Monday, June 6, 2011

Back to the Future at Walmart: Walmart Express Today and Walton's Five and Dime in the 1950's

The Gentry Walmart Express above opens Wednesday. [Photo: Justin Wedgworth.]
Walmart Stores, Inc. and Smaller-Format Retailing USA

Walmart Stores' new Walmart Express format can be fairly described as one part modern small-format fresh food and grocery store, one part dollar format store, and one-part post-modern drug - and food - store, as in what Walgreens' and CVS Pharmacy have been doing for the last couple years in terms of adding additional grocery SKUs and fresh foods to their respective stores, for example.

The Walmart Express prototype stores in Gentry and Prairie Grove, Arkansas opening on Wednesday offer a selection of 11,000 -to- 13,000 SKUs of fresh and fresh-prepared foods, perishables, frozen foods and packaged groceries, along with paper goods, health and personal care items, toys, clothing items, office supplies, household goods, DVD's, pre-paid phones and other sundries in their 15,000 square-foot small boxes.

The Gentry and Prairie Grove stores also feature pharmacies in-store and gasoline pumps out front. Most of but not all the Walmart Express stores will have in-store pharmacies. The gasoline pumps are optional, depending on the location of the particular store.

The Gentry (population 3,100) and Prairie Grove (population 3,113) Walmart Express units open June 8. They are two of three stores Walmart has planned so far in three small towns in Arkansas. The third unit will be in Gravette (population 2,300). All three towns are near the retailer's global headquarters in Bentonville.

Next week Walmart will open its third Walmart Express store, in Ridgefield, North Carolina.

Later this summer the first Walmart Express store will open in an urban region - in Chicago, Illinois.

The retailer plans to open 15-20 of the Express format stores this year, including in rural Arkansas, North Carolina and metropolitan Chicago, Anthony Hucker, vice president of strategy and business development for Walmart U.S. said during a tour of the Gentry Walmart Express unit on Thursday, during Walmart's annual meeting week. The retailer's annual meeting was on Friday.

The Walmart Express stores also feature Walmart USA's "Site-to-Store" program, which we reported they would in this March 9, 2011 story -March 9, 2011 - Going Rural: First Three Smaller-Format 'Walmart Express' Stores Will Be in Small Town Arkansas. Also note in the March 9 story we reported the format would offer a significant selection of fresh-prepared foods. It does, as noted earlier about the Gentry unit.. Walmart had not announced either offering prior to the store tour on Thursday.

The "Express" units will also except and cash customers checks like Walmart does at its other format stores, along with excepting food stamps and W.I.C. Vouchers.

Tesco's 175-store (California, Nevada and Arizona) Fresh & Easy Neighborhood Market, for example, doesn't except paper checks of any kind, nor does it except the Women's & Children's Program vouchers in its small-format stores, accept for excepting W.I.C. in one unit, its store at Central and Adams in south Los Angeles. [Read what we've written about the paper check and W.I.C. Voucher issue at Tesco's Fresh & Easy at this link .]

The Walmart Express stores are in a basic small-box, just like dollar stores and CVS' and Walgreens' stores are.

The interior of the Walmart Express store in Gentry, Arkansas, which is located less than half-a-mile from a Dollar General store and about 15 miles from the nearest Walmart supercenter, is utilitarian, including having exposed ducts and pipes and simple yellow-painted walls.

But it's also colorful and has plenty of signage throughout the store, including a number of signs that say: "If you want it, we'll get it," which are in reference to Walmart's "Site-to-Store" program, in which shoppers can order items from and have the goods delivered to the Walmart Express store for easy pickup. The feature could be a a significant source for pulling shoppers into the stores, in our analysis.

Walmart is also using the prototype or test aspect of the first Walmart Express stores in rural Arkansas in its favor: There's a suggestion box and forms at the stores' front-end, where customers can offer their opinions on items that should be carried.

There's also a "local" positioning aspect in the Gentry store's produce department, which features signs touting various produce items as coming from local growers.

Walmart has also attempted some cross-merchandising of food and non-food items in the Gentry store. For example, toasters were merchandised in the bread aisle and tea kettles and some coffee-related items were located in the packaged coffee and tea aisle.

Walton's small-format 5-10 variety store in the 1950's.
Walmart Express: Sam's' five and dime' with a modern twist

In looking closely at Walmart Express, we have some breaking news: It's not so much a new format for Walmart as it is a return of sorts to founder Sam Walton's beginnings, because the small-box fresh-food-and-grocery-dollar-store-modern-era-drug-store hybrid format isn't all that different from what Sam started out with as a retailer over six decades ago - which was the old "five and dime" or variety store format.

Before the late Sam Walton opened his first Walmart store in Rogers, Arkansas in 1962 at age 44, he was a variety store retailer. Some might suggest that's what Walmart still is in the U.S. - just on a super-sized scale with its supercenters, which average abut 180,000 square-feet.

After getting out of the U.S. Military, Walton worked briefly for J.C. Penney (then a variety store chain) in Iowa, then bought and operated a Ben Franklin franchise variety store, and later a few more in other cities, in Newport, Arkansas.

Then in 1951 Sam opened the landmark Walton's Five and Dime store in Bentonville, Arkansas, where Walmart Stores, Inc. has been headquartered ever since.

Sam's "5-10" store, which has been preserved and is part of the Walmart Visitor's Center on North Main Street in Bentonville, offered what variety format (and many drug stores) stores of the era offered, which was a little bit of everything - sundries, health and personal care items, clothing and other soft goods, household items, toys, grocery items, prepared food, most often at a "lunch counter," and a whole lot more.

The closest and best example today of the 1950's-60's-era "five and dime" or variety store format is the dollar or 99-cent format store, which in addition to offering a variety of non-food items across many categories also offers packaged groceries, household package goods, health and personal care items, other traditional grocery store items and, in a growing number of cases, fresh foods like produce, meats, deli, perishables and frozen foods, as do a growing number of drug stores like some operated by CVS and Walgreens.

Enter Walmart Express - or "Walton's Five and Dime 2.0," the nickname were giving it in this piece today.

The 'dollar' and 'drug store' challenge

Dollar format stores have been the biggest competitor to Walmart in the U.S. over the last few years, as shoppers have searched for variety at low prices during the down economy. The small but packed-with-variety-at-a-cheap-price dollar format stores operated by chain's like Dollar General, Dollar Tree and numerous others have and continue to grow exponentially throughout the U.S., along with becoming places where American consumers love to shop.

Walmart hundred hopes Walmart Express will help it counter the dollar and 99-cent store challenge, along with allowing it to sell food and groceries in more places in the U.S., such as in small towns like Gentry, Arkansas (population 3,000) and more significantly in urban America, in places like metro Chicago, New York City, Los Angeles, San Francisco and elsewhere where it has little or no food and grocery retailing presence.

So like Sam hoped in 1951 when he opened Walton's Five and Dime, Walmart in 2011 is hoping to cash in on America's love of variety, with a focus on food and groceries, at a cheap price, by opening convenient-to-shop, smaller-format stores - Walmart Express.

Back to the future with Walmart Express

It's not 1951 and Walmart is no longer Sam Walton, his wife and a few hundred associates. Instead, Walmart is now the largest retailer in the United States and the world, along with being the number one-seller of food and groceries in America.

But as the old saying goes - the more things change the more they stay the same.

Among the many things Sam Walton built into the Walmart culture that remain today is the "Big C" - competitiveness.

Therefore, despite its status as America's leading retailer of everything, Mike Duke's (CEO) Walmart wants essentially the same thing Sam Walton wanted (and got) from those variety store beginnings so many decades ago - to dominate.

And were he here today, we suggest Sam Walton would be leading the merchandising charge on the Walmart Express format, reminding all those around him that, after all, he does have a little experience in variety store merchandising.

The big question is: Can Walmart do its variety store origins proud with Walmart Express?

Its small-format efforts over the last three decades - Neighborhood Market, marketside by Walmart and a couple other earlier attempts - suggest the answer is ... "maybe?"

However, Walmart's historical legacy, based on Sam's variety store origins and success, suggests the answer is ... it had better this time around. After all, Sam is probably watching.

Related Stories

June 1, 2011: Walmart Week 2011 - All Aboard the 'Walmart Express:' First Two Stores Open June 8

February 22, 2011: Walmart Stores, Inc. Announces the Name For its New Smaller-Format Food & Grocery Stores: 'Walmart Express'

March 9, 2011: Going Rural: First Three Smaller-Format 'Walmart Express' Stores Will Be in Small Town Arkansas

January 10, 2011: Walmart 'Gets Real' With Smaller-Format Grocery Store Initiative in California; First Stores On Tap

January 11, 2011: A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

October 13, 2010: Simon Says: Walmart U.S. CEO Outlines Smaller Store Strategy and Plans; Walmart to Offer Groceries Online in USA

October 12, 2010: 'The Insider': Live-Blogging Walmart Stores' 17th Annual Meeting For the Investment Community.

October 11, 2010: Walmart to Outline its Urban-Focused Smaller-Format Grocery Store Plans Wednesday; What Might Be In-Store?

September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010

September 23, 2010: Revisting 'marketside by Walmart': Format As We Know it On the Way Out But Some or All Of the Four Stores Could Be Converted

July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store

Also see these links - ,  , , , , , , , ,  - for related stories.

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