News & Analysis
Bentonville big box brawler Walmart Stores, Inc. is set on Wednesday (October 13) to present an overview of its food and grocery retailing-focused strategy and plans to open smaller-format stores in various U.S. urban regions, including: Los Angeles (and metro Southern California); San Diego; the San Francisco Bay Area; Chicago; New York City; Boston and possibly a few others.
Additionally, Walmart CEO Bill Simon said on September 15 at the Goldman Sachs Retail Conference that it's possible the smaller-format stores could also be used in suburban (fill-in) and rural areas as part of the retailer's overall USA strategy.
Fresh & Easy Buzz played a key part in kicking off what has been considerable discussion in the industry and media about Walmart's urban smaller-store food and grocery-focused retailing strategy, when we reported in detail in this July 6, 2010 story - Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store - about the retailer's plans. Late last month a number of major publications reported what was essentially our July story. [See - September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010.]
In addition to announcing a version of the about 20,000 square-foot (can range from 20,000 -to- as much as 40,000, depending on the site) small-format 'Neighborhood Market by Walmart' prototype store mentioned in our story above, we expect Walmart to describe at least one medium-format and possibly a third smaller-format it plans to use as part of its urban (and as Simon noted at the Goldman conference, potentially suburban fill-in and rural) smaller-store food and grocery retailing strategy and plans.
The second smaller-format could be a flexible-format food and grocery-focused store. That flex-format would range from a low of about 5,000 square-feet to about 20,000 square-feet. The smaller range would be for very dense urban neighborhoods, think Manhattan and San Francisco, for example, where not only is space at a premium but so too is the per-square-foot cost of retail/commercial space.
We've discussed this flexible square-footage smaller-format store in the past in Fresh & Easy Buzz, often referring to it as an American version of a bodega. This is appropriate terminology because Walmart has borrowed, and will continue to borrow, extensively from its Mexico operations, where the company operates store formats ranging from under 5,000 square-feet to over 100,000 square-feet. Walmart is the number one food, grocery and general merchandise retailer in Mexico.
Walmart on Wednesday will also talk about its new flexibility in terms of size as it pertains to its supercenters, which remain the retailer's primary retail weapon of choice in the U.S. As we've been reporting and writing about since 2008, although (store) size still matters at Walmart, when it comes to its supercenters, which average about 180,000 square-feet (the average size has come down by about 10,000-15,000 square-feet in the last couple years), Walmart is no longer as dogmatic about achieving that "average size" as it has been in the past.
For example, in 2009 Walmart opened its first supercenter in Modesto, California, in what was a vacant big box building the retailer renovated. The supercenter is 98,000 square-feet total, with about 75,00-85,000 square-feet of selling space. The smaller supercenter has been doing extremely well since it opened last year.
Due in large part to the success of the Modesto smaller, "hybrid" supercenter, which offers a full selection of fresh foods and groceries and all the other general merchandise departments featured in the bigger supercenters in a edited fashion, Walmart acquired two vacant big box stores in Southern California early this year, which it's renovating into smaller supercenters (70,000-80,000 square-feet of selling space), modeled on the Modesto unit.
Walmart has also been building and proposing some built from-the-ground-up supercenters in the last two years, which are much smaller than traditionally has been the case.
For example, in Patterson, California, which is about 15 miles from Modesto, Walmart is proposing a below average-sized 158,000 square-foot new construction supercenter, at Sperry and Ward avenues, in the city of about 35,000. The location is an open-space area along busy Interstate 5, which connects Northern and Southern California The Patterson City Council votes to approve or deny the store on Tuesday night. The city's mayor, Becky Campo, says it's likely the majority of the council will vote in favor of the store's construction at tomorrow night's meeting. A new supercenter opening this month in Reno, Nevada is even smaller.
These two pieces, along with building new supercenters and the to be announced smaller-store strategy, are key to Walmart's U.S. food and grocery retailing strategy.
An additional key piece of the retailer's U.S. food and grocery retailing strategy is its ongoing expansion (square-footage) at many of its discount format stores, which Walmart essentially isn't building anymore, in which its adding fresh foods and groceries, converting the stores into a "hybrid" supercenter. (We call both the smaller supercenters in renovated vacant buildings and the discount store conversions "hybrid" because they are modifications on the basic supercenter format model.)
Since 2009 Walmart has added square-footage and the equivalent of a full-service supermarket inside numerous discount format stores in the U.S. And in a number of cases, where it either hasn't been able to add square-footage because none is available adjacent to a particular discount store, or it's unable to get governmental approval to do so, Walmart has been adding fresh foods and expanded grocery selections in the discount stores anyway, reducing other department sizes to make room. The discount format stores average about 100,000-130,000 square-feet, so there's plenty of space to do so. And it creates a store format similar to the Modesto hybrid.
A most recent example of this is the remodeled store in Oceanside, California near San Diego, where Walmart reduced the store's electronics department considerably in size, along with shrinking some other departments, in order to add the fresh food and grocery space. [See - September 21, 2010: Fresh & Easy Neighborhood Market and Walmart Create A September New Grocery Store Rain Storm in Oceanside, California]
[Read the seven stories linked below for background on: (1) the smaller super-center in vacant big big box program; (2) the flexible-size new design supercenter program; (3) the discount store conversions and adding of fresh foods and groceries; and (4) smaller-format, small-store strategy.]
>July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store
>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
>April 25, 2008: Going Smaller: Wal-Mart Might have Found A Solution or Two to Much of the Opposition to its Mega-Supercenter Stores in the USA
>June 27, 2008: Wal Mart Has Created A New, More Upscale Supercenter Store Design Prototype; Submitting Plans For the Stores Selectively in U.S.
>September 15, 2008: Wal-Mart Expanding its Discount Store-to-Supercenter Conversion Program As Part of its Strategy to Grab Even More Food and Grocery Sales Market Share
>February 11, 2009: Tesco's Fresh & Easy Isn't the Only Food & Grocery Retailer With its Eyes on Bakersfield: Wal-Mart's Bakersfield Push and Central Valley, CA Strategy
>May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008
Walmart's plans and Tesco's Fresh & Easy
Walmart's smaller-store plans will strike directly at the heart of the two key market regions Tesco has laid out going forward for its Fresh & Easy Neighborhood Market chain, Southern California, where it has over half of its current 168 stores (soon to be 155 after it closes 13 units by November 2, 2010; see 13 Closing Fresh & Easy Stores List ), and Northern California, which it plans to enter in early 2011 and, along with Southern California, put the majority of its focus on for the next two years. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market]
In Los Angeles and parts of Southern California, as well as in the San Francisco Bay Area, Walmart is looking at various versions of strategic plans similar to what it recently announced for Chicago. Below (in italics) is what Walmart USA CEO Simon said about the retailer's Chicago plans at the September 15, 2010 Golden Sachs conference:
"Many of you heard and read about our Chicago announcement a month or so back. After a lot of time and energy, much of it not successful in urban areas in the US, we took a different approach with Chicago, working very closely with Mayor Daley and his team. And I respect them greatly for this effort.
"We have been able to reach an agreement with the City, the City Council and all the constituents in Chicago. And there are a lot of them. (For any of you who know how that whole thing works, please explain it to me one day. I think that would be a big help.) We do believe there is an opportunity for us to grow in Chicago, and the announcement we made talked about several dozen stores over the next five years and after.
"[After] years and years of City Council votes of 64 to nothing against us, we've had three approvals in the last six weeks from the City Council, and we are very, very optimistic about Chicago, and particularly about our opportunities in urban markets.
"We will be adding at least 12,000 jobs in the City, and at a time when jobs are a premium, we offer this, in addition to the savings it will offer our customers in the City of Chicago. There will be about 10,000 Wal-Mart associates and about another 2000 construction trade jobs that this will generate [in Chicago].
"We will have to be a little creative with formats, more so than we've been in the past. There is not a lot of big, empty lots that we can build 200,000 square-foot Supercenters in, nor do we want to anymore. So we will have a mix, a healthy mix, of Supercenters and small formats, including our grocery format, neighborhood market and smaller formats.
We have lots of learnings around the world from Wal-Mart in small formats. Our group in Mexico and Central America, Latin America operates small formats very well and very profitably, and we are going to beg, borrow, steal and learn from them as quickly as we can, because it is important for our urban strategy."
Fresh & Easy Buzz has learned Walmart representatives have had discussions of varying degrees with representatives of the cities (and mayors) of Los Angeles, San Diego, San Francisco, San Jose and a few others, in which the topic of discussion has been about the retailer's interest in opening numerous stores of different sizes, mostly smaller-format, in these cities and the surrounding suburban fringes.
The California cities, all historically previously pretty cool to Walmart in general, have a renewed interest in the retailer because of the agreement Walmart reached with the City of Chicago and the UFCW union, which agreed not to stand in the way of the stores opening. As an example, the mayors of Los Angeles and San Francisco, both Liberal Democrats, have friendships with Chicago Mayor Daley, a Democrat, as well as having strong respect for his governance of the city.
The fact Walmart is talking about smaller, urban-style stores has also peaked the interest of these California municipal officials and their representatives, as this is the first time Walmart representatives have approached them with such a conceptual idea. In the past it's been all about big box supercenters. We're calling it the Chicago model.
Additionally, there's the cold, hard economic facts: Like Chicago, these economically hard-pressed California cities and others are looking for private sector help to develop inner-city neighborhoods, new businesses to create jobs, and additional retail stores to bring in sales tax monies. The deal Walmart struck with the City of Chicago, where Walmart has so far had two new stores approved by the City Council (there's one Walmart discount store in he city) offers all these elements.
Walmart has already been acquiring, and continues to search for, retail space in California for these smaller-format stores, as we first reported back in July. [July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store.] A number of the sites it's obtained and continues to look at are vacant retail buildings, along with from scratch sites.
This means once Walmart pulls the trigger on the smaller store strategy, it won't take it long to renovate and open the first batch of stores, which include the Northern and Southern California focus, where the small-format stores will go in both urban and suburban cities. And there's considerable rural opportunity in California, especially in the north, as well.
Based on our reporting, we also expect Walmart might eventually locate some of its smaller-format stores in metropolitan Las, Vegas, Nevada and the metro Reno region in northern Nevada, although the regions aren't at the top of its priority list right now.
Metro Las Vegas is one of Tesco's four regions with Fresh & Easy Neighborhood Market, along with Southern California, metro Phoenix, Arizona and California's Central Valley.
There are currently 27 Fresh & Easy stores in metro Las Vegas. After Tesco closes the six units by November 2, that will leave 21 stores in the region.
Tesco also has plans to open Fresh & Easy stores in the Reno area as part of its Northern California launch. The Reno-area stores won't likely open any sooner than late 2001 or early 2012, based on our information.
Walmart could also use some of the smaller-format stores as infill in the metro Phoenix, Arizona Market, including replacing some or all of its four 'marketside by Walmart' small-format fresh food and grocery stores. Those four stores are in the Phoenix suburbs of Mesa, Chandler, Gilbert, and Tempe.
Additionally, two sources, both in good positions to know, recently told us Walmart plans to remodel many of the existing 39,000-42,000 Neighborhood Market supermarkets in Arizona that aren't fairly new or weren't remodeled in the retailer's last cycle in the state. This makes sense in light of the about 20,000 square-foot 'Neighborhood Market by Walmart' prototype Walmart's been testing in Rogers Arkansas and the differences it has compared to the existing format. Some of Walmart's newer neighborhood market supermarkets in Arizona are named 'Neighborhood Market by Walmart," although they are in the 35,000-40,000 square-foot range.
Tesco currently has 34 small-format Fresh & Easy Neighborhood Market stores in metro Phoenix, Arizona. After the closure of the six, it will bring the total store-count down to 28. Walmart is the number one food and grocery market share leader in metro Phoenix and all of Arizona, followed by Kroger's Fry's, Safeway, Albertsons, and Basha's. Tesco's Fresh & Easy isn't in the top 10.
This means once Walmart pulls the trigger on the smaller store strategy, it won't take it long to renovate and open the first batch of stores, which include the Northern and Southern California focus, where the small-format stores will go in both urban and suburban cities. And there's rural opportunities in California, especially in the north, as well. For example, there are numerous smaller cities where a supercenter won't work but a smaller-format store will.
U.S. food and grocery is about to get even more interesting - and competitive - with Walmart's decision to expand its format portfolio and square-footage, and go after U.S. urban markets. Stay tuned to Wednesday.
Bentonville big box brawler Walmart Stores, Inc. is set on Wednesday (October 13) to present an overview of its food and grocery retailing-focused strategy and plans to open smaller-format stores in various U.S. urban regions, including: Los Angeles (and metro Southern California); San Diego; the San Francisco Bay Area; Chicago; New York City; Boston and possibly a few others.
Additionally, Walmart CEO Bill Simon said on September 15 at the Goldman Sachs Retail Conference that it's possible the smaller-format stores could also be used in suburban (fill-in) and rural areas as part of the retailer's overall USA strategy.
Fresh & Easy Buzz played a key part in kicking off what has been considerable discussion in the industry and media about Walmart's urban smaller-store food and grocery-focused retailing strategy, when we reported in detail in this July 6, 2010 story - Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store - about the retailer's plans. Late last month a number of major publications reported what was essentially our July story. [See - September 20, 2010: About Today's Walmart Stores, Inc. Smaller Stores Media Frenzy: We Scooped it On July 6, 2010.]
In addition to announcing a version of the about 20,000 square-foot (can range from 20,000 -to- as much as 40,000, depending on the site) small-format 'Neighborhood Market by Walmart' prototype store mentioned in our story above, we expect Walmart to describe at least one medium-format and possibly a third smaller-format it plans to use as part of its urban (and as Simon noted at the Goldman conference, potentially suburban fill-in and rural) smaller-store food and grocery retailing strategy and plans.
The second smaller-format could be a flexible-format food and grocery-focused store. That flex-format would range from a low of about 5,000 square-feet to about 20,000 square-feet. The smaller range would be for very dense urban neighborhoods, think Manhattan and San Francisco, for example, where not only is space at a premium but so too is the per-square-foot cost of retail/commercial space.
We've discussed this flexible square-footage smaller-format store in the past in Fresh & Easy Buzz, often referring to it as an American version of a bodega. This is appropriate terminology because Walmart has borrowed, and will continue to borrow, extensively from its Mexico operations, where the company operates store formats ranging from under 5,000 square-feet to over 100,000 square-feet. Walmart is the number one food, grocery and general merchandise retailer in Mexico.
Walmart on Wednesday will also talk about its new flexibility in terms of size as it pertains to its supercenters, which remain the retailer's primary retail weapon of choice in the U.S. As we've been reporting and writing about since 2008, although (store) size still matters at Walmart, when it comes to its supercenters, which average about 180,000 square-feet (the average size has come down by about 10,000-15,000 square-feet in the last couple years), Walmart is no longer as dogmatic about achieving that "average size" as it has been in the past.
For example, in 2009 Walmart opened its first supercenter in Modesto, California, in what was a vacant big box building the retailer renovated. The supercenter is 98,000 square-feet total, with about 75,00-85,000 square-feet of selling space. The smaller supercenter has been doing extremely well since it opened last year.
Due in large part to the success of the Modesto smaller, "hybrid" supercenter, which offers a full selection of fresh foods and groceries and all the other general merchandise departments featured in the bigger supercenters in a edited fashion, Walmart acquired two vacant big box stores in Southern California early this year, which it's renovating into smaller supercenters (70,000-80,000 square-feet of selling space), modeled on the Modesto unit.
Walmart has also been building and proposing some built from-the-ground-up supercenters in the last two years, which are much smaller than traditionally has been the case.
For example, in Patterson, California, which is about 15 miles from Modesto, Walmart is proposing a below average-sized 158,000 square-foot new construction supercenter, at Sperry and Ward avenues, in the city of about 35,000. The location is an open-space area along busy Interstate 5, which connects Northern and Southern California The Patterson City Council votes to approve or deny the store on Tuesday night. The city's mayor, Becky Campo, says it's likely the majority of the council will vote in favor of the store's construction at tomorrow night's meeting. A new supercenter opening this month in Reno, Nevada is even smaller.
These two pieces, along with building new supercenters and the to be announced smaller-store strategy, are key to Walmart's U.S. food and grocery retailing strategy.
An additional key piece of the retailer's U.S. food and grocery retailing strategy is its ongoing expansion (square-footage) at many of its discount format stores, which Walmart essentially isn't building anymore, in which its adding fresh foods and groceries, converting the stores into a "hybrid" supercenter. (We call both the smaller supercenters in renovated vacant buildings and the discount store conversions "hybrid" because they are modifications on the basic supercenter format model.)
Since 2009 Walmart has added square-footage and the equivalent of a full-service supermarket inside numerous discount format stores in the U.S. And in a number of cases, where it either hasn't been able to add square-footage because none is available adjacent to a particular discount store, or it's unable to get governmental approval to do so, Walmart has been adding fresh foods and expanded grocery selections in the discount stores anyway, reducing other department sizes to make room. The discount format stores average about 100,000-130,000 square-feet, so there's plenty of space to do so. And it creates a store format similar to the Modesto hybrid.
A most recent example of this is the remodeled store in Oceanside, California near San Diego, where Walmart reduced the store's electronics department considerably in size, along with shrinking some other departments, in order to add the fresh food and grocery space. [See - September 21, 2010: Fresh & Easy Neighborhood Market and Walmart Create A September New Grocery Store Rain Storm in Oceanside, California]
[Read the seven stories linked below for background on: (1) the smaller super-center in vacant big big box program; (2) the flexible-size new design supercenter program; (3) the discount store conversions and adding of fresh foods and groceries; and (4) smaller-format, small-store strategy.]
>July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store
>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
>April 25, 2008: Going Smaller: Wal-Mart Might have Found A Solution or Two to Much of the Opposition to its Mega-Supercenter Stores in the USA
>June 27, 2008: Wal Mart Has Created A New, More Upscale Supercenter Store Design Prototype; Submitting Plans For the Stores Selectively in U.S.
>September 15, 2008: Wal-Mart Expanding its Discount Store-to-Supercenter Conversion Program As Part of its Strategy to Grab Even More Food and Grocery Sales Market Share
>February 11, 2009: Tesco's Fresh & Easy Isn't the Only Food & Grocery Retailer With its Eyes on Bakersfield: Wal-Mart's Bakersfield Push and Central Valley, CA Strategy
>May 6, 2010: Going Smaller & Getting 'Hybrid': Walmart's Smaller Supercenter in Vacant Retail Buildings Strategy Began in 2008
Walmart's plans and Tesco's Fresh & Easy
Walmart's smaller-store plans will strike directly at the heart of the two key market regions Tesco has laid out going forward for its Fresh & Easy Neighborhood Market chain, Southern California, where it has over half of its current 168 stores (soon to be 155 after it closes 13 units by November 2, 2010; see 13 Closing Fresh & Easy Stores List ), and Northern California, which it plans to enter in early 2011 and, along with Southern California, put the majority of its focus on for the next two years. [See - October 5, 2010: Philip Clarke's Early Welcome to America: Tesco Logs $151 Million Half-Year Loss For Fresh & Easy Neighborhood Market]
In Los Angeles and parts of Southern California, as well as in the San Francisco Bay Area, Walmart is looking at various versions of strategic plans similar to what it recently announced for Chicago. Below (in italics) is what Walmart USA CEO Simon said about the retailer's Chicago plans at the September 15, 2010 Golden Sachs conference:
"Many of you heard and read about our Chicago announcement a month or so back. After a lot of time and energy, much of it not successful in urban areas in the US, we took a different approach with Chicago, working very closely with Mayor Daley and his team. And I respect them greatly for this effort.
"We have been able to reach an agreement with the City, the City Council and all the constituents in Chicago. And there are a lot of them. (For any of you who know how that whole thing works, please explain it to me one day. I think that would be a big help.) We do believe there is an opportunity for us to grow in Chicago, and the announcement we made talked about several dozen stores over the next five years and after.
"[After] years and years of City Council votes of 64 to nothing against us, we've had three approvals in the last six weeks from the City Council, and we are very, very optimistic about Chicago, and particularly about our opportunities in urban markets.
"We will be adding at least 12,000 jobs in the City, and at a time when jobs are a premium, we offer this, in addition to the savings it will offer our customers in the City of Chicago. There will be about 10,000 Wal-Mart associates and about another 2000 construction trade jobs that this will generate [in Chicago].
"We will have to be a little creative with formats, more so than we've been in the past. There is not a lot of big, empty lots that we can build 200,000 square-foot Supercenters in, nor do we want to anymore. So we will have a mix, a healthy mix, of Supercenters and small formats, including our grocery format, neighborhood market and smaller formats.
We have lots of learnings around the world from Wal-Mart in small formats. Our group in Mexico and Central America, Latin America operates small formats very well and very profitably, and we are going to beg, borrow, steal and learn from them as quickly as we can, because it is important for our urban strategy."
Fresh & Easy Buzz has learned Walmart representatives have had discussions of varying degrees with representatives of the cities (and mayors) of Los Angeles, San Diego, San Francisco, San Jose and a few others, in which the topic of discussion has been about the retailer's interest in opening numerous stores of different sizes, mostly smaller-format, in these cities and the surrounding suburban fringes.
The California cities, all historically previously pretty cool to Walmart in general, have a renewed interest in the retailer because of the agreement Walmart reached with the City of Chicago and the UFCW union, which agreed not to stand in the way of the stores opening. As an example, the mayors of Los Angeles and San Francisco, both Liberal Democrats, have friendships with Chicago Mayor Daley, a Democrat, as well as having strong respect for his governance of the city.
The fact Walmart is talking about smaller, urban-style stores has also peaked the interest of these California municipal officials and their representatives, as this is the first time Walmart representatives have approached them with such a conceptual idea. In the past it's been all about big box supercenters. We're calling it the Chicago model.
Additionally, there's the cold, hard economic facts: Like Chicago, these economically hard-pressed California cities and others are looking for private sector help to develop inner-city neighborhoods, new businesses to create jobs, and additional retail stores to bring in sales tax monies. The deal Walmart struck with the City of Chicago, where Walmart has so far had two new stores approved by the City Council (there's one Walmart discount store in he city) offers all these elements.
Walmart has already been acquiring, and continues to search for, retail space in California for these smaller-format stores, as we first reported back in July. [July 6, 2010: Walmart Looking for Store Sites in Northern California For 20,000 Sq-Ft Neighborhood Market by Walmart Prototype Store.] A number of the sites it's obtained and continues to look at are vacant retail buildings, along with from scratch sites.
This means once Walmart pulls the trigger on the smaller store strategy, it won't take it long to renovate and open the first batch of stores, which include the Northern and Southern California focus, where the small-format stores will go in both urban and suburban cities. And there's considerable rural opportunity in California, especially in the north, as well.
Based on our reporting, we also expect Walmart might eventually locate some of its smaller-format stores in metropolitan Las, Vegas, Nevada and the metro Reno region in northern Nevada, although the regions aren't at the top of its priority list right now.
Metro Las Vegas is one of Tesco's four regions with Fresh & Easy Neighborhood Market, along with Southern California, metro Phoenix, Arizona and California's Central Valley.
There are currently 27 Fresh & Easy stores in metro Las Vegas. After Tesco closes the six units by November 2, that will leave 21 stores in the region.
Tesco also has plans to open Fresh & Easy stores in the Reno area as part of its Northern California launch. The Reno-area stores won't likely open any sooner than late 2001 or early 2012, based on our information.
Walmart could also use some of the smaller-format stores as infill in the metro Phoenix, Arizona Market, including replacing some or all of its four 'marketside by Walmart' small-format fresh food and grocery stores. Those four stores are in the Phoenix suburbs of Mesa, Chandler, Gilbert, and Tempe.
Additionally, two sources, both in good positions to know, recently told us Walmart plans to remodel many of the existing 39,000-42,000 Neighborhood Market supermarkets in Arizona that aren't fairly new or weren't remodeled in the retailer's last cycle in the state. This makes sense in light of the about 20,000 square-foot 'Neighborhood Market by Walmart' prototype Walmart's been testing in Rogers Arkansas and the differences it has compared to the existing format. Some of Walmart's newer neighborhood market supermarkets in Arizona are named 'Neighborhood Market by Walmart," although they are in the 35,000-40,000 square-foot range.
Tesco currently has 34 small-format Fresh & Easy Neighborhood Market stores in metro Phoenix, Arizona. After the closure of the six, it will bring the total store-count down to 28. Walmart is the number one food and grocery market share leader in metro Phoenix and all of Arizona, followed by Kroger's Fry's, Safeway, Albertsons, and Basha's. Tesco's Fresh & Easy isn't in the top 10.
This means once Walmart pulls the trigger on the smaller store strategy, it won't take it long to renovate and open the first batch of stores, which include the Northern and Southern California focus, where the small-format stores will go in both urban and suburban cities. And there's rural opportunities in California, especially in the north, as well. For example, there are numerous smaller cities where a supercenter won't work but a smaller-format store will.
U.S. food and grocery is about to get even more interesting - and competitive - with Walmart's decision to expand its format portfolio and square-footage, and go after U.S. urban markets. Stay tuned to Wednesday.
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