Citigroup Supermarket Industry Analyst Confirms Wal-Mart Small Marts in Arizona

Deborah Weinswig, a retail industry analyst for investment bank Citigroup Global Markets based in New York, told the grocery industry trade publication Supermarket News in an article for publication tomorrow that Wal-Mart sources have confirmed to her their plans to open a 20,000 square foot grocery market that would be a modified version of the chain's Neighborhood Market format.

The 20,000 square foot stores, named "MarketSide," will have a large assortment of fresh foods, according to Weinswig.

"It's not intended to take on Tesco but just part of a natural evolution for the company," Weinswig told Supermarket News.

Weiswig also said her source at Wal-Mart confirmed the four Arizona locations that were first reported in the Financial Times yesterday, and that we reported here. Those store locations will be in the Arizona cities of Chandler, Mesa, Tempe and Gilbert. (You can get the exact store addresses and other details here.)

While we respect Ms. Weinswig's opinion--and know she's just repeating what she was told from the Wal-Mart source--we believe a little more than "natural evolution" caused Wal-Mart to decide to open the small format, "MarketSide" stores. That something, along with whatever "natural evolution" has taken place, is the mega-retailer's strong desire to not allow Tesco to take food sales market share away from it in the U.S.

Another reason, and a good one, is that Wal-Mart has been stymied in states throughout the U.S. by county and city governments and neighborhood groups (as well as by national groups) in it's ability to get approved and build the number of Supercenters it wants to. This has prevented the retailer from obtaining the amount of food sales' market share it desires in the U.S.

The small format grocery markets will not only allow Wal-Mart to go head-to-head with Tesco's Fresh & Easy stores--along with doing so with other small format grocers in the U.S. like Aldi, with its increasingly popular no frills, price-impact grocery stores--it will also enable the retailer to put food stores in places where it hasn't been able to locate Supercenters do to this intense opposition.

Weinswig also said she believes it's a good idea for Wal-Mart to test the new format in the Phoenix area, "because Arizona has been a very good market for the company over the past couple years."