Wal-Mart unveils mini-stores near dollar rivals
Saturday, June 4, 2011
GENTRY, Ark. (AP) — The Walmart of the future could very well be the size of your local drugstore.
Wal-Mart Stores Inc. this week unveiled its first Walmart Express, its answer to the growing threat of dollar stores which have been successfully maneuvering the post-recession economy. The 15,000-square-foot store, one-tenth the size of a Walmart superstore, aims to carry everything you might need on the spur of the moment, from milk and eggs to DVDs. Just not everything under the sun like its big cousin. Walmart Express is sized to fit into cities where space is at a premium and in rural areas that can’t support a superstore.
Dollar stores have enjoyed strong revenue growth as they’ve lured more shoppers with bargain prices and wider selections. Meanwhile, U.S. Walmart stores have posted declines in revenue open at least a year for eight straight quarters. Dollar store chains also have quickly expanded, opening stores closer to customers’ homes, an advantage in era of high gas prices. Already, the average round trip to a dollar store is six miles, compared with 30 miles for a typical Walmart trip, Credit Suisse analyst Michael Exstein estimates.
The new Walmart Express, located in rural Gentry, Ark., about a half-mile away from a Dollar General location, is one of 20 small stores that Wal-Mart expects to open by the end of January. The long, narrow concrete box topped with a powder-blue Walmart Express sign is aimed at customers who’ve run out of milk or just need to pick up a movie.
A second Walmart Express test store will open June 8 about 30 miles away in Prairie Grove, Ark., and another will launch in Ridgefield, N.C., a week later. The company also is experimenting with a prototype for urban markets in Chicago, to open later this summer.
“This is about access to breadth of assortment” and everyday low prices, said Anthony Hucker, vice president of the strategy and business development division which is spearheading the new format. If the retailer gets the model right for both urban and rural areas, it sees the potential to build about 350 per year. That’s the same pace that it built out its supercenters at the height of the company’s expansion in 2005 and 2006.
Hucker emphasized Thursday that Wal-Mart is still testing out the format. Most Walmart Express locations will have a pharmacy. Some, like the store in Prairie Grove, will even sell gasoline. All stores will offer check cashing services and accept food stamps.
Inside the Gentry store, a wall of coolers featured refrigerated foods and frozen items, including ready-to-go meals like $4.98 Hormel’s Roast Beef. The store highlights that its fresh produce comes from local producers. For ease of shopping, some related general merchandise was featured alongside groceries. For example, tea kettles and toasters were in the bread and tea and coffee aisle. Shoppers can even find prepaid phones and greeting cards.
Analysts will be carefully monitoring how the fight unfolds in Gentry, whose population of a little over 3,000 is about a 16-mile round trip to the nearest Wal-Mart supercenter in Siloam Springs, Ark. Wal-Mart is looking to customers to tell it what the small stores should carry. Signs throughout the store feature “If you want it, we’ll get it.” Customers will be able to order an item on walmart.com and have it delivered to the store through the company’s “Site to Store” service.
The Walmart Express also has a small suggestion box in the front where customers can voice their opinions on what should be carried by filling out a form.
“We have to look through the consumers’ eyes,” Hucker said.