Wal-Mart Stores, Inc., expects to open up to 40 small and medium-sized stores in the U.S. next year, many in large cities, as the world’s biggest retailer accelerates expansion into urban areas amid slumping sales its core supercenters.
So-called Neighborhood Market stores, to feature fresh produce and meats as well as pharmacy and beauty products, will comprise the bulk of the new, medium-sized stores, Bill Simon, chief executive officer of Wal-Mart’s U.S. operations, said during an investor conference.
Wal-Mart has 158 Neighborhood Market stores in the U.S. that average about 41,500 square feet each. By comparison, Wal-Mart’s 2,747 U.S. supercenters average about 185,000 square feet.
“Over the next few years, we will introduce new formats to help us enter new markets,” Simon said, according to a transcript of the conference, held near the company’s Bentonville, Ark. headquarters. Wal-Mart will move toward a “three-format portfolio,” Simon said, “which will drive expansion to urban markets and small towns, as well as fill in gaps in existing markets.”
Wal-Mart is targeting urban areas as it tries to reverse a sales decline that’s reached five consecutive quarters, a reflection stiff competition among discounters and a weak U.S. economy that’s crimped budgets for the company’s lower- to middle-income customers.
Simon didn’t mention specific cities today, but Wal-Mart earlier this year said it planned to build several dozen stores in Chicago over the next five years. Fruits, vegetables and other fresh foods are expected to be a key part of its urban expansion, the company has said.
“The majority of our stores today include a full grocery offering,” Wal-Mart spokesman Steven Restivo said in a Sept 22 e-mail. “It’s an area that customers have come to expect from Wal-Mart and it’s an area where we can save customers a lot of money.”
The medium-sized stores will cover between 30,000 and 60,000 square feet and “will be based on the needs of an individual market,” Simon said today. The small format, at less than 30,000 square feet, will be targeted to urban markets and small towns, he said.
Most of Wal-Mart’s new or remodeled store openings in the company’s fiscal 2012 will be the large-format supercenters. The company expects to add up to 165 supercenters next year, including up to 50 new stores, Simon said. The remainder would be remodeled versions of existing locations.
“We are very excited about the additional growth opportunities that we have in the U.S.,” said Simon. “We will have growth in geography, growth in formats and growth in multi-channels.”
Wal-Mart expects total sales in 2012 to increase up to 6% from 2011, company executives said. In its fiscal 2010, Wal-Mart posted companywide sales of $405 billion.