Wal-Mart's Smallest

Opens two Walmart.com "pop-up" stores as retailers tinker with formats

LOS ANGELES -- Wal-Mart Stores Inc. has opened its smallest-format stores yet in two malls in Southern California in preparation for the 2011 holiday season. Two new test stores--one 1,000 square feet, and the other 3,000 square feet--are pop-up-type stores designed to drive sales through Walmart.com, according to a report by In-Store Trends.

The stores, which bear signs reading Walmart.com, opened November 2 and are expected to remain open through December 31. Unlike its recently launched Walmart Express or its Neighborhood Market small-format stores, this new concept does not feature food or other convenience products.

"This is just a small test we're conducting during the holiday season to offer local customers easier, more convenient access to quality products at everyday low prices," Wal-Mart spokesperson Lorenzo Lopez told CSP Daily News. "These small stores, located in the Topanga Mall in West Los Angeles and Horton Plaza in San Diego, will offer customers access to more than one million general merchandise items currently available through Walmart.com."

He added, "The store will display key holiday items such as toys, electronics, gaming and home theater. These items can be picked up at the Walmart.com store or nearest Walmart store via the Site to Store and Pick Up Today options. Products can also be delivered to customers' homes via the standard shipping options currently available through Walmart.com. Customers will also have an opportunity to purchase a small selection of items at the store, mostly accessories."

Lopez said, "We're always looking for ways to better serve our customers, so it's not uncommon for us to test different formats to learn how customers respond to products and services. These stores are just another way to give customers a continuous experience by bringing together our stores, our brand and our footprint through eCommerce."

Click here to view images of the Walmart.com stores.

Meanwhile, Wal-Mart opened three new Neighborhood Markets in Wichita, Kansas, on November 2. Each is between 30,000 and 40,000 square feet and features a pharmacy, fresh produce, groceries and household goods in a convenient format close to residential neighborhoods. Each store employs approximately 90 part-time and full-time associates.

U.S. stores have an identity crisis, said a Reuters report. The big ones want to be smaller, the small ones are getting bigger and all of them want to sell more food. For years, U.S. retailers could simply build more stores, the larger the better, near new developments to spur sales growth. These days, as suburban communities have lost their luster and more people stay in or near cities, that formula needs a makeover.

"It was just all about new-store expansion, and I think we've come to a tipping point," Steve Caine, a partner in Bain & Co.'s global retail practice, told the news agency.

At the same time, larger store floor plans are becoming less necessary at some chains, as shoppers buy products online. "That is encouraging people to think smaller and then the need to get into the urban cores will bring, on average, most retailers' store sizes down," Caine said.

Wal-Mart and Target Corp. are among those slimming down to fit into cities such as Chicago.

"A lot of these more mature companies that have thousands and thousands and thousands of stores have really kind of maxed out where their format can actually go," Chris Donnelly, a senior executive in Accenture's retail practice, told Reuters. "In general, I think what you're seeing is more that retailers are desperately searching out that next area of growth than it is an attempt to be everything to everyone."

He added, "If they could wave a wand, a lot of them would completely reconfigure their stores. They'd probably close a lot of stores and the remaining stores would be smaller."

Food has become more prominent at a variety of chains, as it brings shoppers in more frequently, driving sales gains.

"When you're trying to steal share, it's about doing what your competitors do, but better, or layering in new businesses," said Caine. "It's a little bit of a redefinition of what you are in the customer's mind."

Meijer recently opened its first Meijer Marketplace store in Melrose Park, Ill., which at 90,000-square feet is less than half the size of the private chain's traditional stores.

The store, with a large grocery section and other goods, does not carry shoes, outdoor furniture or some other items that take up lots of space in large supercenters.

"Our interest in trying to adapt the size of our store is coming more from a recognition that communities are going to grow inward, not outward," said JK Symancyk, Meijer's executive vice president of merchandising. "This, in the end, is less about a magic formula of square footage, it's more an exercise in localization."

After years of selling lots of general merchandise, discounters such as Wal-Mart added groceries to bring in more shoppers, leading to the rise of the supercenter. Now, drugstores and dollar stores are adding more food to increase their sales, as Walmart and other chains go on a bit of a diet to figure out how to fit into tight spaces.

Wal-Mart is testing urban and rural Walmart Express stores that are 10,000 to 15,000 square feet--or less than one-tenth the size of a supercenter's historical average of about 185,000-square feet. New supercenters are being slimmed down to as small as 90,000-square feet. Target is expanding in cities by going from a typical 135,000-square foot store down to 60,000 to 100,000-square feet. It will open its first CityTarget store in downtown Chicago next July. Outposts in Los Angeles, San Francisco and Seattle are also set to open in 2012.

Emphasizing food, which people buy frequently, can lead to more visits. Wal-Mart is building more Neighborhood Market grocery stores, Target is adding larger fresh-food selections to several existing stores and drugstores such as Walgreen now sell everything from bananas to sushi.

For some chains, adding food also adds square feet. Dollar General Corp. is opening and remodeling more of its Dollar General Market stores, which add fresh produce, meat and other refrigerated and frozen foods to an expanded lineup of low-cost merchandise. Still, it only has about 60 of those stores out of nearly 10,000 U.S. stores overall. The stores, typically 16,000 square feet compared with the usual 7,200 square feet for a regular Dollar General, are posting Dollar General's highest same-store sales increases this year, CEO Rick Dreiling said in August.

In early November, it will host grand openings for five new Dollar General Market stores in Las Vegas, the first new Market stores since 2007 and the chain's first stores in Nevada.