Walmart recently announced it will double the number of small-format stores it plans to open in the U.S. this year. The company now plans to open about 300 such locations, up from the 150 it announced last October. It will increase its capital spending by about $600 million to fund the additional expansion.
Walmart’s small-format concepts include Neighborhood Markets and Walmart Express. At around 40,000 sf. and 15,000 sf respectively, each is substantially smaller than a typical Supercenter which are about 185,000 sf. Walmart CEO Bill Simon said the decision to accelerate the number of smaller stores will fuel growth as the company enters “the next generation of retail.”
Target also recently announced plans for a smaller format concept store in Minneapolis and has tested urban format stores in several cities, but thus far has not expanded the concepts as aggressively as its competitor. Both companies are increasingly looking to urban locations for growth.
Walmart’s foray into smaller, urban format locations is in some cases resulting in some uniquely designed stores which on the outside are radically different from the typical suburban Supercenter. In December, the company opened its first locations in Washington D.C., including a 80,000 s.f. store that is located in a mixed-use development with 4 stories of apartments and underground parking.
The overall approach is a radical shift from decades of big box retail expansion trends. As Edward McMahon of the Urban Land Insistute asked, “Who would ever have thought that Walmart shoppers could sleep upstairs and shop downstairs? But that is exactly what residents of the (new D.C. Walmart) will be able to do.”