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Wal-Mart's urban strategy

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MARK AUSTIN THOMAS: Wal-Mart opened its first store in Chicago yesterday. This is part of a strategy by the retailer to open more stores in urban areas, but being the low-cost leader may not guarantee success. Helen Palmer has the story.


HELEN PALMER: Getting a foothold in U.S. cities has been tough for Wal-Mart.
DAVID BELL: Real estate in cities is both hard to come by, expensive, and planning permissions can be quite difficult to obtain.

David Bell teaches marketing at Harvard Business School. He says beyond those hurdles, urban stores may not be the cash cows Wal-Mart hopes.

BELL: The cost of running these stores is very expensive. It's not clear that opening stores in these cities is really an advantage to Wal-Mart's business model.

But Bell says the company's basically run out of good suburban locations and urban areas offer many more potential customers.

He predicts that not only the company, but also cities like Boston and Los Angeles, will be interested to see if this new store is a hit.

I'm Helen Palmer for Marketplace.

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