Wal-Mart's Smaller Grocery Format on the Way

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Wal-Mart's Smaller Grocery Format on the Way

BENTONVILLE, Ark. -- The world's largest retailer has confirmed that it's gearing up to introduce a new grocery format. The small-format stores will be known as "Marketside" and will debut as early as this summer in Arizona, according to a report yesterday in The Financial Times.

While Wal-Mart wouldn't confirm the details of the store, including its name and when and where it will open, spokeswoman Amy Wyatt-Moore told Progressive Grocer, "We trial and test different ways to serve our customers all the time, and this smaller neighborhood market is an example of that."

The "Neighborhood Market" Wyatt-Moore referred to is, of course, Wal-Mart's existing standalone supermarket concept, which was introduced 10 years ago. There are currently more than 112 of these stores in the United States, but their average size is around 40,000 square feet.

In contrast, Marketside would reportedly be closer to 20,000 square feet.

While several analysts mused that Wal-Mart's intention is to go head to head with the new Fresh & Easy Neighborhood Markets being rolled out in the United States by Tesco, one Wal-Mart watcher told Progressive Grocer it's likely that other factors are also at play.

"The headlines are being presented as if Wal-Mart is fighting back at Tesco," noted Richard D. Hastings, a Charlotte, N.C.-based retail economist with the Federation of Credit and Financial Professionals. "But I don't think that's the only objective here. They certainly have a bit of concern, but Tesco and Wal-Mart are two different animals."

According to Hastings, "This is a very good time for Wal-Mart. Things are going well for them -- their confidence as an organization is really rising. Across the board, everything points to good opportunities for smaller-format stores right now. They have dabbled in a couple of things in the past, but they've never been aggressive in the rollout of smaller-format stores. That won't be the case this time. They're going to be much more aggressive in exploring the opportunity."

In addition, Wal-Mart has now had time to experiment with merchandising organics and figuring out which grocery strategies work best, said Hastings.

Its grocery strategy will no doubt be helped along by Jack Sinclair, a veteran of the U.K. grocery industry who was named as Wal-Mart's e.v.p. of grocery merchandise Jan. 4.

According to the Financial Times report, Wal-Mart has secured leases on four properties southeast of Phoenix, some of them only a mile from locations where Tesco is setting up its grocery stores. Its new logo, reportedly filed in planning documents in Arizona, consists of green lettering with a tomato, egg, and grape topped by a Wal-Mart blue star. The retailer has also registered a number of new trade names in recent months, such as City Thyme and Field & Vine, which some industry analysts believe could be used for new private label fresh food offerings, the report said.

Wal-Mart operates 2,435 Supercenters in the United States, but last year the retailer scaled down its expansion plans for the larger, grocery-general merchandise hybrid.

-- Jenny McTaggart