Inside Walmart’s Crystal Ball

Analysts predict the mega-retailer will continue investing in smaller footprint stores.

November 13, 2014

NEW YORK – In recent years, Walmart has seen its same-store sales remain mostly flat, perhaps due in part to factors such as high gas prices, stagnant wages and cutbacks in the SNAP food stamp program. So, what’s next for the mega-store? This week, two analysts from Motley Fool weighed in with their predictions, several of which focus on Walmart’s new, smaller stores.

Motley Fool’s Adam Levine-Weinberg says that if Walmart wants to return to growth, it needs to become more accessible for consumers. While Wal-Mart Supercenters are useful for big shopping trips, they aren't very convenient for customers who just need to buy a few things. Walmart should (and likely will) take a cue from the growing popularity of dollar stores, finding the sweet spot between convenience and price.

Walmart will open about 240 small-format "Neighborhood Market" stores this year and plans to open another 200-220 next year, compared to plans for only about 60 to 70 of its Supercenters. The smaller format stores include models to compete with both grocery stores and dollar stores. Over the past two years, the chain’s Neighborhood Markets have posted significantly better comparable-store sales performance than the Supercenters.

Levine-Weinberg predicts that in five years, “small-format Neighborhood Market stores are likely to be much more prominent relative to Wal-Mart Supercenters than they are today.” By finding top-notch real estate for smaller, easy-to-navigate stores focusing on groceries and fresh foods, Wal-Mart can solidify its dominant position in food retailing.

Read the article from the October NACS Magazine for more on Walmart’s new, smaller format Walmart To Go stores.

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