Neighborhood Market format revisited
When planning commission officials in Northwest Arkansas gave Walmart the go ahead for a 40,000-sq.-ft. store in Bentonville, Ark., back in 1998, it was the retail industry’s biggest story that year.
A few months later, the name Neighborhood Market was revealed, and an early October opening was set for the Bentonville unit and a second location near Little Rock. The openings were a big deal because Walmart was already gobbling market share at an accelerating pace with a rapidly growing base of supercenters and coming off of a year in which same-store sales had increased by 9%. The prospect of another new format to accelerate share gains in the food and consumable space was as intriguing to investors at the time as it was disconcerting to competitors.
“Walmart’s assault on the market share of the nation’s supermarket and drug store operators has been expanded with the recent opening of the first two Neighborhood Market stores,” was the takeaway of Drug Store News’ sister publication Retailing Today following the opening. “The 40,000-sq.-ft. units, located in Bentonville and Sherwood, Ark., provide Walmart with a promising new growth vehicle while addressing the reality that its large supercenters, discount stores and Sam’s Clubs don’t always fit customers’ definition of convenience.”
The competitive concern then, as now, was that a company capable of opening 150 supercenters annually — as Walmart planned to do in 1999 — would be able to open three or four times that many smaller stores annually. Walmart did little to quell such thinking.
At the opening, then president and CEO David Glass did say, “We need to get it open and run it and see what happens,” but later offered that the company’s successful discount stores, supercenters and Sam’s Club concepts also had begun as experiments. Former U.S. stores COO Tom Coughlin took things a step further. “You are at the start of something that has the prospect of growing into another great company,” Coughlin told those gathered at the Bentonville store.
Financial analysts felt the same way, and speculation promptly ensued. Richard Church, an analyst at the former Salomon Smith Barney, forecast Walmart could eventually open between 1,000 and 2,000 units with annual sales ranging from $10 billion to $20 billion.
“We believe the testing phase will be short, and a rapid rollout will begin as early as the year 2000,” Merrill Lynch analyst Dan Barry said at the time, further speculating that “acquisitions of smaller supermarket chains that could be converted to [the Neighborhood Market] concept are likely in the future.”
Lehman Brothers analyst Jeff Feiner declared, “We believe, operationally speaking, it represents an excellent complement to the supercenter.”
Stephen Long at Prudential Securities offered a voice of reason, noting that Neighborhood Market is a test “that has received a lot more attention than some of the other things they have going on. As for the Neighborhood Market’s prospects going forward, it is much too early to speculate.”
Grand expectations for Neighborhood Market may not have materialized within the time frame that some envisioned 14 years ago, but as annual unit growth creeps into the triple-digit range next year, executives are again alluding to the possibility of dramatic growth.
“You know, at our peak, I think we were [opening] over 300 supercenters a year,” Walmart U.S. president and CEO Bill Simon said recently during the company’s investor conference when asked about the pace of expansion. “So if we could do 300 supercenters, I would think smaller stores would far exceed that.”
No one knows for sure how many Neighborhood Markets will open or how fast it will take place, but with pressure to remain a growth company ever present and a multibillion dollar capital budget at its disposal, Walmart has the motive and means to make a rapid rollout happen.
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Walgreens’ Shannon Curtin: ‘Exclusivity of experience is large differentiator’
WHEELING, Ill. — “When you create something for [our various retail concepts], you are creating a new experience and environment that makes us different than our competitive set. Exclusivity of the experience is a large differentiator.” That was a key message that keynote retail speaker Shannon Curtin, Walgreens divisional VP and GMM for beauty, personal care and seasonal, had for attendees of the Oct. 17 Mack Elevation Forum, held here at the Westin Chicago North Shore Hotel. More than 20 suppliers gathered to attend the all-day event, founded by Dan Mack, managing director of Mack Elevation Forum and strategy leader of The Swanson Group.
Curtin attended the event to offer critical insights into how to successfully and strategically align with Walgreens.
When looking to work with Walgreens, suppliers need to be aware of the various formats under the retailer’s banner, including flagship locations and Well Experience stores, she said. They must also determine the best fit for the community they will mutually serve by thinking about how to create a unique experience within that respective format and passing what Curtin referred to as a “gut check.”
“Within each of these stores, make a proposal to us that the customer always has to win first. Then assure the proposal aligns with our mission and strategy. For example, in a flagship store, the world is open to you to co-create whatever you would like to propose, and we are happy to entertain those new ideas,” said Curtin, who also stressed that the proposed product/solution must be exclusive to Walgreens and unique to the market. “In these flagship stores, it is for us to showcase the best of the best.”
Curtin also discussed the future of private brands and told attendees that while Walgreens will continue to support private brand, it is eager to entertain potential partnerships between noncompeting private and national brands. “If you have an idea to partner with one of our private brands, we think that’s a great solution,” she said.
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Hurricane Sandy and friends of friends
It’s been several weeks now since Hurricane Sandy, virtually erased neighborhoods throughout Brooklyn, Queens, Long Island and New Jersey. For those of us who live and grew up here, the stories of loss and devastation are all around us.
As many as 100 Rockaway boys from Xavier High School — my alma mater — lost their homes and everything in them.
It’s times like these when you really understand what it means to be a part of this great city and its indomitable spirit.
You can see it playing out all across the city as strangers pour out to help in relief efforts. It is kind of remarkable, really, how in times like these, everyone’s circles seem to expand a little bit; your friends’ friends become your friends, too.
The efforts of our industry have been truly amazing. At press time, our coverage of Hurricane Sandy relief was the No. 3 most highly viewed story on DrugStoreNews.com for the week of Nov. 12.
That’s why I wanted to share a special letter to the editor we received via DrugStoreNews.com. Jamee Schleifer is a teacher at Public School 253, which is located in Brighton Beach, one of many areas in Brooklyn that was hit hard by Sandy. Schleifer wanted to do something for the moms of PS 253, and she saw one need that wasn’t being addressed. So she began collecting makeup. “I am reaching out to pharmacies and cosmetics companies who can offer immediate help,” Schleifer wrote to DSN. “I believe, ‘look good, feel good,’” she said.
Schleifer’s goal is to create 800 “beauty kits” for the children of PS 253 to bring home to their moms.
Our goal at DSN is to help connect good people — most often for business, but also because in this industry, we have so many opportunities to do good while doing good business. This is one of those times.
Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News, DSN Collaborative Care, and Specialty Pharmacy magazines. You can contact him at [email protected].
Thanks to Rob for this great article. I'm sort of disappointed I haven't heard from ANYONE concerning this much needed project. I'm hoping for some of the folks out there to step up and help. Look Good...Feel Good is something the folks here are in business for. I will keep my fingers crossed. Sincerely, Jamee Schleifer