Aug 09, 2012
Walmart May Be Losing Interest in C-store Format
CHICAGO -- The recent closing of an Express store in Chicago, which Wal-Mart Stores Inc. opened in summer 2011, could signal the end to the company's venture into the convenience store arena. At least that is what some analysts are saying despite statements to the contrary from Walmart executives.
For its end, the Bentonville, Ark.-based retailer said the Express in Chicago's West Chatham neighborhood closed its doors for the last time in late July because of its proximity to a newer supercenter, according to Crain's Chicago Business. However, analysts say the closing indicates that Walmart hasn't yet mastered the push into urban areas.
In addition, according to the report, Walmart's own building plans do not include additional Express stores in the Chicago area. Instead, the company's focus seems to be on midsized Neighborhood Markets which measure 40,000 square feet. Specifically, Walmart plans to open 80 Neighborhood Markets across the United States this year, and an additional five in Chicago between 2013 and 2014.
Walmart currently operates 11 Express stores across the country, which executives contend are profitable.
According to Crain's, the West Chatham neighborhood had been on Walmart's radar screen but the soonest it could open a supercenter was the start of this year, said Steven Restivo, Walmart's senior director of community affairs. When it got a chance to open a small store several months earlier, the retailer jumped. "We didn't think customers should have to wait and, at the time, we were optimistic that the two stores could coexist," he said.
Walmart's one-year lease for the West Chatham Express store was evidence the company's long-term plans were up in the air. The other Express stores in the Chicago area have 10- and 20-year leases. Retail analysts, however, said the West Chatham Express' closure indicates larger bumps in Walmart's small-box strategy, the report stated. "The supercenter was supposed to be the place for once-a-month big trips, and the Express would be for convenient fill-in trips during the week," said Leon Nicholas, director of insights at London-based consultant Kantar Retail. "They weren't supposed to cannibalize each other, so the fact that it didn't work indicates the strategy was wrong."
Nicholas added Walmart didn't have the right mix of products at the c-store. In addition to carrying snacks and sundries, the Express store also carried 40-pound bags of dog food and other bulky items impractical for carless, apartment-dwelling urbanites.
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