Thursday, October 14, 2010

Wal-Mart pins growth on smaller stores

Wal-Mart Stores Inc., the world's largest retailer, expects to open 30 to 40 smaller-format stores in fiscal 2012 as it seeks to enter urban markets to jump-start growth in the U.S., the company's chief executive officer said Wednesday.
The news came shortly after an entity of Wal-Mart bought the 95,000-square-foot former Home Depot Expo Design Center near 100 Oaks Mall in Nashville earlier this week.

The giant discount retailer said it plans to keep the building and create a smaller version of its 185,000-square-foot superstore there, according to developer George Tomlin of GBT Realty — who had earlier owned and sold the property to Wal-Mart.

Wal-Mart has not confirmed its plans for the location and representatives of the company did not return phone calls and e-mails.

RelatedWal-Mart plans smaller, urban store near 100 Oaks Mall

But, at an investors' conference in Rogers, Ark., the retailer's chief of U.S. stores, Bill Simon, said he saw a "true need" for stores smaller than the colossal supercenter.

"After years of development we are now prepared to accelerate growth" of smaller stores, Simon said. The company will open as many as 205 new stores in total in the U.S. in the year ending January 2012.

Wal-Mart is looking for ways to spur growth as sales at stores in rural areas open more than a year have fallen for five straight quarters. Adding urban markets may help the retailer add about $80 billion in sales, or about 20 percent of last year's revenue, according to Neil Currie, an analyst at UBS Securities LLC in Stamford, Conn.

In the past, the retailer's attempts to establish itself in cities such as New York have been stymied by opposition from labor unions and community activists, as well as difficulty in obtaining real estate.

Groups such as New York Communities for Change have voiced opposition to the opening of a Walmart store in Brooklyn, although the retailer hasn't announced plans to do so. The move toward smaller stores also comes as more retail chains target low- to moderate-income shoppers as worries remain about consumers pulling in their horns and saving rather than spending.

Target goes small, too

Target Corp., the second-largest U.S. discount chain, is adding smaller stores to fuel growth. The retailer announced plans last month to open a small store in downtown Seattle in 2012, part of a broader plan for smaller stores of 60,000 to 100,000 square feet. That compares with Target's usual store size of 125,000 square feet or more.

"It could be a huge opportunity, and now would be the time to do it," David Abella, portfolio manager at Rochdale Investment Management in New York, said of Wal-Mart's plan.

"Target doing it lit a fire under Wal-Mart. They don't want to give Target a big head start."

Tennessean reporter Naomi Snyder contributed to this story.
Contact her at 615-259-8284 or

.tweetbutton { margin-top: -3px; margin-right:-18px; }

Buyers Interested in WalkabilityRetailers’ reports show tepid May for shoppers