
On February 26th we reported on Walmart Stores' announcement to significantly accelerate its capital plan for U.S. small store format openings in the current fiscal year. For complete story click here https://realestatedaily-news.com/walmart-accelerates-small-store-openings/
More information was released Wednesday in a presentation at the Raymond James Institutional Investors Conference in Orlando, Fla. (March 3-6) when Bill Simon, CEO of Walmart explained that the retailer is using its Neighborhood Market and Walmart Express formats to create a new kind of “fully tethered retailer,” offering consumers all the possibilities of e-commerce with the convenience of a physical store, including such innovations as grocery delivery, drive-through grocery pickup, and storage lockers.
With Neighborhood Markets, Simons says, “We are in roll-out mode with a direct line of sight for 500 stores by fiscal '16. And, just to be clear, when we talk about smaller formats, we're talking about anything below, say, 50,000 or 60,000-square-feet, non-Supercenters , so Neighborhood Markets and Express stores would fall into that category.
Just so everybody's aware, 90% of Walmart’s fleet is Supercenters, and Supercenters are still a great growth vehicle from a dollar perspective. “We'll continue to build those where we see the opportunities and add about 125 new Supercenters this year,” Simon says.
“We are using these (smaller) formats so shoppers can order groceries and maybe a snow shovel online, then pick it up on their way home, when they are stopping to gas up at Walmart anyway,” he says. “We're excited about it because they (smaller formats) compete really well against multiple channels. We'll build as many as 115 small formats this year, and we see that fleet relative to be about 40% of our new openings.”
It’s not that Walmart Supercenters are going away. “We expect the supercenter to remain vital. It’s a powerful beast. And they perform really well on the weekly stock-up occasion, and we have the ability to flex prototypes.” Those stock-up trips, which account for about 60% of U.S. grocery spending, are a $585 billion market, where Walmart has about 25% market share.
But the problem is that Walmart has fallen behind on fill-in shopping trips, as many smaller competitors, including dollar, drug and convenience stores, have proliferated. “Our growth has been interrupted by the rapid growth in these smaller stores.” Walmart has a roughly 10% share of that $415 billion market.
With the expansion of Neighborhood Markets, first launched in 1999, and the newer Walmart Express launched last year, “we now have an opportunity to really make an impact in this area.”
These stores are hybrids, he says, “designed to not only compete in grocery but also across a much broader space, including fresh foods, fuel and pharmacy.” Nor do they seem to cannibalize sales from larger Walmarts. “Data shows we are capturing new sales, new dollars and new trips when we put these stores in.”
But what makes the concept powerful, he says, is combining the smaller stores with the power of its e-commerce capabilities combined with Walmart’s everyday low prices. With Walmart Express, “it is a full-capability store, with fuel, pharmacy and fresh foods, and it is all right in your zip code. Because of the breadth of the product offering and the connectivity, we are building a competitive advantage against all spectrums of retail, from pure physical to pure digital.”
He says the company’s first “fully tethered” units will come online May 2 in Denver, followed by San Francisco. Its pick-up grocery service, which has been testing in 11 stores in Denver, has resulted in a 90% customer satisfaction level.
Separately, Walmart says it recently acquired digital recipe start-up Yumprint, a start-up that publishes recipes from more than 2,000 blogs and Web sites. Given Walmart's sophisticated use of mobile in-store, the deal could highlight some bigger partnerships between the retailer and its CPG brands.
To see the full transcript of Bill Simon’s presentation at the Raymond James Institutional Investors Conference in Orlando, Fl March 5, 2014 Transcript Bill Simons CEO Walmart Presentation.
To see the accompanying slide presentation click here: Power Point Presentation Walmart US at Raymond James 3-5-13.pdf