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Report: Wal-Mart Needs Smaller Format

Wal-Mart's recent sales struggles are not about merchandise or pricing but rather an outdated store fleet, according to a new report from Customer Growth Partners.

NEW CANAAN, Conn. — Wal-Mart's recent sales struggles are not about merchandise or pricing but rather an outdated store fleet, according to a new report from Customer Growth Partners here.

According to CGP's study, Wal-Mart's flat second quarter sales — and 1.8% same-store sales decline — were due to customer shopping trip attrition to smaller and more convenient shopping formats including drug and dollar stores.

"Wal-Mart's U.S. store fleet is designed for yesterday's retail wars: large battleships targeting the traditional pantry-filling-and-more shopping trip," Craig Johnson, president of CGP, said in a statement. "Meanwhile, moms and increasingly dads have moved onto a new, asymmetrical retail battlefront — better served by smaller, speedier and less costly frigates and assault carriers."

Johnson argued that building a "second fleet" of smaller stores was essential for rebuilding top-line growth at Wal-Mart and should be a top priority for Bill Simon, the company's new chief executive officer.