Walmart Slims Down for Urban Areas
Business + Economy

Walmart Slims Down for Urban Areas

FAYETTEVILLE, ARK. — Wal-Mart unveiled a new blueprint for stores this week that is a fraction of the size of the big-box stores that it helped popularize.

Executives at the company said they plan to use the model — dubbed Wal-Mart Express — for “urban offense and rural defense.” The world’s largest retailer has struggled to gain a foothold in metropolitan areas such as Washington and New York, where real estate is often expensive and limited. It is also hoping to compete against the dollar stores that often siphon its customers away for quick trips during the week.

“Small stores are going to be a very good growth opportunity for us, because they allow us to get into places where we’re not in today,” said Bill Simon, head of Wal-Mart’s U.S. operations said Thursday.

The first Express prototype is slated to open next week in rural Gentry, Ark., and is a mere 15,000 square feet — roughly one-tenth the size of a typical Wal-Mart super center. During a tour of the Gentry store, soda and ice machines and a RedBox DVD kiosk sat outside the front doors. Shelves of ready-to-go meals were the first products inside. The store carries about 13,000 items, compared with 125,000 in a traditional format.

Executives said they are still testing which products to carry and considering the optimal size for Express stores. The Gentry store includes a pharmacy and check-cashing service, but other locations may sell gas and other items. Fourteen additional pilot stores are under construction in North Carolina and Chicago and are expected to open later this year. Those stores could be as large as 30,000 square feet. The company said it hopes to open hundreds of stores during the next few years. There are no plans so far to open an Express in the Washington area.

The move comes as Wal-Mart tries to turn around its flagging U.S. division, where sales at existing stores slipped 1.1 percent in the most recent quarter. It has put 8,500 products back on its shelves after efforts to get rid of some of the clutter in some stores backfired. Simon said sales of air fresheners are up 88 percent since the retailer reintroduced the cheapest brands.

Wal-Mart is also resurrecting its philosophy of everyday low prices rather than relying on discounts, or “rollbacks,” as it has in recent years. Executives said the change confused customers and allowed an opening for competitors.

“That’s not the model we ran for 45 years, and that’s not the model we’re going to run going forward,” Simon said.

Read more at The Washington Post.