U.S. News

Walmart Lines Up Sites for Smaller Stores

By Jonathan Birchall, Financial Times

Walmart is gearing up for a move into small convenience stores in urban markets such as Chicago and Los Angeles as the largest US retailer seeks to revitalise its growth in its home market.

Walmart Stores
Source: Walmart

Commercial real estate brokers say Walmart has begun scouting for sites for smaller- format stores in a range of urban markets, including Sacramento and the San Francisco Bay area in northern California, as well as in Reno, Detroit and other cities.

“They’ve been looking at sites between 20,000 and 50,000 square ft over the summer,” said one broker in northern California.

Garrick Brown, a vice-president of research at Colliers International, said the retailer was looking at taking over existing buildings, and that “chatter” from brokers suggested the retailer was looking for scores of sites across the US. “It is going to be huge,” he said.

Bill Simon, chief executive of Walmart’s US business, has said the expansion plans, to be outlined next month, will include convenience stores similar to those it runs in Mexico and elsewhere in Latin America.

Discussing the retailer’s plans to enter the Chicago market, which the city approved this summer, Mr Simon said Walmart’s plans for more than 20 stores would include “a healthy mix” of supercentres and small-format stores, and that the model would be applied elsewhere. “You’ll see us taking the Chicago approach with other cities,” he said.

The conventional Walmart Supercenter, which remains Walmart’s most profitable format, averages 185,000 square ft and sells both groceries and other goods. But the retailer has been testing both 10,000 square ft stores in Arizona under the Marketside by Walmart banner and a 20,000 square ft version of its Neighborhood Market, which includes a pharmacy. The retailer is also developing smaller, 80,000 square ft versions of its supercentres.

Mr Simon highlighted Walmart’s experience with smaller stores in Latin America, where its smallest Bodega Aurrerá Express stores are 4,000 square ft. “Our group in Mexico and Latin America operates small formats very well and very profitably, and we are going to beg, borrow, steal and learn from them as quickly as we can,” he said.

Walmart’s small-format ambitions will open a new competitive front in its battle with the traditional supermarkets such as Kroger and Safeway.