Inside This Issue - News
Walmart goes small
June 20th, 2011
GENTRY, Ark. – Walmart showed off its latest thinking in small-box retailing here, with the debut of its Walmart Express format. At just 15,000 square feet, the store is just one-tenth the size of a typical Walmart Supercenter.
The outlet in rural Gentry, Ark., a town with a population of just over 2,100 people, is one of two Walmart Express test stores that opened on June 8; the other opened in Prairie Grove, Ark. A third opened on June 15 in Ridgefield, N.C., a week later.
Next month the Walmart Express concept is set to make its debut in Chatham, a neighborhood on Chicago’s South Side.
These initial openings demonstrate the two kinds of markets Walmart hopes to crack with its Express format — rural communities too small to support a Walmart Supercenter, and urban neighborhoods where the space for a Supercenter or other big box is not available.
Speaking at the William Blair & Co. Growth Stock Conference in Chicago a week after the first Walmart Express stores opened in Arkansas, and on the day of the North Carolina opening, Walmart U.S. president and chief executive officer Bill Simon described himself as very pleased with the performance of the first two stores.
Describing the concept’s performance in basketball terms, Simon described the first two test stores — which opened in the company’s backyard — as akin to easy layup shots.
"Well, we’ve got a jump shot coming today in North Carolina, and we’re optimistic, and hopefully we’ll be able to hit the jump shot. And the real three-pointer opens next month here in Chicago with the opening of the Chatham location, which is designed to serve one of the food deserts in Chicago."
Simon pointed out that the Walmart Express is not the company’s first small-format pilot in the United States.
"This is a refinement of Marketside, which was launched several years ago in Phoenix with a very heavy emphasis on prepared meals," Simon said. "So the learnings from that format about traffic-driving elements and product assortment were built into Walmart Express. We’ve also worked collaboratively with our international operations, where they have a vast amount of expertise on effectively and efficiently operating a small format, as we do so well in Costa Rica with Pali and in Mexico with Bodega. And those formats are among some of the highest-return formats they operate in those markets.
"So we’re very optimistic that the vehicle that we’ve developed — while it’s not perfect and will need to be refined — will be a very high-return vehicle for us."
Most Walmart Express locations will have a pharmacy, and some will also sell gasoline. The merchandise assortment is similar to that of a Supercenter — including food and general merchandise — but is tightly edited, with 11,000 to 13,000 SKUs (versus about 100,000 items at a typical Supercenter).
Walmart is also inviting shoppers to weigh in on the products that should be carried in its Walmart Express stores. Shoppers can fill out a form and drop it in a suggestion box located at the front of the store, and signs throughout the store read, "If you want it, we’ll get it."
Walmart plans to open 15 to 20 Express stores by the end of the current fiscal year. The company is also stepping up the rollout of its midsize Neighborhood Market format, which has been rechristened Walmart Market.
Simon said those stores, which are typically about 42,000 square feet, are delivering returns comparable to those of Supercenters but can be approved and built in less time.
Walmart has about 185 of the Market stores in operation now and plans to have 300 by fiscal 2013 (which begins on January 31, 2012).
Walmart is not abandoning its Supercenter format, however. In fact, the company is ramping up the rollout of that format as well, with plans to open 152 of the large outlets this year, up from 135 last year. The Supercenter has long been Walmart’s preferred expansion vehicle, because of the large sales volume the stores generate.