june-2011

culture || Bright Ideas
also a couple of prototypes that have been built in super
secret locations that I can’t tell anybody about.”
Why all the secrecy? Even the smallest move the company
makes draws intense scrutiny, and the stakes for this one
are high. The juggernaut has faltered stateside, and Simon
needs to fi nd a way to quickly turn around seven straight quarters
of same-store sales declines, the worst slump Walmart
has suffered in the U.S. The recession and its aftermath
have eaten into the company’s bo om line, and the decision
two years ago to abandon its policy of off ering the lowest
prices on everything across the board in favor of reduced
inventory and select price “rollbacks” has made it vulnerable
to competition from big grocers like Kroger and discounters
like Dollar Tree. At its height, Walmart built 350 stores in a
year in the U.S., “because the economics of the Supercenter
were so compelling,” says Ken Harris, CEO of Kantar Retail
Americas Consulting. Now economic woes combined with
Walmart’s diffi culties in breaking into new markets suggest
the retail giant has finally reached big-box saturation in
the country that comprises about 64 percent of its annual
revenue. The reputation of CEO Simon, a former Navy offi -
cer who was put in charge of the struggling U.S. division
last June, is riding on the rollout.
(When contacted, Walmart declined
to comment.)
The new Express locations, which
will off er food, a pharmacy in many
cases, and health and beauty products,
will start going online soon. The
first will debut in Chicago’s South
Side this summer, and Simon—who
has also restored the company’s
everyday low-price policy—hopes
to move quickly once the plan gets
off the ground. “The aim here, folks,
is to get the right model so that we
SIZING IT UP
Walmart is known for its big boxes—“landscrapers,” as some call them—but the company has dabbled
in smaller stores in the past. “They are always
experimenting,” says Maggie Gilliam, president of New
York–based retail consulting
fi rm Gilliam & Co., jus just never at this level. Here’s a look at how the giant’s
more than tthan
4,300 U.S. store stores break down by brand.
Walmart
Discount Stores
The original
Wal-Marts
Launched: aunched: 196 1962
Average size:
About 108,000
square feet
Number: 709
Sam’s Club
Members-only
bulk superstores es
Launched: 1983
Average size:
132,000 00 square
feet
Number: 608
60 JUNE 2011 • HEMISPHERESMAGAZINE.COM
uggling U.S. division be happy about it. I
BOX TOP
Walmart’s U.S.
CEO Bill Simon
has staked his
tenure on the
decision to build
smaller stores.
Walmart
Supercenters
The Big Boxes
Launched: 1988
Average size:
185,000 85,000 square
feet
Number: 2,097
can rapidly roll these things out,” Simon told the banking
conference. “When we get this thing right, these are going to
come real fast.”
Nevertheless, it won’t be an easy entry. Walmart finally
reached a compromise with local labor unions in Chicago to
raise wages last June, the fi rst time it had ever done so, and
is now planning to build six small stores there. In New York,
Walmart has had an even tougher time. It reached a deal
with a construction workers union in February to work on
any store it builds in the city in the next fi ve years, but it still
faces resistance from retail labor unions over wages. “Walmart
has a record of devastating small businesses in the immediate
surrounding area just because of its sheer market size and
capacity,” says Christine Quinn, the city council speaker and a
vocal opponent of Walmart. Asked if she would object to smallfootprint
versions moving in, Quinn took a shoulder-shrugging
stance, saying if the company’s small stores fi t in with existing
zoning regulations, there’s not much she could do to stop them.
But because of Walmart’s abiding anti-union stance, what critics
decry as its low wages, and the long-simmering class-action
sexual discrimination suit against the company, she wouldn’t
be happy about it. “It’s not like I’m gonna say, ‘Hey come
on in,’” in,’” says Quinn. Quin “My position changes when their
policies and activities act change.”
Nevertheless, Nevertheless John Bocuzzi Jr., a retail analyst who
has visited Walmart’s Wal Bentonville, Ark., headquarters
some 15 times
on research trips and admires the
company’s strategy, stra feels the plans have the ring of
inevitability to them. t “Any small urban retailer who
doesn’t take this move seriously,” he says, “is going
to be in for a moment of shock and awe
when wh these guys hit town.”
Neighborhood
Neighborhoo
Market
Grocery rocery store stores
Launched: nched: 1998 1
Average size:
42,000 square
feet
Number: 183
KEVIN KE GRAY is a business writer whose
favorite fa song happens to be The Clash’s
“ “Lost in the Supermarket.”
Marketside arketsid
Small
supermarkets ermar
Launched: 2008
Average size:
15,000 square
feet
Number: 4
Supermercado
upermercad
de Walmart
Markets arkets aime aimed
at Hispan Hispanics
Launched: 2009
Average size:
39,000 square
feet
Number: 2
= Average size
PHOTOGRAPH BY MARK WILSON/GETTY IMAGES