Executive Briefings

Will Walmart's Reported Plan for Small Stores Be Any More Successful Than Tesco's?

Rumors about Walmart opening large numbers of small stores have been around for a while. A couple years ago, when Tesco dared to invade Walmart's American turf with their small-format Fresh & Easy stores in L.A., Phoenix and Las Vegas, Walmart quickly opened similar Marketside stores in Phoenix. At the time, there was much conjecture that Marketside was more than the tit-for-tat it appeared, that it was a test of a new plan for Walmart.

It now appears that Walmart is ready to roll out their next generation of urban stores, but if the rumor mill is right, they will probably be more like the older Neighborhood Markets - 40,000 to 50,000 square feet -- than the 10,000-square-foot Marketside format. Though there is also speculation that both formats will be mixed through urban areas.

Commercial real estate sources say that Walmart is looking at locations in Chicago, Detroit, Los Angeles, Reno, and northern California.

There are trade marketing implications - the most immediate being the battle suppliers will wage to be included on the shelf when there are only half (or less) as many shelves per store. Marketers will also have to come up with promotions that will work across formats, and/or separate marketing plans for each format - both options will present obstacles.

By the way, Tesco's original plan was to have 10,000 Fresh & Easy  stores in the U.S. Thus far, they have yet to reach 2 percent of that goal.

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Rumors about Walmart opening large numbers of small stores have been around for a while. A couple years ago, when Tesco dared to invade Walmart's American turf with their small-format Fresh & Easy stores in L.A., Phoenix and Las Vegas, Walmart quickly opened similar Marketside stores in Phoenix. At the time, there was much conjecture that Marketside was more than the tit-for-tat it appeared, that it was a test of a new plan for Walmart.

It now appears that Walmart is ready to roll out their next generation of urban stores, but if the rumor mill is right, they will probably be more like the older Neighborhood Markets - 40,000 to 50,000 square feet -- than the 10,000-square-foot Marketside format. Though there is also speculation that both formats will be mixed through urban areas.

Commercial real estate sources say that Walmart is looking at locations in Chicago, Detroit, Los Angeles, Reno, and northern California.

There are trade marketing implications - the most immediate being the battle suppliers will wage to be included on the shelf when there are only half (or less) as many shelves per store. Marketers will also have to come up with promotions that will work across formats, and/or separate marketing plans for each format - both options will present obstacles.

By the way, Tesco's original plan was to have 10,000 Fresh & Easy  stores in the U.S. Thus far, they have yet to reach 2 percent of that goal.

Read Full Article