Wal-Mart’s store brands include Wal-Mart, Sam’s Club, and Neighborhood Market. Until recently, the firm had high hopes for its Wal-Mart Express stores. Now, the world’s largest retailer has decided to abandon this concept and close those stores.
So, what happened? Let’s look at the conclusions reached by Tom Ryan for RetailWire and for CBS MoneyWatch.
First, here a few of Ryan’s observations:
“Express had been in pilot mode since 2011. A mix between a dollar store and small grocery, the c-store concept was designed to help Wal-Mart reach areas its bigger stores couldn’t, including urban centers. It averaged around 15,000 square feet versus 40,000 for Neighborhood Market and 178,000 for its supercenters.”
In 2015, Wal-Mart officials were telling analysts that Express was challenged leveraging expenses. Dave Marcotte, an analyst with Kantar Retail, told Supermarket News in early 2015 that Wal-Mart’s supply chain system should work ‘reasonably well’ for Neighborhood Market but Express was too small. Mr. Marcotte said, ‘Your cost to serve keeps rising and you’ll have difficulty getting the right quantity of product in there — which might be a half-case instead of a case.'”
In early 2016, “a Wall Street Journal article said Express’ profitability was challenged because it couldn’t fit higher-margin items such as apparel and appliances. The Journal also indicated ‘consumers expect the same low prices at a Wal-Mart Express as a supercenter, while they might expect higher prices from a drug store chain.'”
Now, here are a few of Picchi’s observations:
“Less than two years ago, a top Wal-Mart executive hailed its relatively new Wal-Mart Express stores as ‘the next generation of retail.’ That generation now appears to have been a faulty evolutionary line. Wal-Mart announced that it would shutter all 102 Express outlets, located in neighborhoods like Los Angeles’ Chinatown and in small (and often poor) towns like Interlachen, Florida.
“Wal-Mart had an ambitious goal with the Express stores: to develop a format that would rival dollar stores and convince shoppers to abandon the lure of $1 items in favor of its own brand of low-price merchandising. On its face, the plan seems like it should have been home run because Wal-Mart, love it or hate it, has years of experience in selling low-cost goods.”
“Reviews on Yelp were mixed, with some local shoppers complaining about poor customer service and produce that didn’t meet their expectations, often because of lack of choice or freshness. Some shoppers clearly were fans of the Express format, mostly citing their low costs and locations as positives.”