Wednesday, 9 March 2011

Walmart story: Small store format

Wal-Mart to Break Ground on Small Stores Next Week

“Wal-Mart’s U.S. store fleet is designed for yesterday’s retail wars,” Craig Johnson, president of Customer Growth Partners in New Canaan, Connecticut, said in an interview. “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.”

Wal-Mart supercenters average 185,000 square feet with about 142,000items, according to the company website. Supercenters typically have as many as 800 parking spaces, according to research from UBS AG.

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.

“Large stores are inherently more profitable than small ones,” said Gilliam, who is based in New York. “The supercenter is one of the greatest retail concepts ever created by mankind.”

For Arizon case, see here

Market seems to like this debut as its stock price rises but Walmart is great for large store model and more profitable for that. Small store, I don't see this as an innovation. More cost, lower margin, ... so, maybe some difficulties ahead. Just like this guy askes "How can Walmart make money, i.e. sustainable margins, on grocery alone?"

Not only did panelists question Wal-Mart's expertise in managing small stores, they see the move as bad timing and a political liability.

"Walmart needs to focus on its growth and profitability," wrote John Boccuzzi, managing partner, Boccuzzi, LLC. "It has that responsibility to shareholders. Communities need to focus on their long-term viability and make sure a small format Walmart does not leave their community with lots of vacant storefronts. It will be interesting to see how Walmart explains to small communities the long-term benefits of having a small format Walmart."

But here is a view contrary to that. Walmart’s small-store strategy could take aim at drug stores, bring value

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