Walmart to convert Express stores to Neighborhood Markets
When it comes to shopping at a Walmart Express or a Walmart Neighborhood Market, consumers are pretty much motivated by the same things — quick shops and fill-in visits. So, even though the convenience store-sized Express locations are much smaller than Neighborhood Markets, Walmart doesn’t think consumers will be thrown by its decision to mothball the Express banner.
"All 21 of the Express formats and all future small formats will bear the name Neighborhood Market. It’s a widely known and accepted brand that consumers can easily identify with," John Forrest Ales, a spokesperson for Walmart, told The City Wire.
Walmart has made clear that it sees great opportunities to capture customers with smaller stores strategically positioned between its supercenters or in areas where there is not enough space to open larger stores. In the last quarter, Neighborhood Market stores posted a 5.6 percent comp increase even as Walmart’s total same-store numbers in the U.S. were flat.
Discussion Questions
Is Walmart making the right move converting its smallest store format (Express) banner to Neighborhood Markets? What do you think is the motivation for Walmart’s decision?
I think this is a great sign that Walmart is no longer constraining itself to two cookie-cutter formats—one 10,000 square feet and the other 40,000 square feet. By branding the two smaller formats the same, Walmart likely will flex the sizes of its smaller formats to fit the particular community needs and desires, as well as improve the selection of potential sites to choose from.
Also, there’s only around two dozen Express stores, so the risk of shopper confusion is pretty minimal.
I assume that test results in the two formats drove at least some of this decision, and Walmart would probably prefer to manage fewer brand formats. “Neighborhood Market” is a more marketable idea than “Express” on a national scale, and the small number of Express stores probably made the decision even easier.
Again we get back to this fetish about how fast we can get customers out of the store. That’s the energetic implication of the word “express.” So dropping that expression is a very good idea. IMHO I’d drop the word “market” as well—it is kind of redundant with the brand Walmart isn’t it? I’d call it simply “Walmart Neighborhood.” It’d be the place where everyone knows your name!
I don’t think a name change will confuse consumers, the key word in the name is Walmart. If consumers can find what they want, at attractive prices, they will continue to patronize the stores. Walmart did this to consolidate its brands under a more friendly moniker. Neighborhood Market has a warmer feel and a more local sense than Express.
Expanding their Neighborhood Market format can help the company grow. Many urban consumers do not have easy access to a Walmart Supercenter. More Neighborhood Markets can also help Walmart’s e-commerce efforts by providing more pick-up locations.
Yes, the Walmart Neighborhood Market is good for the smaller urban stores. The difference in size won’t matter for local shoppers, and provides flexibility in layout to fit into existing retail spaces.
Simplifying makes sense for operations and marketing. The Express name might have been identified as a convenience store concept by shoppers, instead of the more inclusive Walmart Neighborhood format.
We are talking about brand here. Which is friendlier, Neighborhood or Express? Go with the friendly. Better yet, I like Ian’s idea. Walmart Neighborhood.
And, to last week’s discussion regarding buying a position in the dollar store segment: Build your own and don’t buy the other guy’s problem. Data says this is where the business is, rather than dollar, or even convenience for that matter. Start from scratch and build a better option.
This was a case of brand over-extension. As the article pointed out, the two formats were basically seen by customers as the same—a place for fill-in goods. Combining them under the Neighborhood market banner extends its brand recognition, states clearly what customers should expect from a shopping experience, etc. The same would not be true if they elected to extend the Neighborhood name over the new To-Go format.
Simplifying the Walmart name on the banner in these smaller boxes permits Walmart to represent the fact that Walmart is focused on location and convenience for the consumer. Neighborhood Market says it nicely. Walmart has the purchasing power to hold pricing in line in these boxes as well, which they very effectively have done.
In addition, the Neighborhood Markets are stocking solid quality goods. Selection is more limited in a smaller box, but the consumer understands that challenge. Living in suburban or rural areas they see the limited selection of merchandise in c-stores. In cities, the same is true with smaller grocery stores.
Walmart’s move delivers three of the top four reasons that consumers shop a particular grocer—location, price and quality. And the selection is solid—in boxes this size, you can only have so many people seeking the 12 pack of Coca-Cola, Chobani yogurt, or frozen pizza, but they are available at the Neighborhood Market/Express operations. Good move.
Walmart’s decision to convert its Express format into Neighborhood Markets might be because the strength of Walmart’s overall consumer appeal has nearly reached saturation. If true, I doubt if Bentonville will admit that.
To be invincible, Walmart has to find ways to increase its sales and at low cost against the onslaught of effective small-store competitors. The belief that Neighborhood Market is their best roadway to that objective seems to be the reason for dropping Express. But who really knows what the crystal ball is telling Bentonville’s top retail strategists?
I have always thought Neighborhood Market was the better name and am glad to see Walmart make this move. Neighborhood Market just captures what these stores need to be, in a way that Walgreens or 7-Eleven never can.
I’m also intrigued that I find myself in rare disagreement with Ian Percy. (Sorry Ian!) If I dropped anything from the name, it would be Walmart—not Market. Walmart has some intrinsic qualities, just like Walgreen’s and 7-Eleven do. Neighborhood Market says “my local grocer” to me. And I like it for what Walmart and others are trying to accomplish with their small store formats (or expansions into food ala WAG and the dollar stores).
Building Neighborhood Market as a stand-alone brand might require a bit more marketing investment. But with a store format that by design is meant to be ubiquitous in presence, well—presence is 90 percent of the battle. Let the building begin!
I don’t think anyone cares from a consumer point of view what the name is. From a corporate position, a smart move building on a unified brand.
Frankly, as a shopper I would want the store to cater to the needs of the neighborhood and I would be less concerned about whether it is an Express banner or not! Does the merchandise serve what the community requires?
Are they making the right move? Sure, banner names are expensive and at the scale of 21 stores, it is still capable at changing out at a reasonable cost, albeit at a cost.
The motivation is simple: it is to reduce costs, eliminate banner/brand management, and to try to attach these few stores to the name where at least they can show a small sales increase. Walmart has been short on same store year over year sales for a long time. They are looking for every area that will give that number a boost.
However, as young as the “Neighborhood” Market is, it is not surprising that they can show a 5.%+ year over year increase. While that seems great, the real question is; where are they with respect to their projections and expectations, as well as, profitability performance with these locations? I’d be wondering what trend they see there.
Right move? Yes. Motivation? Unify its brand. Greater appeal and warmth for the consumer.
I live a few minutes from a relatively new Walmart Neighborhood Market, which is located in a strongly Hispanic area. Their focus on their shoppers is superb, from product offerings to bilingual signage to hiring. If they’re using the same neighborhood strategy in their Express stores, it makes sense to change the name. And if there were an Express in the area near me, they could even change the name to Bodega. I’d retain the Walmart name to preserve identification of the Walmart Pharmacy and other specialized services.
I think it is a good idea, keeping the branding simpler. Why have multiple names for basically “not a big store”? At the end of the day, there are two types of shoppers searching: those who are searching for where the closest Walmart is and those who are searching where the closest market is. Walmart Neighborhood market communicates to people. It is not a super center, and it is smaller from an assortment point of view. Easy, simple.
In terms of Ian’s idea of calling it just Walmart neighborhood, I think the reason Walmart didn’t do it is for search engine optimization. The word market is needed when it comes to categorization and geo searching.
Yes. Standardizing the naming format avoids confusion from the consumer. Frankly, they should just call it a Walmart, and consumers will recognize that it is a smaller footprint.