Supercenters rule, but small formats to accelerate for Walmart

BENTONVILLE, Ark. — Walmart plans a modest acceleration of its small-format stores in the coming years as investors were assured Wednesday morning that financial returns are now comparable with the company’s large supercenters.

Walmart kicked off its 19th annual investor conference on Wednesday with optimistic comments by senior U.S. leadership about their outlook for the holiday season as well as an outline of growth initiatives for 2013 and beyond. One of the most highly anticipated revelations heading into the event was Walmart’s plans for its smaller format Neighborhood Market and Walmart Express stores. By year end, Walmart expects to be operating a total of 240 Neighborhood Markets and 12 Express stores. By 2016 the number of Neighborhood Markets will double to roughly 500 units generating $10 billion in revenue, according to Walmart U.S. president and CEO Bill Simon.

Express stores remain a work in progress and Walmart is attempting to elevate the approximately 15,000-sq.-ft. store's rate of return to that of the approximately 45,000-sq.-ft. Neighborhood Market. Simon said a market density test is currently underway to determine how the Express concept fares against competition.

While Neighborhood Market growth will accelerate next year, it is still well below the pace at which Walmart was opening supercenters during that format’s hey day. According to Simon, supercenters will be the primary driver of growth for the next several years with 125 new units coming on line this year and next as substantial opportunity remains for the larger stores.

He also noted that Walmart, a company which opened close to 300 supecenters during the peak of expansion, has the capability to open small format stores well in excess of that number. Simon made a similar assertion during the prior year conference when asked about the pace of small format expansion.

According to Simon, Walmart’s small format stores offer a blend of low prices, fresh food, pharmacy, quality perception and multichannel capabilities that can’t be matched by rivals, such as drug, dollar and limited assortment food retailers.

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