When you think of Wal-Mart
The Wall Street Journal recently discussed Wal-Mart's renewed desire to open smaller locations, especially in urban areas. Among its interesting ideas: diminutive locations where online shoppers could pick up their purchases via drive-through lanes.
"Small is beautiful" is not a new inspiration for Wal-Mart and others. The U.K.'s Tesco has broken into the U.S. market with smaller-format stores, spurring Safeway
Wal-Mart's renewed effort to pursue smaller formats also reflects additional rivalry from small, no-frills discounters such as SUPERVALU's
In that light, Wal-Mart's desire to spread into the urban markets it now sparsely occupies makes perfect sense. Many big-box retailers covet stores in cities, which require far tinier retail footprints, as Target's
However, urban markets carry problems of their own for companies like Wal-Mart, beyond the difficulty of finding adequate, affordable real estate. If protests occasionally occur when Wal-Mart attempts to break ground in suburban or rural areas, imagine the backlash that could arise in more densely populated markets. (On the flip side, many city dwellers might be glad to avoid a trip to the suburbs to stock up on cheap necessities.)
Wal-Mart shareholders should be glad to hear of the retailer's intriguing strategies for fostering future growth. However, these plans could be easier conceived than realized. While its discount advantage makes Wal-Mart a relatively strong and stable company, it's by no means risk-free.
Will smaller stores help or hinder Wal-Mart's growth in sales and earnings? Share your thoughts in the comments boxes below.