Walmart taps brakes on Neighborhood Market growth

Bentonville, Ark. -- In a shift to quality over quantity, Walmart has cut expansion plans for its Neighborhood Market stores despite the format’s consistently strong top line growth in recent years.



Neighborhood Market same-store sales grew 7.3% in the second quarter on top of a 7.9% comp increase in the first quarter. Despite the strong showing -- especially compared to the more mature supercenter format -- Walmart reduced its 2015 expansion plan to a range of 160 to 170 units down from an earlier plan, which called for between 180 and 200 of the approximately 42,000-sq.-ft. stores.



Walmart U.S. president and CEO Greg Foran said the retailer was shifting to a focus on quality rather than quantity after opening more than 350 Neighborhood Market stores the past few years. The company currently operates 644 Neighborhood Markets stores. The recent rapid pace of expansion of a format introduced in October 1998 has given the company a better understanding of what customers value most, from the choice of location to the size of the box, to the product offering, according to Foran.



“Based on these learnings, we’ve decided not to pursue a number of potential locations, as they would not provide the type of quality experience customer expect from a Neighborhood Market,” Foran said during the recorded conference call to discuss Walmart’s second quarter results. “We’re still on track to build approximately 60 to 70 supercenters this year, which was our original forecast.”