Walmart Accelerating Expansion of Small Stores

NEW YORK -- Wal-Mart Stores Inc. plans to accelerate the expansion of its smaller U.S. stores at a faster pace than that of its supercenters, according to an Associated Press report. The company will tether the small stores to supercenters, which will serve as mini warehouse hubs.

The plan is part of Walmart's efforts to cut costs and was announced at its annual analysts' meeting this week. Walmart will roll out this distribution strategy in the first of three markets in March, although it did not say where. It is currently testing certain aspects of the strategy in regions such as Gentry, Ark., where it operates a Walmart Express store that is less than one-tenth the size of a standard supercenter.

Walmart also plans to add approximately 300 smaller format stores, especially its Neighborhood Marketstores, during the current fiscal year and the next fiscal year combined. During the same time period, it plans to add only 240 supercenters. Neighborhood Markets carry fresh produce, meat, household supplies, beauty products and more and occupy about 38,000 square feet, while supercenters carry food and general merchandise, including clothes and home furnishings, and occupy about 182,000 square feet.

Most of the company's approximately 4,000 U.S. stores are supercenters. Walmart operates around 300 Neighborhood Markets and 20 Walmart Express locations.

During the meeting, Walmart CEO Mike Duke called the current economy "tough and unpredictable" and stated that the government shutdown has weighed on Walmart shoppers. "The government shutdown is on the minds of our customers," he said.

During the upcoming holiday season, Walmart plans to be aggressive about discounting across the store, make sure the right inventory is in stock and push its layaway program, according to the report.