Walmart Goes Slow on Small Formats
Does being first or fast count when you’re Walmart? A Wall Street Journal article earlier this week questioned whether the retailer would achieve the results analysts are looking for with its new Walmart Express small store initiative, based on the relatively slow pace it was opening units.
Fortunately for Walmart, its most recent financial results, announced yesterday, show the company exceeding expectations as U.S. same-store sales increased 2.6 percent and store traffic rose for the second straight quarter.
But, let’s go back to small stores. The concept, as popularly understood, was developed to give Walmart the ability to reach consumers in large areas where it previously didn’t have a presence. It would also allow Walmart to offer a shopping alternative to dollar stores and limited assortment grocers such as Aldi.
As it turns out, while many thought of small stores as a done deal for Walmart with them opening up Walgreen-style in every available street corner location possible, the retailer, as CFO Charles Holley said last month, sees what it is currently doing as "a pilot."
So, can Walmart keep up with the likes of Dollar General and Aldi who are in rapid expansion mode by opening up a few units here and there? Aldi, as an example, is opening up 30 units in the Houston, TX market alone over the next three years.
- Can Wal-Mart Think Small? – The Wall Street Journal
- Walmart reports Q1 EPS of $1.09, above guidance – Walmart Stores
- Wal-Mart’s 1Q profit up 10.1 percent – The Associated Press/Bloomberg Businessweek
- Discount grocer Aldi to open 30 Houston stores – Houston Chronicle
Discussion Questions: Do you think Walmart needs to be more aggressive opening small stores? Is it falling behind, as suggested, to dollar stores and limited assortment grocers by not opening many more Express and Neighborhood Markets across the U.S.?