3/14/2011 4:09 PM ET|
Wal-Mart tries thinking smaller
The retailer known for its giant stores tries cozier markets for shoppers in a hurry. But is the convenience worth it when supercenters are more profitable?
The world's largest retailer has begun construction on a 14,400-square-foot store in Gentry, Ark., a town of 3,158 about 20 miles southwest of the company's Bentonville headquarters, according to the permits.
While Wal-Mart has kept details of the new stores a closely guarded secret, Steve Restivo, a company spokesman, confirmed the location of the store opening and the timing.
Work on similar stores in nearby Prairie Grove and Gravette is also expect to begin this month, said town officials. Each new store will feature a pharmacy and a grocery section.
"Wal-Mart's U.S. store fleet is designed for yesterday's retail wars," said Craig Johnson, president of Customer Growth Partners in New Canaan, Conn. "If they want to capture their rightful share of today's shopping trips, they have to have a smaller format. God bless supercenters, but they are not designed to get in and out of within five minutes."
Mike Duke, Wal-Mart's chief executive, is seeking new avenues for growth in the United States as comparable-store sales in the company's namesake stores have fallen for seven consecutive quarters.
The retailer plans to open as many as 40 smaller units this year in rural and urban areas, and executives said in February that the first Express store would open as early as May.
Wal-Mart's U.S. chief, Bill Simon, has said that "there are hundreds, if not thousands of opportunities in the U.S." for stores that are smaller than the retailer's supercenters, which accounted for 76% of Wal-Mart's U.S. locations as of Jan. 31.
The Express stores, concrete square boxes with metal roofs, will cost $1.2 million to build and sit on lots just under 5 acres, according to building permits filed in Gentry and Prairie Grove, which has a population of 4,380.
The stores will have 75 parking spaces, a pharmacy and three or four checkout counters, said Jackie Baker, Prairie Grove's building and planning director.
Wal-Mart supercenters average 185,000 square feet with about 142,000 items, according to the company's website. Supercenters typically have as many as 800 parking spaces.
Sections for fresh produce, refrigerated foods and frozen items will go down one side and along the back of the Express store, Baker said in an interview. The store will have about a dozen aisles, according to Gentry's city superintendent, David McNair.
It's not clear from the planning materials how much of the product assortment will be groceries compared with general merchandise. Groceries accounted for 51% of Wal-Mart's $258 billion in U.S. sales in fiscal 2010, according to company filings.
McNair said that when he first saw the layout, Wal-Mart's sponsorship of the project was not disclosed, with the plans calling the project simply "Retail Store."
Wal-Mart has tried smaller stores before. In 1998, it launched Neighborhood Market, a 42,000-square-foot food-and-drugstore combination, but that format did not deliver the return on investment provided by the supercenters, according to Maggie Gilliam, a retail consultant.
"Large stores are inherently more profitable than small ones," said Gilliam. "The supercenter is one of the greatest retail concepts ever created by mankind."
In 2008 in Arizona, Wal-Mart rolled out the Marketside concept -- stores of 15,000 square feet that focus on fresh food and prepared meals. In 2009, the company converted two Neighborhood Market stores in Houston and Phoenix into Hispanic-themed grocery stores called Supermercados de Walmart, offering such items as sweet Mexican-style breads and fresh corn tortillas.
As of Jan. 31, Wal-Mart had two Supermercados, four Marketside stores and 182 Neighborhood Markets.
Internationally, Wal-Mart operates a broad range of smaller stores, particularly in Latin America. Simon has said that Wal-Mart's smaller U.S. stores will draw upon what the retailer has learned abroad.
This article was reported by Matthew Boyle for Bloomberg Businessweek.
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For those of you who think buying American is too expensive...quality comes with a price as does your job. You do not want to have a job, keep buying stuff from China, Japan, Sri Lanka wherever foreign stuff is made. If you want to keep your job, focus should be placed on buying American Made. Everything funnels down when it comes to your job so do not feel as if you are immune. No Jobs, No Money. One example, although expensive...compare the quality of Kitchen Aid to the other foreign made stuff. Kitchen Aid (most made in America) has quality that surpasses the foreign made appliances.
For those of you worried about the dollar bill, just because it is cheap is not why you should buy it. Walmart has captivated on that idea and is why it sells so much stuff made from China.
Best Buy is also going the way of Walmart. Look at all the DYNEX junk. Talk to the people who fix DYNEX and see if you buy DYNEX ever again. Kroger? See the pattern? I Digress.
There has to be a shift of thinking that just because it is cheap does not mean you should buy it. Better yet, learn to do without. Entitlement is a false idea. No one is entitled to anything. No one is entitled to a car or a house (roof over your head). No one is entitled to a job. No one is entitled to anything. Nothing is guaranteed except death, taxes, and the return of Jesus Christ.
All American store import products from foreign manufacturers.
Target, JC Penny, Sears, Ross and other stores all stock products made in China!
To say that one store sells these products and to give the impression that others don't is pure and simple bias and i shopper gnorance.
I've read the comments here & must say I agree & disagree. Dollar stores?! You're kidding right?! I priced a gallon of milk yesterday there @ $4.84 & next door @ Safeway it was regularly priced @ $2.79. Not much of a bargain is it?
I must say I laughed @ the article when it said these new "express" stores would only have 3-4 checkouts. That's all the super Walmart's have open @ one time anyway!
A super Walmart is NOT meant to go in & out of fast because you can do shopping for EVERYTHING. DUH!
Please tell me where I can buy American made products. The Dollar stores everything EVERYTHING you pick up is made in CHINA!
We have two family dollars, two new Dollar stores.
We have 3 very large Grocery stores, Fries, Safeway, and Food city. all good clean stores with great fresh produce. The bakeries are excellent too. Many items are cheaper, and better in our Markets than Walmart.
Produce is not great in Walmart, and way over priced.
I have had two cakes mouldy on the bottom. I have had spoiled pies, and so has my neighbor. The bakery items are not made fresh in the stores. The make up is usually all smashed and messy fromTeen shoppers. Clothes are junk, and not stylish, also too many things for teen agers....and everything seems to cater to the Mexican people styles. Hardly any shoes anymore. Ladies underwear have gotten so tacky, and no selections. Slippers and night gowns are made for seniors, I am one and wont wear that crap.
Good costume jewelry selections.
Good glutton free products section.
Best Coffee ever ....store brand...it can not be beat.
Great frozen food sections.
Garden shop nice....but no Home Depot to be sure....
Nice to see that both Wal-Mart and Target are making the move to finally bury the rest of Main Street middle class retail shop owners in this country. (/sarcasm)
Because all we need are more cheap chinese goods peddled with no benefits horrible wages, and any profit given over to a grossly overpaid corporate suit and his A-hole buddies in the boardroom while they figure out creative ways to screw most shareholders.
These places are getting to the point they just need to be rounded up and die in a fire.
Instead of worrying about competing with Dollar General and Family Dollar stores, which is what these “express” stores are designed to do, Wal-Mart should be more concerned about the stores they already have. Here in our London, Kentucky Wal-Mart, you can stand in line as high as 20 minutes just to check out. I used to shop early in the morning, but now they only have one cashier and I stopped going when I was late to work a few times. Add to that the fact that they have stopped carrying products that I’ve purchased there for years, there is no selection as far as clothes or shoes, even the basics, which is what I usually purchased there, and customer service is non-existent. You go in the store and will see lots of employees hanging around talking to each other and they can’t put one of these people on a register? I would say I spend probably a third of what I used to spend in Wal-Mart and it is about the store and not the economy. You can complain all you want, but you will get no results, because I’ve tried.
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