Small format’s future unfolds in NWA

One of the more interesting developments in the retail industry is set to unfold in a series of small towns along the Western edge of Arkansas where Walmart is set open the first of its experimental small formats.

First up is a 35,000-sq.-ft. Walmart Market store along the western edge of Fayetteville that is scheduled to open next week. Walmart Market is the new name for the concept previously known as Neighborhood Market so this store isn’t likely to be revolutionary in its design or product assortment, although it is about 10,000 sq. ft. smaller than the typical Neighborhood Market Walmart opened during the past decade.

The more interesting developments will coming in the following weeks when truly small format Walmart Express stores open in the communities of Gentry, Prairie Grove and Gravett. Each of these towns have only a few thousands residents but the competition set to unfold in these communities could reshape the retail landscape during the coming decade as Walmart reacts to the growth of such small format, low-price concepts as Dollar General and Family Dollar that have been busy adding food to their product assortments.

The first Walmart Express stores to open are in Gentry and Prairie Grove and they will reportedly be open before the company’s shareholders’ meeting on June 3. Hundreds of analysts and bankers descend on Northwest Arkansas for the meeting and the new Express stores will offer an opportunity to showcase a potential new growth vehicle even though the format is still clearly in development.

For example, the unit in Gentry will contain a pharmacy as indicated by a sign on the store’s exterior but not gas. Conversely, the exterior of the store in Prairie Grove offers no indication of a pharmacy but there are four gas pumps in the parking lot. The store in Gravett remains under construction and has been delayed slightly due to demolition work of an existing structure.

Judging from the location of the first Walmart Express store, it is apparent that Dollar General will be the first competitor to feel the impact. The Express store in Gentry is less than a half mile from a recently remodeled Dollar General store, and Dollar General units litter the countryside in Western Arkansas. Also prevalent are Marvin’s food stores, a 21-unit regional operator, which stands no chance or being price competitive with the world’s largest retailer.

The opening of these new Walmart Express stores is certainly an interesting development for Walmart and clearly the company has the potential to open hundreds of them annually. Far less certain is whether residents in such small towns as Gentry and Prairie Grove who are already being served have the purchasing power to deliver the level of sale volume Walmart is going to need to generate an acceptable return on investment.