BENTONVILLE, Ark. — Wal-Mart Stores here confirmed widespread industry speculation Wednesday that it will open medium- and smaller-sized stores beginning next year in urban areas and small towns, though it did not provide a lot of details.
Medium-sized stores will fall in the range of 30,000 square feet to 60,000 square feet — similar to the company's Neighborhood Market units — while smaller stores will range below 30,000 square feet, Bill Simon, president and chief executive officer of Walmart U.S., told the company's 17th annual investors conference here.
He said the company expects to open between 30 and 40 medium- to smaller-sized stores next year — at a relatively low cost of capital, he noted — as part of a learning process, “so we can be ready to roll them out.”
With more smaller stores opening in the U.S., Simon said the company will talk about growth in the number of doors being opened rather than overall square footage growth, which will be lower year-over-year with the smaller footprints.
According to Simon, the medium-sized stores will not necessarily have a standard supermarket assortment. “We plan to build the assortment based on the needs of specific markets, as we've done with Neighborhood Market,” he explained. “We've gained a lot of experience with Neighborhood Market, and we've become very efficient with stores of that size and made great strides in profitability, with EBITDA comparable to that of competitive boxes of the same size. So after years of development, we are now prepared to accelerate the growth of medium-sized stores.”
He was less specific about smaller formats. “Most markets around the globe have been successful with smaller stores, and we have tons of institutional knowledge [from Wal-Mart's international experience] and will continue to learn more,” Simon explained.