NEW YORK - Sometimes being the biggest retailer on the block doesn??t make you the best. And although Walmart??s foray into smaller formats isn??t necessarily new news, the retailer is making headway with its plans for "opening a number of small outposts to penetrate the nation's cities and fight the spread of no-frills grocery chains, which are luring away some of its core customers," reports The Wall Street Journal.

Although details were not released, Walmart CEO Mike Duke stated that the company??s U.S. growth strategy would be fueled by "innovative new formats," which the news source says is consistent with recent statements that Walmart is moving away from the warehouse-sized supercenters for more smaller, urban formats.

The news source says that Walmart??s growth of the supercenter format has slowed, going from 132 stores in 2007 to just 49 in 2009. Part of the reason, according to analysts, is that the retailer is "running out of ideal places to build the gigantic outlets."

However, the bigger concern for going smaller may be coming from increased competition for the consumer dollar, without sacrificing value. Walmart has been facing stiff competition from rising discount grocery chains such as German-based Aldi and Supervalu Inc.'s Save-A-Lot.

"Retail experts disagree over whether these discounters pose a big threat to Walmart...But their rise comes at a tough time for the big-box giant, which has reported three straight quarters of sluggish U.S. sales," writes the news source, adding that Walmart had generally benefitted from consumers who look for savings in the current economic climate. The problem, however, if that Walmart??s core customer "moved further down the retail ladder to discount grocers ?" and liked what they found."