news from the intersection of branding & technology

Walmart flexes muscle by moving into the neighborhood

In brand-building, Shopper Marketing on March 8, 2012 at 10:46 pm

by Robert Liljenwall

In the supermarket business, there is no bigger, badder brand than Walmart.  By a long way, Walmart is the world’s largest retailer in terms of total revenues ($446 billion), employees (2.1 million worldwide), and $206 billion market cap in the supermarket segment.  Not satisfied with its global power, Walmart is heading to a neighborhood near you with its new, smaller Neighborhood Market format, which will be about a third of the size of its regular Super Center stores – from 33,000 to 45,000 sq. ft., which is about the size of Best Buy.

English: A Wal-Mart Neighborhood Market in Win...

Image via Wikipedia

Why is this brand event significant? The down-sizing of Walmart’s traditional do-it-all format to fit into local neighborhoods spells trouble for the well-established supermarkets brands in Southern California where the company has targeted approximately 13 stores in the near future.  These stores will compete head-to-head with Ralph’s, Vons and Albertson (California’s ‘big three’) which are unionized – and Walmart isn’t.  And the company has picked a very smart strategy of avoiding ugly public fights with opposition of unions and local communities.

 

Most of us have always had the brand perception of Walmart as the ultimate downtown-killer, forcing thousands of local merchants throughout its dominant South and Midwest markets out of business, leaving many downtowns to antique stores and a few insurance companies.  That is the fear that many cities have, especially in Southern California which already has 28 Walmart stores in Los Angeles County.  According to their new strategy, this move into smaller markets will probably work because they have learned that the Walmart brand doesn’t always mean cities are hanging out their ‘Welcome To Our Town’ signs anymore.  Every city wants more business, more employment opportunities, but not at the expense of closing their downtowns.

If you haven’t been into the newer, refurbished Walmart Super Centers – you ought to visit, shop.  These stores are extremely well designed – still have wide aisles and great in-store fixturing and signage.  The signage is particularly helpful and dramatic, especially in the meat section.  I was impressed.  One thing you can count on: Walmart will not make the same mistakes that Tesco did with Fresh & Easy, a concept that has not caught on, especially in the Trader Joe’s sector.

Walmart appears to have a handle on its brand values – good and bad – and is making adjustments to expand and enhance their revenues, even at the expense of its competitors.  — RJL

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