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Analyst: Neighborhood Markets losing share in some markets
Although Wal-Mart Stores has picked up the pace of its Neighborhood Market openings, the chain is losing aggregate share in roughly one-third of its markets in which it operates those stores, according to an analysis by BMO Capital.
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Although Wal-Mart Stores has picked up the pace of its Neighborhood Market openings, the chain is losing aggregate share in roughly one-third of its markets in which it operates those stores, according to an analysis by BMO Capital.
In a report released Tuesday, BMO analyst Kelly Bania said Walmart has lost market share in four of the top 10 markets in which the chain operates Neighborhood Market stores between 2010 and 2013, including slight market share declines in its two largest markets by store count, Dallas-Fort Worth and Phoenix, respectively. Walmart’s share is also down in Las Vegas and Houston, Bania added.
The data suggests that “Neighborhood Markets may be less of a threat than expected” to conventional grocers like Kroger and that the concept in some cases may be cannibalizing sales from larger Supercenters in the same market.
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Speaking at the retailer’s annual meeting last month, Bill Simon, Walmart’s U.S. CEO, acknowledged that Neighborhood Market stores had a slight cannibalization effect on Supercenters in some markets, but said it was not significant in assessing the larger marketplace.
The report also noted that Walmart Supercenters appear challenged by declining populations in rural markets. Almost half of Walmart’s Supercenters are located in communities with populations of less than 500,000. According to the report, 83% of those communities showed population declines from 2012-2013.
Bania presented the data in a note upgrading Kroger based in part on the analysis of the Walmart threat.
