Walmart Ramping Up Small-store Growth

Wal-Mart Stores Inc. said it would significantly accelerate its capital plan for U.S. small store openings for the current fiscal year. Having expanded its original capital forecast from last October, the Bentonville, Ark.-based mega-retailer now expects to add about 270 to 300 small stores during the fiscal year, doubling its earlier forecast of 120 to 150 locations. Additionally, Walmart U.S. will keep to its plan to open around 115 new supercenters this year.

“Customers’ needs and expectations are changing,” noted Bill Simon, Walmart U.S. president and CEO. “They want to shop when they want and how they want, and we are transforming our business to meet their expectations. Customers appreciate the broad assortment of our supercenters for their stock-up trips, as well as our small-store formats for fill-in trips. By unlocking this growth opportunity and further combining our supercenters and small store formats with an unlimited selection available through ecommerce, we provide our customers with anytime, anywhere access to our brand.”

Exemplifying the success of the company’s small-format stores, comparable-store sales for its Neighborhood Market locations rose about 4 percent for fiscal year 2014, spurred by fresh and pharmacy.

“Neighborhood Market is performing comparable or favorable to leading grocers,” observed Simon. “Our small-store expansion, in addition to providing customers access to a wide variety of products, including fresh, pharmacy and fuel, will help us usher in the next generation of retail. This will combine thousands of points of physical access with digital retail experiences that include initiatives such as Site to Store and Pay with Cash.”

‘Healthy Pipeline’ of Future Stores

At the present time, Walmart has 346 Neighborhood Markets and 20 Walmart Express stores, the latter of which are being expanded beyond their initial three-market pilot. As a result of its accelerated plan, Walmart U.S. forecasts it will end fiscal year 2015 with net retail square footage growth of around 21 million to 23 million square feet across all formats, compared with its original prediction of around 19 million to 21 million square feet. The projected capital expenditures and square footage exclude the effect of future acquisitions.

“We have a healthy pipeline of stores in development, and we systematically work to improve our real estate and construction processes, reduce building costs and shorten the time needed to open our stores,” added Simon. “In addition to providing best-in-class one-stop shopping at supercenters, we believe that accelerating our small-store expansion will allow customers to choose where and when to shop based on their needs. Our small-store expansion will also strengthen our market share and create greater efficiencies in our supply chain through a tethered approach that uses supercenters as a supply chain base, links our resources, and provides a unique and connected customer experience.”

To finance this added growth, the company has revised its cap ex forecast for the Walmart U.S. segment to $6.4 billion to $6.9 billion, up from its earlier range of $5.8 billion to $6.3 billion. Walmart U.S. plans to open a total of 385 to 415 supercenters and small stores in fiscal 2015, adding considerably to the more than 4,200 stores in these formats that are now open.

Walmart operates 10,942 stores under 71 banners in 27 countries, and e-commerce websites in 10 countries.