Wal-Mart's Neighborhood Market stores and online sales saw strong growth in the first quarter, the retailer reported Tuesday, indicating that e-commerce and smaller-format stores could fuel Wal-Mart's future. The company also reported strength in its grocery segment, as the retailer works to improve its fresh food offerings and the quality of its overall food selection.
A growing number of consumers in the US and UK are turning to online shopping to buy groceries, which has food retailers taking a close look at their strategies for physical stores. Wal-Mart Stores opened more smaller-format stores than supercenters for the first time last year, and Goldman Sachs estimated that the UK's three largest supermarket chains will have to cut down on physical store space by about 20% to restore profits.
Wal-Mart will open 37 new stores in rural Texas through the end of next month. The stores will be smaller-format Neighborhood Markets and will open as a 40,000-square-foot traditional grocery store or a 12,000-square-foot store with a smaller selection of fresh produce, meats and grocery items, as well as a pharmacy and fuel.
Wal-Mart Stores is opening five smaller-format Neighborhood Market locations in California's Central Valley. The concept, launched in 1998, has about 200 stores nationwide, with a focus on discount groceries and quick, convenient shopping.
Wal-Mart Stores secured locations for smaller-format stores in Chicago neighborhood West Englewood, considered one of the city's most underserved communities. A Wal-Mart Market is between 30,000 and 60,000 square feet, while a Wal-Mart Express is less than 30,000 square feet.