Wal-Mart looking at smaller stores?


Is Wal-Mart Stores, Inc. (NYSE: WMT) looking to smaller-format stores to try and revive sales here in the U.S.? In a retailer known for landing huge, big-box locations all over the country to make it easier to have a "one-stop shop" for customers, has this strategy been tapped out? Possibly so -- something I looked at last week in my Wal-Mart Weekly column. But what is the solution? Is the opening of smaller stores seen as a retrenchment or a refinement of strategy for Wal-Mart?

It's a last-ditch effort to revive struggling sales in the light of a rather disappointing 2006 for the retailer. While it saw record revenues for that year, profit windfalls did not follow, which speaks of loss-leader selling and moving merchandise without ramping up profit at the same time. After all businesses are in the business to make money, not just sell -- without profit -- right? It makes sense for some companies to forgive profits to build market share, but Wal-Mart is way, way beyond that point.

The New York Post said this week that Wal-Mart may be considering stores as small as 20,000 square feet, quite a drop from the 100,000 square-foot Wal-Mart Supercenter. Can Wal-Mart get into communities that have shunned the larger-format Supercenter with a small-store strategy? Perhaps -- and it's a good growth strategy as the retailer runs into roadblocks in certain areas of the country that won't permit the "big-bog" fare in their areas. Here's something to chew on: Wal-Mart's promoted a former Tesco executive (David Wild) to the position of senior vice president, new business development. An exec from Tesco, the largest supermarket chain in the U.K., may be just what the retailer needs to grow here in the U.S.

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