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Wal-Mart Announces Plan to Kill Dollar Stores. Will It Succeed?

http://www.fool.com/investing/general/2014/02/23/wal-mart-announces-plan-to-kill-dollar-stores-will.aspx

John Maxfield
February 23, 2014

If Wal-Mart (NYSE: WMT) has its way, the days of the dollar store are numbered.

In a press release issued on Thursday, the retail giant signaled its intent to aggressively go after the smaller store format that's the bread and butter of dollar stores, including Family Dollar (NYSE: FDO), Dollar General (NYSE: DG), and Dollar Tree (NASDAQ: DLTR).

According to the announcement, Wal-Mart is accelerating its plan to blanket the country with miniature versions of its now ubiquitous Supercenters. It expects to open between 270 and 300 small stores throughout 2014. That's more than double its initial forecast of 120 to 150 stores which it publicized last October.

Of particular concern to dollar stores is Wal-Mart's most recent concept, the Walmart Express. "They are really kind of a hybrid little store, with about 10,000 to 12,000 square feet," explained a Wal-Mart executive last year. Most recently, the company opened a Walmart Express in Benson, N.C.

"The new Walmart Express store will be a place for Benson residents to fulfill their everyday grocery and pharmacy needs in a clean, friendly, convenient location," said Benson store manager Dale Ennis. "It also means residents can get fuel without having to drive out of town."

The advantage of the format was highlighted by William Simon, chief executive officer of Wal-Mart U.S., who noted that the stores "deliver really, really well against three competitive sets." Most notably, "against a dollar store, they have fresh food, pharmacy, and gas," not to mention a "pricing advantage"