Wal-Mart Weekly: Is going small an idea for future growth?

The saturation of the megastore means the creation of the microstore - maybe

Wal-Mart's expansion into the Supercenter arena has been in place for a few decades. In many ways, it's reaching a point of saturation in that kind of store format. One fact that's indisputable in the last 10 years is that Wal-Mart has grown year after year and has opened store after store in doing so. Some communities have successfully fought Wal-Mart and have kept its stores from certain areas, but Wal-Mart continued growing.

The next decade from 2010 to 2020 will either show Wal-Mart taking market share from the competition (or eliminating the competition), or will open new locations around the globe to continue its torrid growth spurt. Although efforts in growing its store count -- organically or with partners -- continues unabated in international markets, what is the retailer to do in the U.S.?

It's like many other established franchises -- it can only grow to a point where there is market saturation in every possible market. Then, growth slows. This happens in every industry without constant innovation. The question is: what innovation waits for mass-merchant discount retailers? How about slowing down focus on macro operations and look to see what opportunities exist in micro operations?

It's about time if Wal-Mart wants to focus in on this area. When Wal-Mart began expanding its big-box store format in the early 1990s, who would have known that the retailer borne out of Arkansas would become the world's largest retailer? It has barely been two decades and the retailer is saturating itself out in many markets. A little history: the company's knack for logistics, planning and intense focus on keeping prices as low as possible for all consumers allowed it to expand into more and more communities. As it grew, its fans and critics grew at the same pace. Now that it's reaching critical mass in mass retailing (at least in the U.S.), where should Wal-Mart's future growth turn to?

When progress slows down

Wal-Mart continues opening locations across the country to this day. It has, however, scaled back plans for store openings in 2009 due to economic concerns. It is also entering international markets as it makes sense, but the U.S. is not the only country experiencing financial problems, so that is hampering the retailer's overall growth mission.

At some point -- even with a robust global economy -- the retailer's growth will have to slow down. Even right now, Wal-Mart is taking sales away from other retailers as consumers scrounge for the lowest price on everything and anything possible. So, even in a crisis, Wal-Mart is doing well. Customers can't stop buying paper towels and ravioli, although fewer of them are lining up to buy flat-screen televisions.

But, once the economy returns to some semblance of its past self (if that's possible), customers may return to their old retail haunts and back to higher-margin retailers where they formally shopped. At the same time, Wal-Mart will need to either hope to recruit recurring customers from this group, open more stores or find new ways to gain customers in new store formats. Smaller formats that integrate with populated complexes like colleges and corporate campuses, perhaps?

How progress could speed up

Wal-Mart has already taken a stab at this at the University of Charleston in South Carolina. There, the retailer has partnered with the university to open an on-campus pharmacy. The intent will be to serve the campus as well as the surrounding community with the new pharmacy. Think about it -- there is a captive shopping audience at almost any major university. It's like a complete shopping group at your fingertips, with almost all of them having a need for your products.

If it makes business sense, Wal-Mart best consider a micro-store formula like the one in South Carolina that could be rolled out to any mass-population area. We're not talking Supercenters here, but smaller-format stores that carry what the surrounding consumer base might need on a daily basis. Who knows -- smaller stores like this integrated into certain environments may be Wal-Mart's next engine for growth.

Join me right here this time next week for another edition of the Wal-Mart Weekly. Until then, have a great week.