Update: Wal-Mart Executives Focus On Small Stores, Online

by Marty Cook  on Friday, Jun. 6, 2014 1:30 pm  

Bill Simon, speaking at Friday's Wal-Mart annual meeting in Fayetteville.

Bill Simon, the CEO of Wal-Mart’s U.S. stores division, said this week that Wal-Mart’s same-store sales struggles need to be put in perspective. Simon and the other divisional CEOs addressed the media in question-and-answer sessions with reporters on Thursday, and each spoke during the meeting Friday.

“Supercenters for us are still performing very well,” Simon said Thursday. “The bottom 10 percent of our stores, they’ve been a pretty big drag on us. I get asked all the time, ‘Why don’t you just close them?’ We still make a lot of money on them. They’re profitable stores.

“We don’t have a significant number of stores that are negative cash flow stores. Our problem is a high quality problem, even our worst stores, the ones that are not having the same-store sales we would like, are still very good stores,” Simon said.

Wal-Mart officials have said they plan to open between 270 and 300 smaller stores this coming year. A Supercenter is about 182,000 SF while Neighborhood Markets and Walmart Expresses are 38,000 SF and 15,000 SF.

Wal-Mart plans to open 115 Supercenters this year.

“This is the first year we have built more small stores than we have large stores,” Simon said.

Simon said the company’s Neighborhood Markets have continued to perform well, posting their 46th consecutive month of increased same-store sales. This comes as shoppers are focused on convenience, popping into a smaller store to pick up a few items and saving a Supercenter for a “stock-up” visit.

“We see the opportunity with Neighborhood Markets to go much faster than we have been going,” Simon said. “We are confident today that Neighborhood Markets will have a positive material impact on the company and that’s why we’re going quickly. We’re moving forward aggressively with Neighborhood Markets because we understand what they’re doing in the marketplace.”

Simon said he doesn’t think Neighborhood Markets are taking sales from Supercenters. He believes smaller stores are a complement to the larger ones.

“What we see is a relatively low impact on our own Supercenters,” Simon said. “They’re shopped differently by customers than Supercenters are. The stock-up trip to the Supercenter has always been very, very powerful and still is today. Neighborhood Markets do a really good fill-in and convenience job for us.”

One example Simon used was with prescriptions. Someone picking up a regular medication would schedule it around their trip to a Supercenter, but a mother of a sick child would prefer to go to a smaller store to pick up an immediately needed prescription because “hauling the kid through the Supercenter is not a good thing.”

It’s all about serving the customer, Simon said. Big store, small store, new store, what truly matters is the store that customers go to, he said.

 

 

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