When you think of Wal-Mart (NYSE: WMT), you think big. It isn't nicknamed the "Bentonville behemoth" for nothing. But now, the massive retailer is pursuing an unorthodox new route toward continued growth: It wants to get smaller.

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 (NYSE: SWY), Whole Foods Market (Nasdaq: WFMI), and Wal-Mart to try to think small as well. In its most recent quarter, Whole Foods discussed its successes with smaller stores, which cost less to open, yet still generate impressive results. However, going too small could trip up Wal-Mart; disappointing performance has confined one of its existing smaller concepts, Marketside, to just four stores.

Wal-Mart's renewed effort to pursue smaller formats also reflects additional rivalry from small, no-frills discounters such as SUPERVALU's (NYSE: SVU) Save-A-Lot and Germany's Aldi. (Incidentally, the latter company owns Trader Joe's, a great example of small, cheap, and nimble retail.)

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 (NYSE: TGT) recent experiments with pop-up stores reflect.

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.

Wal-Mart is a Motley Fool Inside Value recommendation. Whole Foods Market is a Stock Advisor choice. Try any of our Foolish newsletters free for 30 days.

Alyce Lomaxowns shares of Whole Foods Market. The Fool has a disclosure policy.