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Thread: Smaller Wal-Marts?

  1. #1
    OH....IO Hink's avatar
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    Smaller Wal-Marts?

    http://finance.yahoo.com/news/WalMar...55426.html?x=0

    Real estate executives said that over this past summer, the world's largest retailer has been scouring for small locations, around 20,000 square feet, in urban areas including New York City, San Francisco and other cities. That size is larger than a typical drugstore but smaller than a supermarket.
    This could be amazing, or this could be horrible. At least Wal-Mart is understanding scale....maybe?
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

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    Cyburbian fringe's avatar
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    hink, it sounds to me like Wally world is aiming to take on the dollar stores and wipe them out.

    Around this area the typical dollar store stays under 12K SF area to duck requirement for sprinklers.
    Last edited by fringe; 21 Sep 2010 at 9:41 AM. Reason: 2nd thought

  3. #3
    Cyburbian Cardinal's avatar
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    This is a trend not confined to Walmart, and began to shape up about 3-5 years ago. Part of it is market saturation for current formats, part of it is efficiencies achieved by focusing on core sales, and part of it is competing with stores that found a way to adapt to larger formats.
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    OH....IO Hink's avatar
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    Quote Originally posted by Cardinal View post
    This is a trend not confined to Walmart, and began to shape up about 3-5 years ago.
    I had seen this with what I would consider higher market grocery stores, but not with Walmart. I really don't see how this can fit within their business plan. The only reasonable reason someone would go to Walmart is wide selection for low cost. With a smaller store they limit selection and are paying a higher rental or purchase rate. For stores that have a wider profit margin, this can be supported. Walmart though eeks by on such small profit margins and loss leaders, that I didn't see this as a feasible option for them. I guess we will see how they do. Maybe they will create these into more upscale walmarts - with a higher quality product and less selection?
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

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    Unfrozen Caveman Planner mendelman's avatar
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    Hink - thier savings are on the mass purchase of products from producers. Then that is distributed to the stores. The large format was the means to an end in the past, but since they have a super low cost purchasing power established they will just supply the "smaller" format stores to allow access to a wider segment of the retail market and continue their market expansion.

    I presume that they can provide such low prices regardless of the individual store size.
    I'm sorry. Is my bias showing?

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    Cyburbian Queen B's avatar
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    Quote Originally posted by Hink_Planner View post
    I had seen this with what I would consider higher market grocery stores, but not with Walmart. I really don't see how this can fit within their business plan. The only reasonable reason someone would go to Walmart is wide selection for low cost. With a smaller store they limit selection and are paying a higher rental or purchase rate. For stores that have a wider profit margin, this can be supported. Walmart though eeks by on such small profit margins and loss leaders, that I didn't see this as a feasible option for them. I guess we will see how they do. Maybe they will create these into more upscale walmarts - with a higher quality product and less selection?
    You must not have shopped there lately. Their selection has dropped drastically. Yes they may have much more of one thing but not much selection at all. They just revamped ours, made the isle wider. Opened up the main throughfares and dropped the selection. The selection of shoes was the biggest change I saw. Horrible selection.

    Well there is my Wal Mart critique.
    It is all a matter of perspective!!!

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    OH....IO Hink's avatar
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    Quote Originally posted by mendelman View post
    Hink - thier savings are on the mass purchase of products from producers. Then that is distributed to the stores. The large format was the means to an end in the past, but since they have a super low cost purchasing power established they will just supply the "smaller" format stores to allow access to a wider segment of the retail market and continue their market expansion.

    I presume that they can provide such low prices regardless of the individual store size.
    I guess I was thinking about transportation costs. They do have the purchasing power and therefore should be able to be well below market rate.

    Quote Originally posted by Queen B
    You must not have shopped there lately. Their selection has dropped drastically.
    The second I got a job that paid me, I stopped going there. If I go broke so be it, I will not support them. With a MIL who has a family business that supplies Walmart, I know all too well how they deal with suppliers. I guess I just assumed that was why people would go - low cost, lots of options. Maybe low cost just wins out anymore. I wish we had Publix in Ohio...
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

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    Cyburbian The One's avatar
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    HA!

    Big Lots has already got he model.....they should build build build!!!
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    Cyburbian
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    They could call them Small~Mart.

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    Cyburbian DetroitPlanner's avatar
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    There has been a lot of consolidation in the grocery market chains leaving empty stores looking for tennants and neighborhoods that are not as well served as they used to be. This will allow Walmart to penatrate into market areas where they never were before and get a new customer base (those who cannot make it to the large Walmarts in far flung burbs or those who it is just not cost effective to do so. I think its a wise move by the company.

    I still hate them and they won't see any of my money!
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    Cyburbian fringe's avatar
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    My understanding of Walmart's success is that it is based very much in its ability to dictate prices to its suppliers, thus driving the creation of foreign sweatshops etc, along with the "rolling warehouse", having so many items in so many trucks always rolling somewhere, and in abusing its workforce by having high majority part-timers who work max hours to stay just under triggers for many benefits.

    Capitalism at its meanest.

  12. #12
    OH....IO Hink's avatar
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    Quote Originally posted by fringe View post
    Capitalism at its meanest.
    I can think of few instances where capitalism isn't mean. It is Darwinism at its worst.
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  13. #13
    Cyburbian Cardinal's avatar
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    The smaller format is meant to take on others who have successfully adapted:

    - pharmacies (CVS, Walgreens) that have become the neighborhood store, taking market share from grocery stores and particularly convenience stores, despite high prices

    - variety stores like General Dollar and Family Dollar, that make their profit be selling large volumes of mostly expendable merchandise

    - smaller discount formats like Alco, which has disappointed me by not expanding more, and has a strategy to locate in communities without a Walmart to intercept traffic

    I do not see it taking on the likes of Trader Joes or Fresh Market, which appeal to a different clientele.

    Queen B - What you noticed about Walmart's selection is something I have talked about for about a year and a half. Walmart is not alone in wanting to pare down the number of items it sells in an effort to increase margins. Like you, many people have not reacted in the way Walmart hoped. It seems people have brand loyalty after all. Some products have made it back into stores.

    http://www.uwex.edu/CES/cced/downtow...nts/DE1009.pdf

    http://www.uwex.edu/CES/cced/downtow...nts/DE1109.pdf
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