Walmart aims... small?

The Lempert Report
August 12, 2014

Walmart will build around 300 small stores this year.

Walmart is making a push for the smaller store. 

As one of the dominant supercenters Walmart has, according to a recent article in Supermarket News, seen U.S. same-store sales be largely stagnant. As a result, the retailer is for the first time, moving away from the big stores and building more small stores.

Walmart will build around 300 small stores this year (two-thirds of them the food-and-drug focused Neighborhood Market stores, the rest the 12,000-square-foot Express format, which takes direct aim at dollar stores). Longer term, Walmart envisions up to 1,000 Neighborhood Market stores and potentially 5,000 outlets for the Express format. 

Why is this?  Smaller stores have developed more effective counter strategies, as well as narrowing the pricing gap with Walmart.  Add this to their list of other advantages, convenient locations and fresh selections and they are beating the supercenters.  Walmart’s U.S. CEO, Bill Simon,  recently noted that 11,000 such smaller outlets have opened against Supercenters over the last three years alone — and with price deficits closer to 5% than the 15% that they used to be, they are just more appealing to the consumer than driving out to a supercenter. 

 With ever grow e-commerce the smaller Walmart’s can still over everything a supercenter can, by simply being linked to a larger outlet through the internet.  

So what will this mean for the future of the superstore? Will they survive? Walmart expert Dave Marcotte of Kantar Retail told Supermarket News;  “this is the same thing we said 20 years ago about department stores. Everyone said they were going to go. What happened was the weak ones did. The not-so-weak ones got together under Macy’s. The specialized ones like Nordstrom got better.”