The produce is fresh and the entrance is framed with a welcoming archway of green, white and yellow balloons. Each aisle is marked with a sign advertising green beans or coffee or cookie dough at an "Everyday Low Price."

Wal-Mart has arrived. Again.

The nation's largest grocer opened another store in greater Sacramento last week, a Neighborhood Market on Elk Grove Boulevard. It's the fourth new store in two months as Wal-Mart tries to swamp Sacramento's grocery market with nonunion labor and unrelenting discounts.

The strategy is working. In six years, Wal-Mart has gone from barely visible in Sacramento's grocery industry to a resounding 14 percent market share. It just overtook Safeway Inc. as the No. 2 grocer in Sacramento and is making life miserable for the market leader, Raley's of West Sacramento.

Raley's workers are on strike in a dispute over the grocer's demands for lower labor costs. The company says it is losing millions of dollars a year because of nonunion competition.

The tumult isn't surprising, given Wal-Mart's ability to gobble market share in city after city, said New York retail consultant Burt Flickinger III.

"Wal-Mart has created tremendous havoc," he said.

Especially in Sacramento. Wal-Mart runs 14 grocery stores between Dixon and Lincoln, including 10 Supercenters that combine food and general merchandise.

"Wal-Mart is making a major run at that market," said Bob Reynolds, a supermarket consultant in Moraga. He said Sacramento has become one of the most competitive grocery markets in the nation.

Shoppers are responding.

"It's price and the fact that it's nice and clean and new," said Betty Hall, who shopped the Elk Grove Walmart the other day.

She and her husband, John, still shop at Raley's Bel Air subsidiary, which has a store two miles east. They like the meat there better.

"They've served us well for many years," Betty Hall said. "But this (Walmart) is a place we'll come back to."

At a Raley's three miles away, striking workers talked about Wal-Mart with disdain.

"Raley's does offer higher quality products, higher quality service," said Doug Troutman, who was coordinating picket-line activities. "There is a premium for that – you get what you pay for."

Wal-Mart wouldn't comment on the Raley's strike but makes no apologies for its growth in Sacramento.

"Our goal is to serve our customers, expand access to ... affordable, fresh groceries and give consumers an option," said spokeswoman Delia Garcia.

It's not just Wal-Mart, of course. Target is making a big push to sell groceries, and companies such as Sprouts and Fresh & Easy have added stores in Sacramento. Drugstores have grocery aisles. WinCo Foods' warehouse outlets are big competitors.

But none can match Wal-Mart's out-of-nowhere impact on Sacramento. Its market share has jumped from 3 percent four years ago to 14 percent earlier this year, according to Scarborough Research.

In that same time, Raley's share has fallen from 27.6 percent to 22.7 percent, including Bel Air and Food Source.

Raley's has seen the Wal-Mart effect elsewhere. The West Sacramento company bailed out of Las Vegas a decade ago after an unsuccessful three-year run.

"Wal-Mart forced them out of Vegas," said Nelson Lichtenstein, a labor historian at University of California, Santa Barbara. "They're particularly gun-shy about Wal-Mart."

Safeway and Save Mart Supermarkets, the other unionized chains in the area, also have lost market share in recent years. But unlike Raley's, they've been able to agree to new contracts with the United Food and Commercial Workers.

At the heart of the matter is compensation.

Labor expenses are crucial in an industry with razor-thin profit margins, and Reynolds and other experts say Wal-Mart has a clear advantage over Raley's and other union chains.

Union stores pay up to $21 an hour plus benefits, although most workers earn less than that. Garcia said the average full-time Wal-Mart employee in California earns $12.82 an hour plus benefits.

Wal-Mart opened its first California grocery store nine years ago, a Supercenter in La Quinta. It spooked the incumbent Southern California grocers and was a key factor in a nine-month strike. But since then, analysts say, Wal-Mart has struggled to make serious inroads in Southern California and the Bay Area, the state's largest population centers.

One reason is cost. Real estate in the urban centers is too rich for Wal-Mart's blood, Reynolds said.

Another is politics. Union leaders and community activists in parts of Southern California and the Bay Area mounted publicity campaigns that portrayed Wal-Mart as an anti-labor monster that drives Main Street merchants out of business. Several cities, including Oakland, passed ordinances limiting grocery sales by "big box" retailers.

Reynolds said Wal-Mart has planted stores "at the periphery of the Bay Area" but hasn't made a lot of progress.

No such problem exists in the Sacramento area, where real estate is cheaper and the retailer has run into less friction.

It hasn't always been smooth sailing – a proposed Supercenter in Lodi has been held up by court fights. Wal-Mart wanted to open a Supercenter on Elk Grove's Bruceville Road but now is planning a smaller general-merchandise store after running into lawsuits and delays imposed by city officials.

In general, though, the company has been able to expand operations in the Sacramento area.

Part of its success is due to a softer, less visible, approach. Four of its stores in greater Sacramento – all opened in the past two months – are the Neighborhood Market format. They focus exclusively on groceries and, at around 40,000 square feet, are considerably smaller than Supercenters.

The new market in Elk Grove, located in the same parking lot as a general-merchandise Walmart, isn't a full service supermarket. There's no delicatessen or butcher counter. The floral department consists of a couple dozen bouquets, clumped in containers.

But it's plenty good enough for shoppers like Christine Lao.

"It's pretty neat, it's convenient," she said as she left the store the other day.

A stay-at-home mother of two, Lao said she feels bad about the struggles of Raley's, where she shops occasionally. She sympathizes with the striking workers.

But the low prices draw her to Walmart.

"You have to crunch the numbers," she said. "You want to get more food, more groceries, for your money."

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