Wal-Mart (NYSE: WMT) has decided to consider opening small, high-end stores. In response to food retailers moving into the business of selling expensive groceries and taking Wal-Mart food business in some cities, the largest retailer is looking at opening similar stores of its own.
As The Wall Street Journal writes "the retailer has been largely shut out from upper-income and urban markets." The paper adds that Wal-Mat wants to "localizing the retailer's business" to try to attract customers that have not used its stores before.
But, the plan has a flaw. With Wal-Marts huge revenue and flattening sales in the US, smaller outlets can do little to help a company that measures it US sales in the billions of dollars per quarter. Even scores of smaller stores are unlikely to do a great deal to lift Wal-Mart's domestic fortune. Time spent working on niche operation is time spent away from trying to solve Wal-Marts biggest problem.
Wal-Mart may be able to get customers to come to small locations, but it traffic to its larger ones does not increase significantly, the company has lost the war.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
8-17-2007 @ 8:24AM
Nick Pasquine said...
Very well written article. Was in one of the new Neighborhood stores recently. Poor selelction, prices no bargain, and you could have rolled a bowling ball down the aisles
8-17-2007 @ 10:57PM
j. Boyle said...
In the late 1980s Wal-Mart leaders considered swallowing Whole Foods but backed off. Later some of its executives bought an unknown number of WF shares and the upscale idea lived on. It eventually led to the birth of Wal-Mart's Neighborhood Stores.
8-18-2007 @ 2:46PM
happy said...
wow ,what i night ! got there at same time ,and spint a hour looking for a cart to put stok on it to take to floor ! oh and it takes two peppole to move it empty !! yes the wheels dont move no more cant bye new ones!cust!!! hi van you help me i walk this holle store not one persun to help me are you the only one in the store oh yes the repture came !!!
8-18-2007 @ 2:58PM
happy said...
ok , a high end food store just what the custmer dont need !! what a gold banna wow !! scott is going out to lunch on this one !! didnt he work for the red and white ,,, targert !!! i thank he must take lunch with the old homedepo ceo !!
8-20-2007 @ 11:27PM
roudy11z said...
I can't read #3's comments because of broken sentences. It is probably a computer error. Now let us fire Lee Scott and part of the other members of upper management and part of the board. Their expertise or knowledge has shown to be ineffective. Now they want an upscale food store?
9-06-2007 @ 7:21PM
rosalie said...
i think wal-mart should open clearance centers ,for all their clearance merchanedise,so they can get all the new merchandise to the floor without cluttering the floor with old items.