Monday, December 21, 2009

Wither Walmart's Small-Format 'marketside' Stores and Format?

Walmart Stores, Inc. has eliminated its Web Site for the four 'marketside' (now named 'marketside by Walmart') small-format grocery and fresh foods markets it operates in the Phoenix, Arizona Metropolitan region and replaced it with a single Web Page introducing the company's new line of 'marketside' store brand foods products, which are named after the fresh foods-focused format stores in Arizona.

The Web address for the 'marketside' retail store chain is But that Web Address now contains only this Web Page offering a graphic and headline about the new 'marketside' store brand food products, along with a comment box asking readers to e-mail any comments about the new store brand line to Walmart.

If you click the link on any past stories about Walmart's 'marketside' stores in Fresh & Easy Buzz it will take you to the new 'marketside' store brand product line Web Page. The old 'marketside' retail stores' Web Site is gone. And based on our research, Wal-Mart has not moved it to another Web Address. The photograph at the top of this September, 2008 story in Fresh & Easy Buzz is from the no longer existing 'marketside' retail stores' Web Site.

Walmart Stores, Inc. does include 'marketside,' along with its other corporate retail formats, on this page on its corporate Web site. Ironically though, as you can see at the link, the store pictured still has the old 'marketside' (only) sign on it rather than 'marketside by Walmart,' which the stores are now called.

Walmart opened the four 'marketside' combination grocery and fresh foods markets on October 4, 2008 in the suburban Phoenix, Arizona cities of Glibert, Chandler, Mesa and Tempe.

In addition to these four initial test stores, Walmart had planned to open an additional 'marketside' store in Peoria, Arizona, also in the Phoenix Metropolitan region.

Up to five additional 'marketside' test stores were planned for the San Diego region in Southern California. The Peoria, Arizona 'marketside' and at least two of the San Diego region stores - one in San Diego and the other in nearby Oceanside - were originally slated to be open by now based on the retailer's initial strategic plan.

However, earlier this year Walmart announced it was postponing the opening of any additional 'marketside' stores until further announcement.

Shortly after this announcement Wal-Mart confirmed it would introduce the first of its food products under the 'marketside' store brand this year. It has started doing so. The first 'marketside' branded item is an upscale prepared pizza.

This summer Walmart added the 'Walmart' name to the four Arizona 'marketside' stores, changing the original 'marketside' (only) signage on the stores to new signs reading 'marketside by Walmart,' and bearing the Walmart logo. This was a departure from the retailer's original strategy which was to not associate the Walmart name with the 'marketside' stores, instead positioning them as a free-standing entity.

Walmart also set up a corporate office for the 'marketside' stores in Tempe, Arizona. That facility and the four 'marketside' stores remain operating.

Wither 'marketside' the stores?

So, what to think of Walmart's replacing its 'marketside' stores' Web Site with the single page 'marketside' store brand site?

We think the main reason Walmart did this is because since it now has branded the four stores in Arizona 'marketside by Walmart' the old Web site can no longer function as a marketing or communications tool. It's not a standalone 'marketside' grocery and fresh foods store brand anymore.

We have searched for a replacement Web Site for the Arizona 'marketside by Walmart' stores without success. If one exists, it's well hidden. Walmart isn't commenting on the subject at present. There is a Facebook Site for 'marketside by Walmart' stores. However it hasn't had much activity lately.

Fresh & Easy Buzz has reported on and written extensively about Walmart's 'marketside' small-format grocery and fresh foods retail format since early 2008. In our reporting and analysis we've always stressed that for Walmart 'marketside by Walmart' is truly a test. The retailer isn't wedded either to the small-format grocery and fresh foods format -- as Tesco is in the U.S. with Fresh & Easy, for example -- nor is it wedded to the 'marketside' stores specifically. The four stores are a mere trickle in the investment bucket for Walmart.

Walmart though appears somewhat wedded to the 'marketside' brand name in that it is using the name for its new prepared foods store brand, developing and rolling out additional items under the brand.

Perhaps when all is said and done 'store brand marketside' will be the only legacy of the name for Walmart Stores, Inc.?

We don't suspect Walmart will close the four existing marketside stores just yet though. But the fact the chain postponed going forward with opening the additional 'marketside' stores doesn't hold great promise for the future of a chain of 'marketside by Walmart' stores. The San Diego region stores haven't been built/remodeled yet although Walmart holds leasing on the two sites.

The recession really changed the landscape for Walmart vis-a-vis focusing on the marketside stores. It's mega-combination grocery and general merchandise Supercenters have drawn an entire new demographic of shoppers - higher income and professionals - along with its traditional shopper base, as consumers have been searching for food and grocery dollar value in the last two years, and continue to do so. The Supercenters are also drawing more food and grocery customers of all socio-economic levels than ever before.

This fact has caused increased faith at Walmart in its Supercenters, along with the development of a strategic program in which the retailer is committed to holding on to its "new" customers when the recession ends.

Walmart's original strategic vision for 'marketside' was as a fill-in type food and grocery store (in between shopping trips to its Supercenters), which is the main reason it opened the first four test stores in Arizona, where Walmart has numerous Supercenters and holds the number one market share position for food and grocery sales.

The second reason was to test whether or not a focus on selling fresh, prepared foods (ready-to-eat and ready-to-heat) had consumer sales legs. Think Tesco's Fresh & Easy.

The 'marketside' stores were also a defensive move against Tesco's Fresh & Easy, which is another convenient reason the 'marketside by Walmart' stores are located in Arizona, which is one of Tesco's three markets with Fresh & Easy.

Walmart's marketside, just like Tesco's Fresh & Easy, hasn't been turning in a stellar sales performance to date as a format devoted roughly 50% to prepared and fresh foods and 50% to grocery and related products.

Based on our reporting and research at present we don't know the ultimate fate of Walmart's now 'marketside by Walmart' stores and format.

However, we believe there's a high probability that Walmart will dump the stores sometime next year. We don't see Walmart opening the San Diego test stores anytime soon. And it makes little sense for Walmart to operate just four of the 'marketside' stores.

Additionally, with a line of fresh foods and fresh, prepared foods branded 'marketside' available in every Walmart Supercenter and Walmart Neighborhood market format store is a small-format store called 'marketside by Walmart' then needed? Why not just 'marketside' fresh and prepared foods kiosks inside the Supercenters, for example.

For now though the 'marketside by Walmart' stores remain open. Web Site or no Web Site. And of course if a new 'marketside by Walmart' Web site pops up soon that would be a good indicator or sign that 'marketside' the stores also will be around for a while. Stay tuned.

[Readers: Click here and here for a selection of past posts in Fresh & Easy Buzz about Walmart's 'marketside' retail format and stores.]


The Village Postmaster said...

Good to see you back, your longer commentary on F&E has been sorely missed.

Merry Christmas


Fresh & Easy Buzz said...

Thanks for the kind words Village Postmaster. We continue to follow -- and learn from -- your Blog as well.

How are independents like yourself weathering the recession in the UK?

Happy Holidays! Merry Christmas!

Roger said...

Fyi: The C-store trade publication CSP Daily News has a story on your post. Here's the link: