Doug McMillon, President and CEO of Wal-Mart Stores, Inc. Photo: Walmart Today blog

Walmart said Friday it planned to pull the plug on its small-format Walmart Express concept as part of a broader plan to shutter 269 stores worldwide.

Of the 154 planned U.S. closures, 102 were Express, which had been in pilot mode since 2011. A mix between a dollar store and small grocery, the c-store concept was designed to help Walmart reach areas its bigger stores couldn’t, including urban centers. It averaged around 15,000 square feet versus 40,000 for Neighborhood Market and 178,000 for its supercenters.

The smaller stores — both Neighborhood Market and Express — have been touted as Walmart’s future growth vehicles over the last few years with shoppers finding their supercenters too cavernous.

By 2012, a Wall Street Journal article noted that Express was being affected by Walmart’s “supercenter mind-set.” Stores were carrying wide varieties of staples when only a few were needed for “fill-in” needs. They also stocked 20-pound dog food sizes that couldn’t be carried home by urbanites.

In 2015, Walmart officials were telling analysts that Express was challenged leveraging expenses. Dave Marcotte, an analyst with Kantar Retail, told Supermarket News in early 2015 that Walmart’s supply chain system should work “reasonably well” for Neighborhood Market but Express was too small. Mr. Marcotte said, “Your cost to serve keeps rising and you’ll have difficulty getting the right quantity of product in there — which might be a half-case instead of a case.”

A Journal article last week said Express’ profitability was challenged because it couldn’t fit higher-margin items such as apparel and appliances. The Journal also indicated “consumers expect the same low prices at a Walmart Express as a Supercenter, while they might expect higher prices from a drug store chain.”

Walmart instead will focus on strengthening Supercenters, optimizing Neighborhood Markets, growing the e-commerce business and expanding Pickup services for customers. Also covered in the closures in the U.S. are 23 Neighborhood Markets, 12 Supercenters, seven stores in Puerto Rico, six discount centers and four Sam’s Clubs.

More than 300 stores openings are planned this year, including 50 to 60 supercenters and 85 to 95 Neighborhood Markets domestically.

BrainTrust

“People indeed expect fill-in stores to be higher price, but no one would forgive Walmart for not keeping the prices low. Back to expectations, shoppers shop there because of the price so why would they then change that mindset just because it’s a small store?”

Laura Davis

Founder, Branded Ground


“It has been said before, companies used to running big stores have trouble running little ones. That is because both their and the customers’ expectations are not met.”

Steve Montgomery

President, b2b Solutions, LLC


“Walmart unwittingly ended up in a business model that was antithetical to their core business. They tried to make the c-store market fit their big-store approach and it was never to be. The focus on small sizes, limited inventory and limited quantities ran against Walmart’s core.”

Mark Price

Chief Data Officer, CaringBridge

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21 responses to “Walmart shutters Express”

  1. Adrian Weidmann Avatar
    Adrian Weidmann

    The strength of Walmart is their supply chain and logistics. Distribute and manage large volumes (i.e., pallets) of items. Their economies of scale are held by these processes. As the square footage of your store gets smaller, the more localized and specific your inventory needs to be. It costs money to break apart those palettes of items, distribute and manage them. These additional costs need to be carried by the customers and therefore the Walmart cost advantage is lost. The idea of the smaller Express store is to understand and address the local community market and its needs. Walmart apparently tried to stuff their traditional 50 pounds of inventory into a five pound bag. That five-pound Express store was bound to burst.

  2. Laura Davis-Taylor Avatar
    Laura Davis-Taylor

    I have no data to back this hypothesis, but the first thing that I thought of is that people have different expectations of small-format fill-in store that Walmart would not quite understand much less deliver against. Also, people indeed expect fill-in stores to be higher price, but no one would forgive Walmart for not keeping the prices low. Back to expectations, shoppers shop there because of the price so why would they then change that mindset just because it’s a small store?

    Regardless of the reason, this is a very interesting retail case study. It will be interesting to see how Amazon fares with their brick-and-mortar store, as it’s a similar stretch for their model.

  3. David Livingston Avatar
    David Livingston

    Walmart should have learned their lesson after they shut down all their Marketside locations. In my opinion Walmart just can’t live up to expectations with a small store. The Neighborhood Market locations closing is mostly due to poor site location. Just a bad “Fresh & Easy-esque” choosing of sites. The Supercenter closings appear to be difficult areas where shrink and crime are high. Walmart has picked up locations from failed chains, like Shaws, for some of their Neighborhood stores. Over time, some will just fail. Other Neighborhood Market failures were due to arrogance trying to compete with stores like WinCo or Woodman’s. Those stores have lower prices and obviously superior service, making the Neighborhood Market redundant.

    Message to all those well-run chains like H-E-B, WinCo, Kroger, Hy-Vee, Publix, etc., if you see a Walmart Neighborhood Market doing $500,000 or $600,000 or more per week you need to get all over that right now. They are the new low-hanging fruit.

  4. Richard J. George, Ph.D. Avatar
    Richard J. George, Ph.D.

    I believe at one time Walmart was focused on two players that silently encroached on its business, namely dollar and drug stores. Dollar stores have always been the “ankle biters” to Walmart and drug stores have expanded their food offerings. Therefore, developing a format to address these bona fide competitors made sense and probably still does. However, the focus on this format and the resulting concentration of resources to achieve success takes attention and scarce resources away from Walmart’s key formats; Supercenters, Neighborhood Markets and online.

    Neighborhood Markets still address the size issue of supermarkets. Historically, supermarket footprints have been shrinking to accommodate the changes in demographics and alternative shopping formats (online). In addition, it appears as though the size of the Neighborhood Markets and their assortments better fit the logistics system of Walmart than do smaller stores and their accompanying assortments.

  5. Ed Rosenbaum Avatar
    Ed Rosenbaum

    I am embarrassed to say I did not know they were still open. I thought the experiment was a failure and the locations were shuttered. Go figure.

  6. Gene Detroyer Avatar
    Gene Detroyer

    Boy, was I wrong on this one. Originally, I thought Walmart would be extraordinarily successful operating c-stores. I have found the convenience store channel the weakest operational segment of the mass/grocery/drug/convenience quartet. My assumption was that Walmart’s strength in operations would win the day and they would eventually gain a market share of over 25 percent, just like everything else they touch.

    But it seems like this was a marketing problem, not an operations problem. the famous four Ps of marketing include product and it appears the product mix was wrong. This should not have been a “small-mart” but a separate animal entirely.

  7. Steve Montgomery Avatar
    Steve Montgomery

    It has been said before, companies used to running big stores have trouble running little ones. That is because both their and the customers’ expectations are not met. For the company they expect their supply chain can service the location as economically as they do the big boxes. To do this they need to buy and sell the same products in the same sizes, have the same drop sizes, etc. Unfortunately that is not the reality.

    The customers’ perception is they are going to get the same value proposition in the smaller format they find in big locations. For Walmart that means finding the same price points but the economics don’t work out that way. The cost to serve is far higher resulting in the customer paying more or the store making less. Then there is the higher cost of labor as a higher percentage of sales. It all looks great in the strategy sessions but then reality sets in.

  8. Mel Kleiman Avatar
    Mel Kleiman

    I look at the challenge from a different perspective. That of utilization of staff.

    If I have a great manager, where would I want that manager to work? In a small store, medium-sized store or large store? The larger stores get the cream of the crop, which in some cases is not even too great. But If you can not find great managers for large stores or even departments in large stores, why would you try to staff a small store?

  9. Mohamed Amer Avatar
    Mohamed Amer

    I suspect that Express was just too small and a major deviation from the Walmart model. Although the Neighborhood Market format is no Supercenter, it allows Walmart to cater to local tastes with economies of scale.

    You can extend from a company’s sweet spot but not so far that it becomes unrecognizable. Walmart will continue to tweak their portfolio based on sales per square foot and cost to get product on their shelves.

  10. Ryan Mathews Avatar
    Ryan Mathews

    There are two reasons why retail formats fail — poor strategy and poor execution.

    In the case of the Neighborhood Markets and Express the meta-strategy was — and remains — sound, but the tactical execution was horrible.

    Look, despite our best efforts to make it more complex than it could ever hope to be, retailing is, at its heart, a fairly simple exercise. Combining right location and product with right price and service still equals success. Get any one or more of these “basics” wrong — whether it is 20 pound bags of dog food in urban cores or the rotting produce I once saw for sale in a Neighborhood Market in Ogden, Utah — and you are bound to have trouble. And as the old cliche goes, you only have one shot at making a first impression. Blow that and you lose some customers for life.

    This is a long way of saying that the talents needed to run a superstore or hypermarket don’t automatically transfer to a smaller unit and optimizing a “system” isn’t the same thing as running a single successful format or location. So yes, unless something changes I’d say Neighborhood Markets — if not endangered — are rapidly earning a place on the “Watched Species” list.

  11. Brian Kelly Avatar
    Brian Kelly

    I’ve never been in a Walmart Express. With that out of the way, I think its failure goes two ways.

    Walmart culture probably doesn’t allow for an “alternative universe.” Hard to get an organization to successfully support two selling models. Portfolio management in retail is problematic. Aldi doing a winning Trader Joe’s is unique.

    2. Brand Walmart for consumers is a big box. The value of shopping there is the experiential aspects of a big box. Small box doesn’t cut it.

    Or as Sam Walton might have said, “retail ain’t for sissies!”

  12. Doug Garnett Avatar
    Doug Garnett

    We have a “small mart” in our neighborhood. And I confess I never set foot inside it. Why? The neighborhood was already well-supplied with options and the store offered nothing of interest to lead me to shop there. Plus, in our higher income area, the core Walmart value of lower prices wasn’t meaningful (and a WinCo was within a mile). And the location they chose was the location of a failed specialty market — one that failed because it was off the beaten path.

    From the beginning, I was surprised that they chose to put this store in. This obviously doesn’t apply to all the small mart choices. But this one should close because it’s not a successful mix within the neighborhood.

  13. Mitchel Cox Avatar
    Mitchel Cox

    The comments regarding the leverage of Walmart’s supply chain are on point and clearly proved more costly and challenging than expected. Walmart is not set up to deliver to small-format stores, merchandise/price to optimize profit or manage the stores with any productivity. The pharmacy was one of the upsides to these stores but the cost of having a pharmacist performing only script services and not managing the store or having limited hours clearly does not work from a profit perspective.

    I applaud the Walmart team for attempting this new concept and hopefully they learn from this failure and stick to what works for them going forward. The Neighborhood Market concept is going to be a continuing challenge for the Walmart team for many of the same reasons the Express concept failed. They require a high level of store traffic and top-notch food operators managing these stores. Walmart has not secured the best locations to attract traffic and their best operators are leading Supercenters where the compensation is much higher.

  14. Mark Burr Avatar
    Mark Burr

    I’m’ not sure that Walmart currently has a very well defined minimum brand expectation. Without that, their superstores are challenged, along with the ability to shrink that down to create a minimum brand experience neighborhood market. Bigger is not smaller. Smaller is not bigger.

    In the early stages of the insurgence of the Asian automakers into the U.S. market, GM, Ford, and Chrysler simply tried to “shrink” their conventional larger product into a smaller size. At the time they didn’t realize (and effectively, still don’t) that big and small are are two different things.

    Just as Walmart — the once conqueror of the universe — is facing challenges in their larger mainstay format, it’s difficult to create a compelling vision of not only what Walmart believes a “neighborhood” market should be, but how to carry that out. Call it a personality crisis if you wish. Nevertheless, they are two distinctly different things.

    Just as conventional supermarkets have not clearly understood the distinction in attempts to compete, Walmart faces the same challenge in reverse.

  15. Craig Sundstrom Avatar
    Craig Sundstrom

    Based on the poll response, you either have utter faith in Walmart (to execute smaller formats) … or you don’t. I don’t. As the article logically points out, WMT doesn’t really do small. And even if it can, so what? It must take a hundred of these neighborhood stores to equal one supercenter. Even if “successful,” they’re never going to be more than icing.

  16. Roger Saunders Avatar
    Roger Saunders

    Little need to dwell on the Walmart Express concept. The format has clearly been named a “pilot” since its inception. The logistics, distribution, and pricing need for a diverse basket of goods from grocery to dollar store items simply didn’t add up to profitability for Walmart on a scalability, cultural, or operational standpoint.

    Due credit should be awarded to Walmart in that they will treat their relocated or displaced associates from Express Stores very fairly with added opportunities or severance.

    The Neighborhood Market concept, with its clearer focus on grocery and clean, well stocked stores/operating practices, with 30,000-40,000 square feet, is an ideal. These stores can take adequate space in strip shopping centers, provide solid parking or walk-up ease for consumers, and create the opportunity to not only support fill-in purchases, but also pull in a more diverse customer base who might not choose Walmart for grocery shopping in a supercenter.

    Walmart did the right thing here. They made the tough-minded decision to ask their organization, “What do we start, sustain, and stop doing?” The last point is the one that too many operators, like stock pickers, fail to do. They sell their winners instead of the losers, perhaps because human nature doesn’t want to admit their mistake.

    Good move on Walmart’s part.

  17. Herb Sorensen, Ph.D. Avatar
    Herb Sorensen, Ph.D.

    Every store in the world is a “convenience” store, attested to by the fact that they ALL have either one or two items as the most common NUMBER of items shoppers purchase at the store. This is the basis of my statement that “all stores are convenience stores; just with big long floppy tails.”

    As a retailer with 100 year-old INSTINCTS, Walmart is a “merchant warehouseman” running rat-maze warehouse stores, focused on logistics and the long tail. Layering on online purchasing as a response to Amazon is appropriate baby steps, but an inadequate response to Amazon’s “Everything Store.”

    The coup-de-grace is Amazon’s brilliant management of big head purchasing, and the refusal of most bricks retailers to recognize their own genuine strengths with quick trips and the big head. The details are here, “Selling Like Amazon in Bricks Stores,” with the larger context in the new “Inside the Mind of the Shopper.“

  18. Kenneth Leung Avatar
    Kenneth Leung

    Operating small stores require local expertise in assortment and micro managing the merchandise. Walmart’s strength in large scale supply chain doesn’t translate well to small stores. Basically, for “small-mart” to succeed, they need to build a different merchandising and store management skill set than what they’ve invested in. The Neighborhood Market is basically a supermarket size which I think Walmart has a better chance adapting its supply chain and merchandising model to.

  19. Camille P. Schuster, Ph.D. Avatar
    Camille P. Schuster, Ph.D.

    Walmart’s operational efficiency is based upon a lot common items being delivered to many stores with a fast turnover. Small stores cannot stock everything. Trying to do a wide variety of items in a small space, cater to neighborhood needs, and maintain operational efficiency was not a successful formula. The scale is slightly larger at the Neighborhood Market level, but a way still needs to be found to make the formula work. Anything under the large discount and supercenter will be a challenge for Walmart’s traditional approach.

  20. Naomi K. Shapiro Avatar
    Naomi K. Shapiro

    Tom’s summary contained all the reasons for the Walmart Supercenter stumble (which I’m surprised Walmart couldn’t figure out for itself): Supercenter mindset; supercenters too cavernous, neighborhood stores the wrong model for Walmart’s paradigm; can’t fit higher margin products; carrying too many staples instead of “fill in” items; and in the wrong sizes too bit. All in all, a recipe for failure.

  21. Mark Price Avatar
    Mark Price

    Walmart unwittingly ended up in a business model that was antithetical to their core business. They tried to make the c-store market fit their big-store approach and it was never to be. The focus on small sizes, limited inventory and limited quantities ran against Walmart’s core business practices. In addition, as the article mentioned, consumers expected the same low prices as you would find in a supercenter, while c-store economics rely on high prices, with consumers effectively paying a premium for convenience.

    Logistics, inventory management, positioning, benefits — all ran away from Walmart. Neighborhood Markets should not suffer from such issues and should make greater sense.

Share Your Opinion

Why was “small-mart” not viable for Walmart? To what degree will Walmart face similar pressures with Neighborhood Market?

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How confident are you that smaller formats, whether Neighborhood Market or some other concept, still represent strong growth vehicles for Walmart?

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21 Comments
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Adrian Weidmann
Adrian Weidmann
7 years ago

The strength of Walmart is their supply chain and logistics. Distribute and manage large volumes (i.e., pallets) of items. Their economies of scale are held by these processes. As the square footage of your store gets smaller, the more localized and specific your inventory needs to be. It costs money to break apart those palettes of items, distribute and manage them. These additional costs need to be carried by the customers and therefore the Walmart cost advantage is lost. The idea of the smaller Express store is to understand and address the local community market and its needs. Walmart apparently tried to stuff their traditional 50 pounds of inventory into a five pound bag. That five-pound Express store was bound to burst.

0
Laura Davis-Taylor
Laura Davis-Taylor
7 years ago

I have no data to back this hypothesis, but the first thing that I thought of is that people have different expectations of small-format fill-in store that Walmart would not quite understand much less deliver against. Also, people indeed expect fill-in stores to be higher price, but no one would forgive Walmart for not keeping the prices low. Back to expectations, shoppers shop there because of the price so why would they then change that mindset just because it’s a small store?

Regardless of the reason, this is a very interesting retail case study. It will be interesting to see how Amazon fares with their brick-and-mortar store, as it’s a similar stretch for their model.

0
David Livingston
David Livingston
7 years ago

Walmart should have learned their lesson after they shut down all their Marketside locations. In my opinion Walmart just can’t live up to expectations with a small store. The Neighborhood Market locations closing is mostly due to poor site location. Just a bad “Fresh & Easy-esque” choosing of sites. The Supercenter closings appear to be difficult areas where shrink and crime are high. Walmart has picked up locations from failed chains, like Shaws, for some of their Neighborhood stores. Over time, some will just fail. Other Neighborhood Market failures were due to arrogance trying to compete with stores like WinCo or Woodman’s. Those stores have lower prices and obviously superior service, making the Neighborhood Market redundant.

Message to all those well-run chains like H-E-B, WinCo, Kroger, Hy-Vee, Publix, etc., if you see a Walmart Neighborhood Market doing $500,000 or $600,000 or more per week you need to get all over that right now. They are the new low-hanging fruit.

0
Richard J. George, Ph.D.
Richard J. George, Ph.D.
7 years ago

I believe at one time Walmart was focused on two players that silently encroached on its business, namely dollar and drug stores. Dollar stores have always been the “ankle biters” to Walmart and drug stores have expanded their food offerings. Therefore, developing a format to address these bona fide competitors made sense and probably still does. However, the focus on this format and the resulting concentration of resources to achieve success takes attention and scarce resources away from Walmart’s key formats; Supercenters, Neighborhood Markets and online.

Neighborhood Markets still address the size issue of supermarkets. Historically, supermarket footprints have been shrinking to accommodate the changes in demographics and alternative shopping formats (online). In addition, it appears as though the size of the Neighborhood Markets and their assortments better fit the logistics system of Walmart than do smaller stores and their accompanying assortments.

0
Ed Rosenbaum
Ed Rosenbaum
7 years ago

I am embarrassed to say I did not know they were still open. I thought the experiment was a failure and the locations were shuttered. Go figure.

0
Gene Detroyer
Gene Detroyer
7 years ago

Boy, was I wrong on this one. Originally, I thought Walmart would be extraordinarily successful operating c-stores. I have found the convenience store channel the weakest operational segment of the mass/grocery/drug/convenience quartet. My assumption was that Walmart’s strength in operations would win the day and they would eventually gain a market share of over 25 percent, just like everything else they touch.

But it seems like this was a marketing problem, not an operations problem. the famous four Ps of marketing include product and it appears the product mix was wrong. This should not have been a “small-mart” but a separate animal entirely.

0
Steve Montgomery
Steve Montgomery
7 years ago

It has been said before, companies used to running big stores have trouble running little ones. That is because both their and the customers’ expectations are not met. For the company they expect their supply chain can service the location as economically as they do the big boxes. To do this they need to buy and sell the same products in the same sizes, have the same drop sizes, etc. Unfortunately that is not the reality.

The customers’ perception is they are going to get the same value proposition in the smaller format they find in big locations. For Walmart that means finding the same price points but the economics don’t work out that way. The cost to serve is far higher resulting in the customer paying more or the store making less. Then there is the higher cost of labor as a higher percentage of sales. It all looks great in the strategy sessions but then reality sets in.

0
Mel Kleiman
Mel Kleiman
7 years ago

I look at the challenge from a different perspective. That of utilization of staff.

If I have a great manager, where would I want that manager to work? In a small store, medium-sized store or large store? The larger stores get the cream of the crop, which in some cases is not even too great. But If you can not find great managers for large stores or even departments in large stores, why would you try to staff a small store?

0
Mohamed Amer
Mohamed Amer
7 years ago

I suspect that Express was just too small and a major deviation from the Walmart model. Although the Neighborhood Market format is no Supercenter, it allows Walmart to cater to local tastes with economies of scale.

You can extend from a company’s sweet spot but not so far that it becomes unrecognizable. Walmart will continue to tweak their portfolio based on sales per square foot and cost to get product on their shelves.

0
Ryan Mathews
Ryan Mathews
7 years ago

There are two reasons why retail formats fail — poor strategy and poor execution.

In the case of the Neighborhood Markets and Express the meta-strategy was — and remains — sound, but the tactical execution was horrible.

Look, despite our best efforts to make it more complex than it could ever hope to be, retailing is, at its heart, a fairly simple exercise. Combining right location and product with right price and service still equals success. Get any one or more of these “basics” wrong — whether it is 20 pound bags of dog food in urban cores or the rotting produce I once saw for sale in a Neighborhood Market in Ogden, Utah — and you are bound to have trouble. And as the old cliche goes, you only have one shot at making a first impression. Blow that and you lose some customers for life.

This is a long way of saying that the talents needed to run a superstore or hypermarket don’t automatically transfer to a smaller unit and optimizing a “system” isn’t the same thing as running a single successful format or location. So yes, unless something changes I’d say Neighborhood Markets — if not endangered — are rapidly earning a place on the “Watched Species” list.

0
Brian Kelly
Brian Kelly
7 years ago

I’ve never been in a Walmart Express. With that out of the way, I think its failure goes two ways.

Walmart culture probably doesn’t allow for an “alternative universe.” Hard to get an organization to successfully support two selling models. Portfolio management in retail is problematic. Aldi doing a winning Trader Joe’s is unique.

2. Brand Walmart for consumers is a big box. The value of shopping there is the experiential aspects of a big box. Small box doesn’t cut it.

Or as Sam Walton might have said, “retail ain’t for sissies!”

0
Doug Garnett
Doug Garnett
7 years ago

We have a “small mart” in our neighborhood. And I confess I never set foot inside it. Why? The neighborhood was already well-supplied with options and the store offered nothing of interest to lead me to shop there. Plus, in our higher income area, the core Walmart value of lower prices wasn’t meaningful (and a WinCo was within a mile). And the location they chose was the location of a failed specialty market — one that failed because it was off the beaten path.

From the beginning, I was surprised that they chose to put this store in. This obviously doesn’t apply to all the small mart choices. But this one should close because it’s not a successful mix within the neighborhood.

0
Mitchel Cox
Mitchel Cox
7 years ago

The comments regarding the leverage of Walmart’s supply chain are on point and clearly proved more costly and challenging than expected. Walmart is not set up to deliver to small-format stores, merchandise/price to optimize profit or manage the stores with any productivity. The pharmacy was one of the upsides to these stores but the cost of having a pharmacist performing only script services and not managing the store or having limited hours clearly does not work from a profit perspective.

I applaud the Walmart team for attempting this new concept and hopefully they learn from this failure and stick to what works for them going forward. The Neighborhood Market concept is going to be a continuing challenge for the Walmart team for many of the same reasons the Express concept failed. They require a high level of store traffic and top-notch food operators managing these stores. Walmart has not secured the best locations to attract traffic and their best operators are leading Supercenters where the compensation is much higher.

0
Mark Burr
Mark Burr
7 years ago

I’m’ not sure that Walmart currently has a very well defined minimum brand expectation. Without that, their superstores are challenged, along with the ability to shrink that down to create a minimum brand experience neighborhood market. Bigger is not smaller. Smaller is not bigger.

In the early stages of the insurgence of the Asian automakers into the U.S. market, GM, Ford, and Chrysler simply tried to “shrink” their conventional larger product into a smaller size. At the time they didn’t realize (and effectively, still don’t) that big and small are are two different things.

Just as Walmart — the once conqueror of the universe — is facing challenges in their larger mainstay format, it’s difficult to create a compelling vision of not only what Walmart believes a “neighborhood” market should be, but how to carry that out. Call it a personality crisis if you wish. Nevertheless, they are two distinctly different things.

Just as conventional supermarkets have not clearly understood the distinction in attempts to compete, Walmart faces the same challenge in reverse.

0
Craig Sundstrom
Craig Sundstrom
7 years ago

Based on the poll response, you either have utter faith in Walmart (to execute smaller formats) … or you don’t. I don’t. As the article logically points out, WMT doesn’t really do small. And even if it can, so what? It must take a hundred of these neighborhood stores to equal one supercenter. Even if “successful,” they’re never going to be more than icing.

0
Roger Saunders
Roger Saunders
7 years ago

Little need to dwell on the Walmart Express concept. The format has clearly been named a “pilot” since its inception. The logistics, distribution, and pricing need for a diverse basket of goods from grocery to dollar store items simply didn’t add up to profitability for Walmart on a scalability, cultural, or operational standpoint.

Due credit should be awarded to Walmart in that they will treat their relocated or displaced associates from Express Stores very fairly with added opportunities or severance.

The Neighborhood Market concept, with its clearer focus on grocery and clean, well stocked stores/operating practices, with 30,000-40,000 square feet, is an ideal. These stores can take adequate space in strip shopping centers, provide solid parking or walk-up ease for consumers, and create the opportunity to not only support fill-in purchases, but also pull in a more diverse customer base who might not choose Walmart for grocery shopping in a supercenter.

Walmart did the right thing here. They made the tough-minded decision to ask their organization, “What do we start, sustain, and stop doing?” The last point is the one that too many operators, like stock pickers, fail to do. They sell their winners instead of the losers, perhaps because human nature doesn’t want to admit their mistake.

Good move on Walmart’s part.

0
Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.
7 years ago

Every store in the world is a “convenience” store, attested to by the fact that they ALL have either one or two items as the most common NUMBER of items shoppers purchase at the store. This is the basis of my statement that “all stores are convenience stores; just with big long floppy tails.”

As a retailer with 100 year-old INSTINCTS, Walmart is a “merchant warehouseman” running rat-maze warehouse stores, focused on logistics and the long tail. Layering on online purchasing as a response to Amazon is appropriate baby steps, but an inadequate response to Amazon’s “Everything Store.”

The coup-de-grace is Amazon’s brilliant management of big head purchasing, and the refusal of most bricks retailers to recognize their own genuine strengths with quick trips and the big head. The details are here, “Selling Like Amazon in Bricks Stores,” with the larger context in the new “Inside the Mind of the Shopper.“

0
Kenneth Leung
Kenneth Leung
7 years ago

Operating small stores require local expertise in assortment and micro managing the merchandise. Walmart’s strength in large scale supply chain doesn’t translate well to small stores. Basically, for “small-mart” to succeed, they need to build a different merchandising and store management skill set than what they’ve invested in. The Neighborhood Market is basically a supermarket size which I think Walmart has a better chance adapting its supply chain and merchandising model to.

0
Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
7 years ago

Walmart’s operational efficiency is based upon a lot common items being delivered to many stores with a fast turnover. Small stores cannot stock everything. Trying to do a wide variety of items in a small space, cater to neighborhood needs, and maintain operational efficiency was not a successful formula. The scale is slightly larger at the Neighborhood Market level, but a way still needs to be found to make the formula work. Anything under the large discount and supercenter will be a challenge for Walmart’s traditional approach.

0
Naomi K. Shapiro
Naomi K. Shapiro
7 years ago

Tom’s summary contained all the reasons for the Walmart Supercenter stumble (which I’m surprised Walmart couldn’t figure out for itself): Supercenter mindset; supercenters too cavernous, neighborhood stores the wrong model for Walmart’s paradigm; can’t fit higher margin products; carrying too many staples instead of “fill in” items; and in the wrong sizes too bit. All in all, a recipe for failure.

0
Mark Price
Mark Price
7 years ago

Walmart unwittingly ended up in a business model that was antithetical to their core business. They tried to make the c-store market fit their big-store approach and it was never to be. The focus on small sizes, limited inventory and limited quantities ran against Walmart’s core business practices. In addition, as the article mentioned, consumers expected the same low prices as you would find in a supercenter, while c-store economics rely on high prices, with consumers effectively paying a premium for convenience.

Logistics, inventory management, positioning, benefits — all ran away from Walmart. Neighborhood Markets should not suffer from such issues and should make greater sense.

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