Skip to comments.Wal-Mart's Micro-Mini Opportunity (Now opening convenience stores?)
Posted on 11/12/2013 2:44:45 AM PST by 2ndDivisionVet
Watch out, 7-Eleven! There just might be a Wal-Mart convenience store opening up next door.
According to an Arkansas news site, the retail giant is testing out a convenience store format next to its corporate headquarters in Bentonville. The Northwest Arkansas Business Journal says the new C-store "will offer customers a quick and easy solution for gas, snacks and beverages, and other staples like milk, bread and eggs."
As Wal-Mart experiments with smaller-format concepts that step away from the previous superstore expansion model it championed, it's drilling down to the most basic level. While this will be something it uses to learn from, it's easy to see the convenience-store format being the next natural progression in store development. It's already accelerating the rollout of small-footprint stores, such as its 42,000-square-foot Neighborhood Market stores and its 14,000-square-foot Walmart Express shops.
The vast majority of the retailer's stores are Supercenters that average 180,000 square feet, but Wal-Mart says it will be opening more smaller stores than Supercenters. Between 2013 and 2014, the discount chain anticipates opening 240 Supercenters, yet will open about 300 of these more compact stores over the same time period.
The average C-store is around 2,750 square feet, according to the Association for Convenience & Retailing, with newer stores going as large as nearly 3,600 square feet, with almost 2,800 square feet dedicated to sales space.
Even if Wal-Mart doesn't shrink to that size, it still represents a remarkable transformation in its direction. Because convenience stores are typically, well, conveniently located, offer extended hours, and stock the basics most people are looking for when they don't want to spend hours doing a week's or month's worth of grocery shopping, they continue to expand at a steady pace.
The industry trade group says the number of C-stores in existence expanded to a record 149,220 at the end of 2012, a 0.7% growth rate over the year before. More than 82% of the stores sell gas and nearly a like amount sell beer, and C-stores account for more than 30% of all the beer sold in the U.S.
As popular as they are, they are also very reliant upon gasoline sales and quarterly results can end up being lumpy. The Pantry, one of the largest C-store chains, with more than 1,500 locations in 13 states, saw store merchandise sales rise 1.3% (up 3.3% excluding cigarettes) despite declines in store traffic, but retail fuel gallons sold comps dropped 4.4% in the quarter.
Conversely, a convenience store chain like TravelCenters of America , which operates fewer than 250 facilities, saw a near 4% rise in retail fuel sale volumes, yet revenues were essentially flat year over year, although its margins jumped 7.5% despite being negatively affected by aggressive sales tactics from rivals who tried to gain market share.
As Wal-Mart continues to deal with a sluggish economy, a bleak employment picture, and record numbers of people on food stamps, becoming an even more convenient destination for shoppers could help bolster flagging sales. It generated profits in the second quarter ahead of 2012's numbers, but still came in below analyst expectations and ended up lowering full-year guidance.
Of course, simply because it's opening up one test store doesn't mean it will become a full-fledged C-store operator. The company has a history of testing ideas to see what can be learned, such as its recently ended test of a subscription commerce service that began less than a year ago. It's taking the lessons learned from the experience and applying it to its traditional retail business.
I imagine the convenience store is being launched with the same mind-set, though I believe there's a lot more traction for this format then in a grocery-basket-a-month club.
Oh Mercy! Ah-Poo is very, very frightened at this particular point in time...
Why the question mark?
“Ah-Poo is very, very frightened at this particular point in time...”
He should be; my town just opened its first 7-11, and a neighboring town opened one within a mile, and they are better deals than the family-owned Indian covenience stores that have sprung up all over the area in recent years (replacing traditional American delis). If Wal-Mart displaces even the 7-11s, there won’t be many American jobs lost - they don’t hire very many around here (northern NJ).
A huge opportunity for Wal-Mart. The markups in these stores is astronomical. It never ceases to amaze me whenever I buy gasoline at one of these stores, the number of folks buying junk, lottery tickets, beer, and so forth.
Impulse buying, I believe it’s called.
Reading the article should answer your question.
End-of-the-day decision fatigue
Wiki “decision fatigue”
It explains why the tards drive so horrendously bad at the end of the day, as well
LOL. It was after reading the article that I didn’t understand your need to edit the title and add a question mark.
Wal-Mart has only built the one small C-Store in Bentonville so far, but the article discusses whether they will follow-on with multiple units.
See # 4; 7-11 is already making a play for those dollars in my area. I wouldn’t call it “impulse buying”; I believe it is more related to the growing phenomenon of unmarried, childless young adults buying (their version of) staples on their way to & from work. Who will cook meals every day for just themselves or maybe one other person?
In my area these Indian convenience stores have replaced many traditional American delis, and gas stations bought by Asians have replaced their mechanics’ bays with convenience stores (there actually is a caste angle to this; the Indians that are in the merchant class are not the same as those that fix cars, so they either hire American mechanices or convert the bays to a store). One thing you can be assured of: air for your tires will never again be free. Another thing (not so certain): The bathroom is probably not available.
The market will decide. Unless the God-damned USG gets involved.
Wow — they’ll be able to undersell the other convenience stores easily!
Do you mean the 300 new WalMart compact stores planned to open through 2014?
A regrettable inefficiency, for which they deserve to lose out to WalMart!
cool another place to buy melamine from China!
“A regrettable inefficiency, for which they deserve to lose out to WalMart!”
Yeah; I guess they don’t hire people from other castes. An Indian friend that works in a convenience store owned by his family never buys ANYTHING in other stores when we’re out; he tells me the markup is incredible.
Nothing beatz Sheetz!
“This is the key factor: record numbers of people on food stamps Walmart is going after Obama’s growing inner city crowd. These low information shoppers do not drive so are an untapped market for Walmart.”
I think many of these people ARE driving now (their cars are newer than mine), but I agree that Wal-Mart may be targeting the urban areas. Why not? They made a ton of money targeting white welfare recipients all over the country; their pictures are all over the internet.
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