Commercial real-estate brokers said Wal-Mart has begun scouting for sites for smaller-format stores in a range of urban markets, including Sacramento and the San Francisco Bay area in northern California, [image-nocss] as well as in Reno, Detroit and other cities.
"They've been looking at sites between 20,000 and 50,000 square feet over the summer," one broker in northern California told the newspaper.
Garrick Brown, a vice president of research at Colliers International, said the retailer was looking at taking over existing buildings, and that "chatter" from brokers suggested the retailer was looking for scores of sites nationwide. "It is going to be huge," he told the paper.
Discussing the retailer's plans to enter the Chicago market, which the city approved this summer, Simon said Wal-Mart's plans for more than 20 stores would include "a healthy mix" of supercentres and small-format stores, and that the model would be applied elsewhere. "You'll see us taking the Chicago approach with other cities," he told the Times.
The conventional Walmart Supercenter, which remains Wal-Mart's most profitable format, averages 185,000 sq. ft. and sells both groceries and other goods. But the retailer has been testing both 10,000-sq.-ft. stores in Arizona under the Marketside by Walmart banner and a 20,000-sq.-ft. version of its Neighborhood Market, which includes a pharmacy. The retailer is also developing smaller, 80,000-sq.-ft. versions of its supercenters.
Simon highlighted Bentonville, Ark.-based Wal-Mart's experience with smaller stores in Latin America, where its smallest Bodega Aurrera Express stores are 4,000 sq. ft. "Our group in Mexico and Latin America operates small formats very well and very profitably, and we are going to beg, borrow, steal and learn from them as quickly as we can," he told the paper.In a note to investors cited by the Associated Press, Brian Sozzi, analyst with Wall Street Strategies,said thathe believes the new 20,000-sq.-ft. stores would likely fuse the Marketside and Neighborhood Markets formats.
"Wal-Mart needs to have a store concept that brings in customers more than once every two weeks when paychecks are distributed," he wrote. He added that using the Marketside Stores as a vehicle for growth is too limiting, and that Neighborhood Markets are too big to enter cities.
Wal-Mart spokesman Steven Restivo said Monday that "while we have not shared an exact size of the small format...we continue to evaluate a wide range of stores sizes across the country and will consider any format that puts us closer to our customers.""I think 20,000 makes more sense than 80,000 square feet," Sozzi said.
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