Walmart moves to smaller stores

17 October 2013
NEW YORK: For the first time, Walmart plans to open more smaller-format stores than supercentres in the US as it responds to changes in shopping habits, the rise of e-commerce and seeks to reduce distribution costs.

The world's largest retailer told analysts that it planned to open between 120 and 150 small format stores by January 2015 compared with 115 larger stores, the Financial Times reported.

In a move that recognises increased consumer demand for convenience and 'immediate access' trips, the company is responding to increased competition from dollar stores and online retailers like Amazon.

The retailer operates more than 4,000 stores in the US, most of them supercentres, but it views its 300-strong Neighborhood Markets chain and Walmart Express as key vehicles for growth.

It also sees an opportunity to link its smaller stores to the distribution network operated by the supercentres.

Using the back room of a supercentre as a "little mini warehouse" for daily deliveries to smaller stores would eliminate the need to send large trucks from distribution centres to smaller stores, said Walmart US CEO Bill Simon, in comments to Reuters.

Elsewhere, the company plans to close around 50 under-performing stores in Brazil and China – although that represents only up to 3% of its sales in each of those markets – and it plans to continue opening new stores in other locations.

Other major retailers, such as the UK's Tesco and Carrefour of France, have also been adapting to the movement towards convenience store formats, a trend analysed in the latest issue of Admap magazine.

In the UK, for example, the convenience food retail market is growing at twice the rate of the wider market and accounts for 20% of grocery spend.

Data sourced from Financial Times, Reuters; additional content by Warc staff
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