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Big-Box Players Find Small Formats Require New Strategies

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Big-box retailers have received a lot of praise lately for rethinking the sizes of their stores and investing in smaller formats to improve productivity and drive growth in urban areas. But it turns out operating a small format store in downtown New York or Los Angeles is a completely different proposition than operating a 150,000-sq.-ft. store somewhere in rural Idaho, and the big-boxers might be struggling to adapt.

A story in today's Wall Street Journal points out that Wal-Mart, which has been working on its 20,000-sq.-ft. to 40,000-sq.-ft. urban Walmart Express stores, has been selling the same merchandise in those stores as in its regular supercenters.

The company wants to do the same in the U.S. At Wal-Mart's annual meeting last June, U.S. stores chief Bill Simon said he would like the Express Stores "to deliver the same experience that a supercenter can deliver, only in 15,000 square feet."

Problem is Wal-Mart has taken that statement quite literally, said Leon Nicholas of the consulting firm Kantar Retail.

"Wal-Mart can't pull itself away from a supercenter mind-set," he said. "Just look at the shelves. It is just absurd to see a dozen kinds of jelly or peanut butter when a shopper just wants to get in and out of the store quickly."

As a result, the company still doesn't have any plans to launch Walmart Express stores across the country, as the few stores it has opened remain in test mode.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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