Erin Hallissy, Chronicle Staff Writer

Wal-Mart will move into an abandoned Macy's at Hilltop Mall in Richmond, a move cautiously applauded by city officials who say the mega- retailer will bring the city as much as $700,000 in new sales tax revenues.

Steve Duran, the city's community and economic development director, said Wal-Mart could help attract customers to the mall and even help surrounding shopping centers that have sprung up since hundreds of new homes have been built in the past few years between Richmond and Hercules.

"I think it's going to increase traffic in the whole Hilltop area, and probably attract more businesses,'' Duran said Friday.

Still, he and others noted that Wal-Mart critics had accused it of ruining smaller local businesses that cannot compete with its "everyday low prices.''

"The theory that this is a zero-sum game and Wal-Mart sucks business away from smaller stores seems to be a proposition that has some credibility,'' said Richmond Councilman Tom Butt, who is taking a "wait-and-see'' approach to the store. "But it seems to have more credibility in a small-town mid-America environment than a complex urban area. I think only time will tell.''

Wal-Mart is taking over a 150,000-square-foot space that was vacated by Macy's seven years ago when that store moved into an old Emporium in the same mall.

Wal-Mart spokesman Kevin Loscotoff said that it was not unusual for Wal- Mart to open in a mall, although it has mostly stand-alone stores. The Richmond Wal-Mart will not be a super-center -- stores that are controversial because they include a full grocery section.

Loscotoff dismissed fears that Wal-Mart would take business away from other stores.

"All these doom-and-gloom predictions just haven't come to fruition,'' Loscotoff said.

Duran said he didn't believe that the new Wal-Mart, which did not need approval from the City Council because it's going into a retail area, would hurt other businesses.

"The population is growing, and retail follows residential growth,'' Duran said. "Hopefully there will be enough business for everyone.''

Wal-Mart needs to renovate the existing three-story store at Hilltop and build a new garden center adjoining it. Loscotoff said it would probably be open by the middle of next year.

Along with Wal-Mart, Richmond officials are pleased that Target plans to build a new store at a long-abandoned Montgomery Ward store on MacDonald Avenue, which will also bring more revenue to a city that had a $35 million deficit last year.

"Those sales tax revenues should translate into restoration of city services,'' Duran said.

E-mail Erin Hallissy at ehallissy@sfchronicle.com.