Thursday, March 5, 2015

Walmart slowing down growth of Neighborhood Market's smaller format stores

Walmart's US CEO Greg Foran said in an earnings conference call last week that the company would open 10-15 of the small format Neighborhood Markets this year, then hold off on further investment in the concept until results can be studied. As of January 30, Walmart operated 88 of the smaller-format stores, which are typically in the 12,000 - 16,000 square foot range.

Last year, Walmart opened 68 of the small format Neighborhood Market stores, far less than the 110-120 forecasted. These stores were once known as Walmart Express, but the company dropped the Express name late last year.

"Their supply chain is optimized for the supercenter," said Kantar Retail Analyst Dave Marcotte. "It can work reasonably well for a (traditional) Neighborhood Market, but when you keep going down in size, eventually it's going to become an issue."

Walmart plans to open 180 - 200 traditional Neighborhood Market stores this year, which typically range between 38,000 and 42,000 square feet.

BB&T Capital Markets Analyst Andrew Wolf told Supermarket News that there is not a lot of evidence to show that small stores really work. He continued to say that Aldi and Trader Joe's are the exception, not the rule.


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