Small formats have big future at Wal-Mart

BENTONVILLE, Ark. —Wal-Mart hasn’t discussed expansion plans for its new Marketside stores, but the company has indicated small-format stores will play a much bigger role in its future.

The average size of new supercenters is shrinking to a range of 140,000 square feet to 170,000 square feet, compared to 195,000 square feet just a few years ago. By opening smaller stores capable of achieving comparable sales volumes through supply chain efficiencies and reduced product assortments, Wal-Mart can make more efficient use of its capital.

The reduction in supercenter size comes as the company further reduces the planned number of new units. But as supercenter growth decelerates, Wal-Mart looks to tap growth opportunities with small stores. It has identified 15 large-opportunity markets where it has a limited presence and, according to U.S. Stores division president Eduardo Castro-Wright, could achieve enormous sales potential.

“If we had the same market share in those 15 opportunity markets as in the rest of the U.S., it would represent a larger opportunity than exists in India and Russia combined,” he said. “It is a very significant opportunity for us and one you will see us invest more in, in the future.”

Wal-Mart’s problem is that it doesn’t have the right vehicle to reach those markets, which explains why the 15,000-square-foot Marketside was developed. However, Wal-Mart’s global portfolio includes numerous small formats that could be modified to serve U.S. consumers in densely-populated markets.