NEW YORK — The three Walmart Express units are still simply pilot operations the company is testing to determine how to proceed, a Wal-Mart Stores executive said at a conference here this month.
Speaking at the Bank of America-Merrill Lynch Consumer & Retail Conference, Charles M. Holley Jr., executive vice president and chief financial officer for Bentonville, Ark.-based Wal-Mart, said, “We’ve got one urban Express in Chicago and two rural locations in Arkansas and North Carolina, and we don’t have clear enough results to say whether it’s a resounding success.
“That’s not where we are right now, and it will take us a little while to test and pilot and make sure we understand the dynamic [of the Express format] — to see a different kind of dynamic and how that works.”
The evaluation process may not take as long as it did for Wal-Mart to decide to expand the Neighborhood Market format, Holley noted. “The reason it took so long with Neighborhood Markets is, we had great growth opportunities with supercenters that gave us a big bang for the buck.”
Of the 80 to 100 small format stores Wal-Mart plans to open this year, the vast majority will be Neighborhood Markets, Holley added.
Asked about potential cannibalization of supercenters by Neighborhood Markets, he said, “We have enough Neighborhood Markets close to supercenters to see what kind of dilution you might have, and we still feel very good that we can have a little bit of cannibalization and still provide very good returns overall between both units.”
WORKING WITH CHICAGO
When one questioner asked if Wal-Mart plans to sit down with “community and labor opposition” to facilitate urban expansion, Holley replied, “We’ve already done that in Chicago, which is our first urban penetration. We worked very closely with the mayor’s office and city leaders on how we would approach Chicago as a whole, not just one store at a time.
“I think that’s the way to do it. It has been very successful for both sides so far. We definitely want to sit down and talk to city leaders.”
In response to another question, Holley declined comment on Wal-Mart’s decision in Charlotte to go head-to-had with Harris Teeter on promotions and price advertising. “We operate 10,000 stores, and we try a lot of different things, and I can’t really comment too much on that specific market,” he said.
“I do know we are very focused on making sure the customer understands not just real-world prices but also how we use our advertising and social media and the Internet. We have been very aggressive in many markets to make sure the customer knows we are the price leader.”
