WAL-MART'S WHITE: THE STORE AS A RETAIL LABORATORY

CHAPIN CLARK

PALM BEACH, Fla. -- The disgruntled are quick to cite low-ball pricing as the key to Wal-Mart Stores' success, but Nick White, executive vice president of the retailer's supercenter division and a keynote speaker at SN's Food Retailing Summit here, probably would argue a willingness to experiment has been equally important.

White, describing Wal-Mart's fine-tuning of its supercenters and the infancy of its new Neighborhood Market format, painted a picture of store-as-laboratory, where distinctions among supermarket, mass merchandiser and drug chain have little meaning, and achieving maximum convenience for the consumer is all.

Acknowledging many shoppers find a 200,000-square-foot store too daunting to bother with for their food and general-merchandise needs, White said the Neighborhood Market, which he deemed a test, is an attempt to answer the question, "What is it that they want when they don't want that particular trip?"

With two of the 40,000-square-foot stores up and running -- in Bentonville, Ark., where the company is based, and in Sherwood, Ark. -- and two more openings planned for later this month, Wal-Mart concedes that growth of the new format will lead to some cannibalization of supercenter sales, White said. He added, however, "We do believe that it complements our supercenter activity."

Though dominated by food, with an emphasis on fresh departments -- produce, prepack deli, fresh deli preparation, a fresh-meat case and a dairy wall -- the Neighborhood Markets have "quite large" pharmacies, White said.

"The pharmacy business for us is growing quite fast, and it's certainly an emphasis area in this store base."

The stores also feature drive-through pharmacies.

"We're not real sure about this particular opportunity, but we certainly think it's worthy of a test," White said.

The stores have two main entrances, one on the left leading directly into the health and beauty care and pharmacy area, and one on the right opening into the grocery section. "You should get the feeling that this is a convenience store right as you walk through the door," White said.

As in the Neighborhood Markets, perishables are a focus in Wal-Mart's new "192," or 192,000-square-foot supercenter prototype, White said. The first 192 unit, in Broken Arrow, Okla., opened in August.

The produce area features new multideck fixtures that give the section "a better look and feel," he said. The retailer is also relying more on its regional buyers and local producers to ensure that stores concentrated in one area are merchandised differently from one another.

"The supply chain is a critical part of our [freshness] initiative," he noted. Working with suppliers, Wal-Mart has had success with experiments of returnable containers and co-managed replenishment. Its Fresh Express warehouse system is providing faster processing -- eggs, for example, now go from the chicken to the customer within 48 hours, White said -- ensuring lower costs as well as product quality. "It's very much just in time," he said.

The 192 stores feature an expanded fresh-meat section, with the new multideck fixturing, and all Wal-Mart Supercenters now have case-ready ground beef, with reduced out-of-stocks and better packaging, White said.

The chain is reconfiguring supercenter entrances to make better use of the vestibule area, White said. This has allowed Wal-Mart to move its food-service departments up front, where they tie in more conveniently with the deli and bakery as part of a larger "convenience foods" section, White said. "We think this is a lot more customer-friendly."

Wal-Mart will have 564 supercenters in operation by the end of January 1999. David Merrefield, executive editor and associate publisher of SN, moderated this session.