Wal-Mart exploring idea of new format

BENTONVILLE, ARK.

The prospect of a new format development comes amid a slowing rate of U.S. supercenter expansion and the looming arrival of a highly successful European competitor on Wal-Mart’s home turf. Wal-Mart’s response to these challenges was brought to the forefront in late July when the company posted a job listing on its Web site for a senior director of multiformat strategy responsible for proposing the development of new formats to complement the company’s current portfolio and to address the opportunities of new markets.

“This position will analyze the organization model of successful multiformat companies and recommend a suitable organizational approach for Wal-Mart,” according to the job description. “[The position] will also evaluate the interaction among our existing formats, monitor the performance and recommend format combination and location strategies to increase market share and minimize cannibalization impacts.”

The job posting coupled with Tesco’s entry into the country next year with a small format store called Fresh & Easy Neighborhood Market caused most of the speculation to be focused on Wal-Mart’s development of a small format food concept. Largely overlooked was the possibility that Wal-Mart would entertain the development of an entirely new concept targeting growth in other sectors of the economy where application of the company’s business model could deliver value to consumers. That was the strategy in the 1980’s when Wal-Mart entered the food business with supercenters and more recently was the rationale behind the expansion of financial services.

It is entirely likely that Wal-Mart will develop food formats that are complementary to its existing offerings or will find a way to continue to shrink the 9-year-old Neighborhood Market concept. Such formats are evolutionary, though, considering Wal-Mart is already the largest food retailer, and it would merely be segmenting the market.