Krispy Kreme Goes to Wal-Mart

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One of my favorite treats will soon be appearing in one of my favorite places, with the announcement that Krispy Kreme (NYSE: KKD) is putting a doughnut-producing factory store inside a Wal-Mart (NYSE: WMT) Supercenter in Mount Airy, N.C. The two are also teaming up to test additional Krispy Kreme concepts in other Wal-Mart locations, with five shops in total opening up next month.

Krispy Kreme has been selling boxes of its sugary love rings in 125 Wal-Marts across the country, but this move should offer consumers fresher doughnuts, with some of the locations making them on site. Aside from the factory location, which will give fans the chance to see the doughnuts as they're made, two of the other shops will be smaller "doughnut and coffee shops" and two will be "fresh shops."

The fresh shops will have doughnuts delivered daily from nearby Krispy Kremes, while the doughnut and coffee shops are scaled down versions of a normal store. Of course, since the five locations will be inside Wal-Marts, they'll all be smaller, with the factory store taking up about 1,800 square feet vs. its usual size of 4,500 square feet.

Krispy Kreme itself will own and run the five Wal-Mart-based locations, as opposed to a franchisee having the rights to them. The move should allow the company to test how well each of its three different concepts work in a novel setting, and how customers respond to them. Krispy Kreme doesn't find it unfathomable that all three could work well, and I agree. The convenience factor here will be a big draw.

It's a win for Wal-Mart, as it offers yet another thing to bring shoppers into stores. And it's a win for Krispy Kreme because it gives the company more outlets to easily meet and satisfy customers. But for Krispy Kreme devotees and Wal-Mart shoppers who happen to live in Mount Airy or the other four places where the new shops will be, it's a home run. Color me jealous.