Wal-Mart refines Canadian concept with focus on community

Wal-Mart Canada is expanding its supercenter presence in the country, but now, after the initial rollout, it is building on its earlier operations, applying some of the community principles and even using the big combination units as a testing ground for new ideas.

Wal-Mart initially launched with three supercenters in late 2006, all surrounding Toronto. By January of this year, Wal-Mart was operating 31 supercenters with units in Ontario and Alberta. The company is planning to debut its first supercenter in British Columbia this spring. The new stores incorporate lessons Wal-Mart has learned about operating expanded food—the company blew out its pantries as a test for supercenters, but offered few perishables before the big format debuted—in Canadian markets.

“Rather than making significant changes to the format, we’ve tweaked here and there with refinements to our fresh assortment and worked with vendors to make sure that our products are as fresh and relevant as we promised,” said Wal-Mart spokesman Kevin Groh. “That’s been front of mind, given we have been known for discount general merchandise. We must prove our freshness daily for Canadian customers to believe in Wal-Mart as a grocery destination. The feedback to date—whether it’s from customers or industry analysts—has been resoundingly positive.”

The initial wave of supercenters consisted of greenfield projects, but since the initial openings, Wal-Mart has begun converting discount stores to supercenters as well. Its supercenter in Brampton, Ontario, open for a little over a year, was the conversion of a 10-year-old discount store.

The Brampton store was 130,000 square feet as a discount store and was expanded to 200,000 square feet. As a supercenter, 45,000 square feet of floor space is devoted to food, which is the largest prototypical food offering among Canadian supercenters.

Wal-Mart has crafted merchandising in several departments that help it serve the area’s large Asian community. The company’s efforts are particularly apparent in food. Something like over a third of the neighboring population is south Asian. On the food side of the supercenter, merchandising begins catering to the community immediately inside the front door in the ready-to-eat foods, which include samosas and other south Asian specialties.

Adjacent, in the deli, Wal-Mart also has local sensibilities in mind. “There are actually two chicken ovens,” pointed out Groh. “[One] would be traditional chicken, the other is the same chicken cooked to halal standards. About 40% of the chickens the store would sell would be halal.”

Wal-Mart isn’t only addressing ethnic consumers in food. It has introduced a brand of South Asian fashions, including three-piece suits with pants, referred to as salwars, from the region. The line is dubbed ‘Bollywood’ and is placed in about 16 units, approximately the same units in which the retailer is introducing products such as samosas and halal chicken.

Initiatives in supercenters aren’t just addressing ethnic customers, though. Wal-Mart has remerchandised women’s apparel to better match looks to lifestyle. The effort has been most extensively executed at supercenters and filtered into discount stores to the extent appropriate.

Among the other departments that have been tweaked at Wal-Mart supercenters is the pharmacy/HBA/OTC section. It has gotten a new layout to bring it more in line with the overall shopping pattern of the store and adjacent departments, in part to make it less pharmacy-focused and more competitive with the entirety of chain drug stores. It also has been remerchandised to more prominently feature a broader line of fragrances and cosmetics. The centerpiece of the expanded operation is a cosmetics counter designed to resemble a fragrance or cosmetics counter that might be found in a more upmarket retail concept.

One of the departments to which pharmacy is more firmly attached is greeting cards, a section of the store that Wal-Mart has remerchandised with wood-finish fixtures and fresh signage designed to make the package more competitive with specialty store and other sophisticated greeting card presentations.

While new ideas and community initiatives are important, Wal-Mart continues to promote its value proposition, Groh said, providing solid quality products at particularly sharp prices. Maintaining a high level of quality in food is particularly important in Canada where Wal-Mart is addressing a consumer base that is demanding when it comes to the category.

Wal-Mart supercenters’ debut in Canada with the slogan ‘Your Fresh Market’ bolsters both its value and quality proposition with items such as the 44-cent fresh croissants prominently mounted in its bakeries. “There are a lot of signature items. The croissants are a huge item at 44 cents. It’s a reflection of the sweet spot we’re trying to hit. It’s a high quality product. They are baked on site. You would buy a croissant for a buck elsewhere. We’re seeing huge traffic in that.”