Wal-Mart to accelerate small store growth
Wal-Mart Stores Inc. is accelerating the expansion of small stores,
particularly its Neighborhood Market stores, as it looks to compete with a
variety of rivals from dollar stores to drug chains.
"This gives us the opportunity to build more stores for
less money," Bill Simon, president of Wal-Mart's U.S. division told Wall
Street analysts gathered at a meeting near its headquarters in Bentonville,
Ark.
Simon said it plans to have 500 Neighborhood Market stores
and 12 Express stores by fiscal 2016.
As of the end of July, Wal-Mart had 10 Express stores and
had ramped up its Neighborhood Market concept to 217 locations.
Simon said Wal-Mart's small stores, which range from 10,000
square feet to about 55,000 square feet, have become a hybrid and compete well
with a broad variety of merchants.
Neighborhood Market store have generated a 5 percent
increase in revenue at stores open at least a year for the first half of this
year. That's more than double the growth rate of the Wal-Mart's average store.
Express stores are less than one-tenth the size of Wal-Mart
supercenters and offer groceries, general merchandise like tools, and
pharmacies. Neighborhood Markets are more than twice the size of Express stores
and offer perishable food, household supplies and beauty aids as well as a
pharmacy.
The news comes as Wal-Mart's shares are up more than 24
percent since early this year. That's been fueled by a turnaround of its
namesake business in the U.S.,
which accounts for about 60 percent of its total sales.
Wal-Mart last year began adding back 10,000 products and
refocused on keeping prices low throughout the store, backing the strategy with
TV campaigns. It has done that by cutting expenses and passing some of the
savings on to customers. As a result, starting late last year, it's been able
to turn around a more than two-year slump in revenue at stores opened at least
a year. The metric is considered a key indicator of a retailer's health.
Company officials told investors Wednesday that it is
preparing to win this holiday season. The company is focusing on initiatives to
help its low-income shoppers finance their holiday purchases.
Wal-Mart officials said that launching layaway 30 days
earlier than last year has helped boost the business. It already has $400
million worth of layaway merchandise, half of last year's total, and the season
has barely started.
Copyright 2012 The Associated Press.
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