Wal-Mart Sees Big Growth Through Small Stores
It is certainly not the first time that the topic of Wal-Mart
opening small stores has come up, but a Financial Times report that
the retailer is scouting locations between 20,000 and 50,000 square-feet in
markets across the country has many people thinking this could be a game changer.
has Wal-Mart opening more of its Neighborhood Market grocery formats along
with its smaller Marketside by Walmart concept. The company is said to be looking
at locations in Chicago, Detroit, Los Angeles, Reno, Sacramento and the San
Francisco Bay area.
Bill Simon, CEO of Wal-Mart Stores’ business in the U.S.,
has also indicated that the company may open a convenience concept based on
those it operates in Latin America.
"We are going to beg, borrow, steal and learn from them as quickly as
we can," said Mr. Simon.
Brian Sozzi, an analyst with Wall Street Strategies,
wrote in a research note that any move by Wal-Mart to smaller stores was both "wise
and long overdue."
Mr. Sozzi said opening stores in urban markets would
give the discounter access to higher income consumers who "could be tapped
for sales of gross margin enhancing categories." A smaller store could
also be used to bring in "customers
more than once every two weeks when paychecks are distributed" to drive
Mr. Sozzi said Wal-Mart was likely to go about building its
small store base from the ground up and discounted it acquiring a chain such
as Rite Aid, which is reportedly on the block.
"Rite Aid’s store size is on average an 11k square-foot box, well shy
of what will be optimal for Wal-Mart to achieve its ambitions with a new concept," he
The Financial Times piece reported that Target is also looking
at a smaller footprint model. The publication cited commercial real estate
executives, including John Bemis at Jones Lang LaSalle, as saying Target was
scouting 20,000 square-foot stores.
Discussion Question: What will a small store concept
developed by Wal-Mart mean for the company and its competitors?
lines up sites for smaller stores – Financial Times (reg. required)
- Wal-Mart to aggressively roll out smaller stores – The Associated Press/Salon.com