BENTONVILLE, Ark. -- Daniel Burnham once famously said, "Make no little plans." Choosing to ignore that advice, Wal-Mart Stores Inc. plans to roll out dozens of small stores in Chicago in the next five years, said a new report by The Chicago Tribune. The company has also some realigned some personnel as part of its multi-format strategy.
(Click here for previous CSP Daily News coverage of Wal-Mart's smaller-format stores.)
The expansion is part of an effort to combat a two-year decline in U.S. comparable-store sales by infiltrating the dense urban markets where Wal-Mart has little or no presence, said the report. The small stores, operating under the banners Walmart Market and Walmart Express, are not only new to Chicago but also to most of the country.
The Neighborhood Market concept, recently renamed Walmart Market, debuted in 1998 and accounts for 184 of the retailer's approximately 4,400 U.S. stores. The first Express store has yet to open.
"As Wal-Mart's growth [has] matured with Supercenters, they have to look for new avenues of growth, and that means getting into urban locations with a format that works," Michael Dart, a San Francisco-based retail strategist for Kurt Salmon consulting and co-author of The New Rules of Retail, told the newspaper.
Wal-Mart first tinkered with the idea of small stores more than a decade ago as a way to learn the grocery business. The company initially rolled out a few dozen Neighborhood Markets (nicknamed "Small Marts" at the time). But instead of opening more, Wal-Mart melded the Market concept onto its discount stores, creating the 180,000-square-foot Supercenters. The grocery-selling Supercenters have fueled the retailer's growth for most of the past decade.
Today, Wal-Mart ranks as the nation's largest grocer and generates more than half of its revenue from grocery sales. With suburbs and rural towns saturated with Supercenters, Wal-Mart is repurposing the slim Market format as a tool for getting into big cities.
The relatively diminutive size of Market and Express stores has several advantages over the Supercenters. The new formats are small enough that Wal-Mart can move into vacant storefronts zoned for retail and avoid triggering city planning department reviews that come with larger projects.
Wal-Mart can open small stores more quickly, too, the report said.
Wal-Mart is set to open its first Express next month in Gentry, Ark., near its corporate headquarters in Bentonville, just in time for its June 3 shareholders meeting. Wal-Mart is experimenting with what to carry in the 15,000-square-foot format, putting pharmacies in only some stores and varying the mix of fresh produce and general merchandise, the report said.
The first small stores in Chicago will debut this year. In 2012, it plans two more Market stores.
Meanwhile, Bill Simon, president and CEO of Wal-Mart U.S., put out a confidential memo on Friday detailing personnel changes within the company, some keyed to store-format, layout and "space productivity" strategies, according to MorningNewsBeat.com, which obtained a copy of the memo.
Among the changes, "David Redfield has been promoted to vice president of store formats, and will continue to manage Neighborhood Markets. David will assume the added responsibility for other small formats, including the Walmart Express."
He said, "To allow for an even greater focus on the Walmart Express format, Anthony Hucker, vice president and strategy and business development and the Walmart Express team will move to the new Store Formats, Layouts & Space Productivity strategic business unit."
Simon added that "the merchandising and operations of the Walmart Express project will move to Merchandising, while the design and construction elements of this and all other formats will remain in Real Estate."
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