Is This the End of Local Stores? Mighty Walmart Plans to Build 350 Mini 'Express' Shops a Year to Take on Smaller Retailers
Is this the end of local stores? Mighty Walmart plans to build 350 mini ‘express’ shops a year to take on smaller retailers
The article I have chosen is one about Walmart and the opening of their new convenience stores around the US. I found this article quite interesting and thought it showed very much where the retail industry is heading, a more uniform retail environment, especially in a market like grocery stores. This article also gives a strong example of retail strategy and location as well as illustrating the effect these multinational retailers are having on the smaller independent retailers. To best evaluate this article we need to discuss the relevant retail marketing concepts, models and theories that are present.
Wal-Mart is the largest retailer in the world based on revenues and competes with other retailers like Costco, Target and Amazon, according to Forbes (2011). According to one analyst at Forbes, Walmart commands about 33% of the U.S. grocery market. Walmart’s venture into convenience stores or neighbourhood market’s could be seen as acquiring profit from a whole new segment of the market. We need to understand why Walmart have decided to open new convenience stores to get an idea of their retail strategy. According to The Economist 1 ‘Demographics and changes in lifestyles have played into the convenience stores hands, with young urbanities and the well off elderly often more concerned about location and speed than price.’ So as we can see these convenience stores provide something that Walmart’s superstores cannot, quick, convenient service. Mike Duke, Walmart’s chief executive, says that Walmart 2‘is seeking new avenues for growth in the United States as comparable-store sales in the company’s namesake stores have fallen for seven consecutive quarters.’ This shows that the demand for superstores is saturating, people in the US are wanting smaller stores nearby that can offer similar products on a smaller, more
The article I have chosen is one about Walmart and the opening of their new convenience stores around the US. I found this article quite interesting and thought it showed very much where the retail industry is heading, a more uniform retail environment, especially in a market like grocery stores. This article also gives a strong example of retail strategy and location as well as illustrating the effect these multinational retailers are having on the smaller independent retailers. To best evaluate this article we need to discuss the relevant retail marketing concepts, models and theories that are present.
Wal-Mart is the largest retailer in the world based on revenues and competes with other retailers like Costco, Target and Amazon, according to Forbes (2011). According to one analyst at Forbes, Walmart commands about 33% of the U.S. grocery market. Walmart’s venture into convenience stores or neighbourhood market’s could be seen as acquiring profit from a whole new segment of the market. We need to understand why Walmart have decided to open new convenience stores to get an idea of their retail strategy. According to The Economist 1 ‘Demographics and changes in lifestyles have played into the convenience stores hands, with young urbanities and the well off elderly often more concerned about location and speed than price.’ So as we can see these convenience stores provide something that Walmart’s superstores cannot, quick, convenient service. Mike Duke, Walmart’s chief executive, says that Walmart 2‘is seeking new avenues for growth in the United States as comparable-store sales in the company’s namesake stores have fallen for seven consecutive quarters.’ This shows that the demand for superstores is saturating, people in the US are wanting smaller stores nearby that can offer similar products on a smaller, more
References: 1. Clarke, I. And J. Rowley (1995) ‘A case for spatial decision-support systems in retail location planning’, International Journal of Retail & Distribution Management, 23 (3), pg 4-10 2 3. Hazel, D. (2011) Small Formats Big Opportunities - Urban growth and other factors cause retailers to rethink store size. Chain Store Age. 4. Hollander, S, C. 1966. Notes on the Retail Accordion. Journal of Retailing, 42: 29-40 5 6. Huffman, C and B.E.Khan (1998) ‘Variety for sale: mass customization or mass confusion’, Journal of Retailing, 74 (4), pg 491-513 7 8. Karamychev, V. and Van Reeven, P. (2009) Retail sprawl and multi-store firms: An analysis of location choice by retail chains. Regional Science and Urban Economics, 39 (3), pg 277-286. 9. McGoldrick, P. (2002) Retail Marketing. 2nd ed. New York: McGraw-Hill Education, pg 255-257. 10. McNair, M.P. 1931. Trends in Large Scale Retailing. Harvard Business Review, Vol.10, October: 30-39 11 12. Unknown. (2004) Country Monitor, Big retailers think small. The Economist, Iss. 35. 1 Unknown. (2004) Country Monitor, Big retailers think small. The Economist, Iss. 35. 2 Money.msn.com (2011) Wal-Mart tries thinking smaller - shopping & retail - MSN Money. [online] Available at: http://money.msn.com/investing/wal-mart-tries-thinking-smaller-bloomberg.aspx [Accessed: 9 Apr 2012]. 4 Hazel, D. (2011) Small Formats Big Opportunities - Urban growth and other factors cause retailers to rethink store size. Chain Store Age. 1 Unknown. (2004) Country Monitor, Big retailers think small. The Economist, Iss. 35. 3 Karamychev, V. and Van Reeven, P. (2009) Retail sprawl and multi-store firms: An analysis of location choice by retail chains. Regional Science and Urban Economics, 39 (3), pg 277-286.