BENTONVILLE, Ark. — Challenging the domain of drug chains, Walmart has debuted the first three of its new small-format stores.
The 15,000-square-foot Walmart Express units opened this month in Gentry and Prairie Grove, Ark., southeast of the retailer’s Bentonville headquarters; and in Richfield, N.C., between Greensboro and Charlotte. The outlets feature a pharmacy and groceries, including fruit, vegetables and meat. General merchandise includes bedding, greeting cards and office supplies. There is also a check-cashing counter.
Initial sales at the Arkansas stores were “very, very good,” Walmart U.S. president and chief executive officer Bill Simon said at an investment conference.
The Walmart Express format targets urban and rural areas, and two of the stores will premiere in Chicago this summer. Fifteen to 20 are expected to open by the year’s end in northwest Arkansas, North Carolina and Chicago, and the stores are viewed as a vehicle for a possible entry by Walmart into New York City.
Walmart Express is a scaled down version of the 30,000- to 60,000-square-foot Walmart Market (the former Neighborhood Market) and bears little resemblance to the chain’s discount stores and Supercenters. The express stores have 11,000 to 13,000 SKUs versus more than 100,000 SKUs at a Supercenter.
Counting Walmart Markets, hundreds of smaller format stores will be rolled out over the next three years, according to Simon. And the Walmart Express is not the retailer’s smallest format. The chain has debuted a 3,300-square-foot Walmart on Campus at the University of Arkansas in Fayetteville. The store has a pharmacy and 2,800 SKUs, half of which are groceries.
While the company will still open more than 100 Supercenters this year, analysts say it is likely to run out of space for the big boxes in the next decade and the rollout of smaller units is a farsighted move.
The rollout is also part of Walmart’s response to two years of same-store sales declines in the United States. That contrasts with the discounter’s success overseas, which president and CEO Mike Duke drew attention to at the chain’s annual shareholders meeting this month. Serving international consumers is “a clear and direct path to a stronger business and a better company,” he said.
“Walmart is the best positioned retailer on the globe,” he added. “We are right in the sweet spot of the next generation customer.”
There are millions of such customers “striving to join the emerging global middle class,” Duke commented. “They’re connected to the world through smartphones and social media. They’re in charge of when they shop and how they shop, and they know who has the lowest prices.”
On the heels of recent investments in the United States and China, he reaffirmed Walmart’s commitment to global e-commerce. “With our stores and low prices, we can really take advantage of mobile technology and this era of price transparency. We can combine our stores, our systems, and our logistics expertise into one continuous channel to drive growth and serve the next-generation customer around the world. In global e-commerce we will not just be competing. We will play to win.”
Vowing to build up international management expertise, Duke added, “We have to be more intentional about developing talented leaders, managers and associates around the world. That means better training and greater opportunity for our store associates. And it means thinking globally and building teams that reflect today’s world.”
At the same time, he called same-store sales growth in the United States the company’s top priority. He said that Walmart U.S. “has the right plan” and is gaining traction.
He reiterated Walmart’s unwavering commitment to everyday low prices, saying, “Nothing builds more loyalty with customers … Everyday low prices in every market. No exceptions. No excuses.”