think that means they’re going to be growing and expanding into organic produce or other items. It would seem to be at odds with their desire to be the low-price guys. It will be interesting to see how this thing plays out."

Wal-Mart set a company record for store openings in 2005, with 341, John Menzer, the firm’s vice chairman, said during a Webcast Feb. 7.

Wal-Mart is not going “upscale,”Menzer noted.

“We are looking at the customers who are already in our stores but are not shopping in our entire stores,” Menzer said.

Wal-Mart operates about 3,200 stores, about 2,000 of which are supercenters.

Menzer noted the company opened 69 stores in January, including a supercenter a block outside the Chicago city limits. That opening drew national headlines, as some observers saw it as a victory for the company over union groups and politicians that had fought to keep Wal-Mart outside the city of Chicago.

“We are really focused on opening new stores right now,” he said. “We see so many opportunities to open new stores that that’s where our capital is going first.”

Stern noted the success of the new Chicago-area operation in Evergreen Park, Ill.

“They had a record number of applicants,” Stern said. “That’s in a lower-income area that not only was under-served from a retail standpoint but also from a job standpoint. It’s a classic situation where Wal-Mart can do some good but, again, there’s conflict between Wal-Mart and the unions. It’s a fine line you walk there.”

Peterson said Wal-Marts in more urban settings would require the chain to tailor each store’s produce offerings to a particular neighborhood setting.

“They key issue is having the right (stock-keeping units),” he said when asked whether more stores would translate to bigger product assortment. “An urban customer is not a homogeneous description of consumers who live in an urban area. Age, ethnic background, income level and family size all vary from market to market. Our job in produce is no different than our job in the rest of any store, namely, to match our assortment to the customer base. In some urban markets, organics is a bigger deal than in others. So, our assortment will reflect that. But the same can be said for pack sizes, varieties and other areas that the customer is interested in.”

More Wal-Marts translate to more opportunities for produce suppliers, said Ed Odron, president of Produce Marketing Consultants, a Stockton, Calif.-based retail consulting firm.

“They’ll be increasing their business with Wal-Mart,” Odron said. “So, it’s good for the suppliers that are in with them, with all the products they supply them. But for the stores that lose business to Wal-Mart, it will hurt those suppliers.”

The company’s growth strategy is not a surprise, Odron said.

“At one point, they thought they’d be opening up 75 new stores in California, but that hasn’t happened, with all the issues they’ve run into,” he said. “The reality is, it’s difficult to break into some of these towns and cities that put up these obstacles. But, they’ve made some progress.”