Walmart has a new business model in mind. The 180,000-sq.-ft. behemoth-of-a-store model remains alive and well, of course, but the retail giant has begun targeting markets outside its suburban comfort zone. The new platform stores are projected to average 20,000 sq. ft. and will serve either densely populated urban areas where space is at a premium, or smaller, isolated cities.
Bill Simon, head of Walmart U.S., remains secretive about the details of the small-format stores, which will round out the large and medium platforms already in existence. But a word of warning to small ‘conveniencestore- plus’ model retailers: the big W is on its way to the big city, with 20 to 30 small-model stores projected to open in urban areas like Chicago and New York by 2012.
What does that have to do with you? Depending on who and where you are, it could mean a lot or a little. It certainly will mean stiff competition for smaller retailers, and it could mean danger for the private urban corner store. But in a larger sense, it could be read as a bellwether for where retailing in the U.S. is headed, as even the ultimate symbol of expansive shopping is finding ways to shrink.
That’s not to say this is the company’s first foray into the small model–its Neighborhood Markets have been around for more than a decade–but it’s saying something that Walmart is, once again, contorting itself to fit into a smaller space. The buying power and discounting capacity remain, of course; only the footprint changes.
And Walmart is by no means the first in the retail shrink. Tesco’s ballyhooed stateside arrival in the form of its Fresh & Easy stores was a benchmark for the new format. Hy-Vee, Jewel-Osco, Safeway and a host of others launched their own smaller models in 2008. The announcement of Walmart’s plans seems to legitimize the perceived ebb in retail store sizes.
The extent of the new format’s dip into food and foodservice remains unclear. Internet speculation has everyone from dollar stores to smallformat supermarkets as the current markets in Walmart’s crosshairs. The truth is probably somewhere in between. Grocery is an important element of any retailer of such a footprint, particularly in urban settings.
A glance back at the suburbs reminds us that the large-format store isn’t going anywhere–but it will be interesting to watch as formats shrink, SKU lists specialize and the small format evolves. The streamlined, hypertargeted opening salvos are marking a change in retail.