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Coming soon: Small-Mart

Steve Tripoli Aug 27, 2007

Coming soon: Small-Mart

Steve Tripoli Aug 27, 2007


Tess Vigeland: Attention Wal-Mart shoppers: The next generation of your favorite store may look less like a super center and just a little bit more like a . . . mini-mart?

Well, OK, not that small. But the world’s largest retailer could be moving toward a more intimate shopping experience. A story in today’s Financial Times says Wal-Mart is looking for an executive to help shape a downsized-store strategy.

The company would neither confirm nor deny. But several analysts say they’ve been expecting Wal-Mart to get bigger by going smaller. Marketplace’s Steve Tripoli has more.

Steve Tripoli: Wal-Mart spokesman John Simley wouldn’t be recorded today. But when asked about the small-store strategy he said the company would never rule anything out.

Simley did say Wal-Mart wants to hire mid-level executives to, quote, “evaluate our existing formats.” The Financial Times says Wal-Mart’s responding to a new U.S. initiative by British food giant Tesco. Tesco’s planning lots of new neighborhood grocery stores called “Fresh & Easy” here.

That notion prompts a chuckle from analyst George Whalin of Retail Management Consultants.

George Whalin: My guess is that Wal-Mart is not afraid of Tesco.

But Whalin says Wal-Mart will go smaller with future stores.

Whalin: You’ve got states like California and you’ve got Northeastern states where real estate is very difficult to come by. So you look at other formats and, you can get close to the customer in smaller formats in neighborhoods and communities.

Retail analyst Bernie Sosnick is with Oppenheimer & Company. He says Wal-Mart’s already tested the small-store strategy in Mexico and Central America.Sosnick says it could be a path to future growth here as well.

Bernie Sosnick: By stratifying in this way, Wal-Mart can serve different shoppers at different income levels better than it can with one large Super Center of almost 200,000 square feet.

Sosnick and Whalin both say there’s a lot more life in the Super Center yet. There are 2,300 of them out there now and more planned.

But they agree the expansion of giant stores will reach a point of diminishing returns soon. And they also say that Wal-Mart is sure to have answers ready when it comes to what to do next.

I’m Steve Tripoli for Marketplace.

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