For much of the past decade, the largest retail chains were the ones with the largest stores, though these businesses have been struggling in recent years. As a result, the stores are getting smaller and, somewhat surprisingly, Walmart is next in line for smaller stores.
For most of the past few decades, the trend in a lot of consumer goods has been to get bigger and bigger. McDonald’s gave us the “Super Size” fries and drinks, developers gave us larger houses in developments that look just like the adjacent houses and retailers such as Best Buy, Walmart and others led the charge with stores that could easily shelter Howard Hughes’ famous titanic-sized “Spruce Goose” cargo plane.
However, a number of these “big box” store chains also started losing a lot of money. A long series of losses led Sears and Kmart to shutter 120 stores in Dec., 2011, according to USA Today. Best Buy, according to the Los Angeles Times, announced in March that the company was going to close 50 of its large locations and only open smaller Best Buy stores from now on. Walmart, according to ABC, is doing likewise.
Rolling back store sizes
Walmart is not exactly hurting, as the company reported a $3.7 billion profit for the most recent quarter, but can see the writing on the wall as other retailers are cutting down on the mega-locations and bringing store size down to earth. There are 624 Walmart Discount stores, the mid-level size of the Walmart range, which average 108,000 square feet. There are also 3,029 Walmart Supercenters, which are bigger than those.
There are also a small number of Walmart Express stores, which is part of a pilot program launched in 2011. These stores range from 12,000 to 18,000 square feet. Walmart is going to open more of them to test them in various markets. Also called Walmart Neighborhood markets, according to Businessweek, the idea was tested by the company previously, but without success. However, newer smaller stores under the Walmart umbrella have been able to sustainably make a profit.
Supercenters not going away
Fans of the Supercenters, one of the few retail stores open 24 hours a day, can rest easy as those stores are not going to be rolled back. Walmart plans to open 150 more in the next year and those stores are the most profitable for the company. However, the roughly 100 Walmart Neighborhood Markets/Walmart Express stores the company plans to open are slated for areas a Supercenter can’t otherwise be built in.
Many still-viable large retail companies either already are or will follow suit. Target is already rolling out smaller stores and “stores-within-stores” at various locations nationwide, according to Daily Finance.
USA Today: http://www.usatoday.com/money/industries/retail/story/2011-12-29/sears-releases-sears-kmart-closings-list/52272742/1
Los Angeles Times: http://articles.latimes.com/2012/mar/29/business/la-fi-mo-best-buy-big-box-20120329