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Walmart Tweaks Strategy with new Hybrid Stores

According to a recent MediaPost article, Walmart U.S. CEO Bill Simon recently described their new hybrid stores as “the digital thinking of physical retail.” The goal being to provide customers with the best of both worlds, the extensive inventory offered through e-commerce and the convenience and accessibility of a brick-and-mortar store.

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From the article:

It’s not that Walmart Supercenters are going away. “We expect the supercenter to remain vital. It’s a powerful beast. And they perform really well on the weekly stock-up occasion, and we have the ability to flex prototypes.” Those stock-up trips, which account for about 60% of U.S. grocery spending, are a $585 billion market, where Walmart has about 25% market share.

But the problem is that Walmart has fallen behind on fill-in shopping trips, as many smaller competitors, including dollar, drug and convenience stores, have proliferated. “Our growth has been interrupted by the rapid growth in these smaller stores.” Walmart has a roughly 10% share of that $415 billion market.

With the expansion of Neighborhood Markets, first launched in 1999, and the newer Walmart Express, “we now have an opportunity to really make an impact in this area.”

These stores are hybrids, he says, “designed to not only compete in grocery but also across a much broader space, including fresh foods, fuel and pharmacy.” Nor do they seem to cannibalize sales from larger Walmarts. “Data shows we are capturing new sales, new dollars and new trips when we put these stores in.”

But what makes the concept powerful, he says, is combining the smaller stores with the power of its e-commerce capabilities.