Retailer Wal-Mart (WMT, Financial) has been aggressively working on plans to make a quick but long-lasting recovery from the sluggish retail sales. To cope with the burden of increasing cost of living, its customers have been flocking to smaller format stores such as dollar stores, smaller pharmacy stores, etc. to get the necessities for a few cents less, while the big-box retailer has been struggling to retain customers. But, the management has been quick to understand what the new generation buyers want and is banking on its narrow format stores and e-commerce portal to do the trick. Here’s a lowdown on how Wal-Mart wishes to change its fortune.
Focus on narrow-format shops
A new trend that’s becoming increasingly prominent among the consumers is that they are all preferring the convenience of a small store compared to huge assortments available with retail giants such as Wal-Mart, Target (TGT, Financial) , Kroger (KR, Financial), and similar others.
To regain its lost customers, the Arkansas-based retailer is ready to ride the wave of change and has started offering two concepts of narrow format stores – Wal-Mart Neighborhood Market and Wal-Mart Express. A typical Neighborhood market is almost one-fifth of a retail superstore at an approximate 40,000 square feet of space, and a Wal-Mart Express will be even smaller than the Neighborhood Market at an average size of 12,000 square feet.
So, what makes these small stores more convenient compared to superstores? Well, these stores are all around and buying in small quantities become easier. The consumers won’t have to travel downtown and buy in bulk all their necessities and then store them. Instead, the consumers are getting the option to buy whenever they want to or need to. Some excellent examples of retail chains focusing on such small format stores are Dollar Tree (DLTR) and Family Tree.
Wal-Mart has been experiencing improving comparable sales in smaller stores and this just proves that the concept works. Apart from this, Wal-Mart is also emphasizing on offering organically grown food, following the footsteps of the very successful Whole Foods Market (WFM, Financial).
Focus on e-commerce
Coming to the retail giant’s second initiative, Wal-Mart has been actively investing in developing its online sales also. The web is flooded with reports of Wal-Mart opening new fulfillment centers, hiring hundreds of employees to add arms and legs to its efforts. And why shouldn’t the company do so? After all, online sales has massive upside potential. Just look at Amazon (AMZN, Financial). The retailer booked online sales worth $68 billion last year. Wal-Mart is a very popular brand and it can easily leverage its goodwill to make e-commerce click for itself.
The company is putting special efforts to make its delivery system prompt and robust. Smart delivery option such as pick up from store is going to take the retailer a long way. As the company expands its network with narrow format stores, it will be using these stores as shipment pick up centers. Shoppers can visit their nearby small format Wal-Mart outlet and pick up whatever they have purchased online. Now, there’s added advantage to this. When a shopper goes to pick up the shipment, he will also get to see a lot of stuff all around and that induces more purchases. This has been seen in multiple cases.
Parting thoughts
Wal-Mart is definitely among the most well-known companies on the planet. In recent times, its sales may not have been up to scratch, but the future surely looks promising. With hundreds of narrow format stores about to open and with so much emphasis on e-commerce, Wal-Mart is sure to turn its wheel of fortune in its favor. The retailer is going to offer the convenience of a small store through its narrow format stores and at the same time will allow consumers to surf through its huge collection of offerings using its e-commerce platform.
