By going small, Wal-Mart is looking to make it big in the city.
The Associated Press reports that Wal-Mart has begun exploring smaller locations (approximately 20,000 square feet) in urban locations, with the intention of rolling out a series of mid-sized stores. The new stores, which will be larger than drugstores but smaller than supermarkets, will allow the discount chain to establish a presence in densely-populated urban locales.
"I see this as a smart move, instead of coming into a market as a 900-pound gorilla," Faith Consolo, chairman of real estate firm Prudential Douglas Elliman's retail leasing division, told the AP. Wal-Mart has previously faced difficulty breaking into cities due to local opposition to their sprawling discount stores.
The new strategy eschews Wal-Mart’s traditional status as a one-stop shop for all manner of discount shopping, from food to power tools to clothes. Still, analysts see some appeal in the new urban stores, which evidently represent a fusion of Wal-Mart’s smaller Marketside stores (which focus on fresh foods) and the larger Neighborhood Markets, which feature groceries, pharmaceuticals and beauty products.
"Wal-Mart needs to have a store concept that brings in customers more than once every two weeks when paychecks are distributed," analyst Brian Sozzi told the AP.
Aside from the viability of the business model, another question exists: Do communities want Wal-Mart? While a 20,000 square-foot store on the corner is far less invasive than a sprawling, 150,000 square-foot behemoth, local concerns about the chain’s business practices persist. Opposition to Wal-Mart often centers around the chain’s strict anti-union policy, plus its tendency to put smaller stores out of business and depress local wages.