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Walmart shrinks to grow sales

Thursday, July 28, 2011 - 02:08

July 27 - Walmart is slowly rolling out a new smaller store format called Walmart Express aimed mostly at urban areas like Chicago, as the retailer struggles to end a two-year slide in U.S. same-store sales. Conway G. Gittens reports.

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Suppliers and workers put the finishing touches on this new Wal-Mart in Chicago. But at 10,000 square feet it is only one-tenth of the size of a regular Wal-Mart. That's because this is Walmart Express. It's the retail giant's attempt to push into America's urban centers, where a warehouse sized location can be very expensive and often faces big opposition from neighborhood groups. And providing fresh food, in so-called food deserts, a nickname for areas lacking in affordable food options, seems to be at the centerpiece of Wal-Mart's push into Urban America. Anthony Hucker is in charge of the Walmart Express format. SOUNDBITE: ANTHONY HUCKER, VICE PRESIDENT OF STRATEGY AND BUSINESS DEVELOPMENT, WAL-MART (ENGLISH) SAYING: "It's really important that we get a blend of fresh product. We have ready meals, food-to-go, and then we also have an organic range as well as local sourced product." The retailer is betting that product mix in a smaller urban setting will drive customer traffic and help stop a two-year slide in U.S. sales. And because it's Walmart Express, keeping costs low is also key. SOUNDBITE: ANTHONY HUCKER, VICE PRESIDENT OF STRATEGY AND BUSINESS DEVELOPMENT, WAL-MART (ENGLISH) SAYING: "Part of our DNA is always about lowering costs, because we know if we can lower costs, we can lower prices for our customer and if you look around, this is very much a low-cost environment. It's frugal, but it's respectful." But the competition is also formidable- drug stores are heavily investing in more fresh food offerings and dollar stores are competing even better on price. But Wal-Mart with its massive buying power, still has a lot of leverage with suppliers, and can use that to keep prices down at the cash register. The challenge: Walmart Express, without the same economies of scale as the traditional much bigger Wal-Mart, has to be careful to keep its operational costs low enough to maintain profit margins. Conway Gittens, Reuters

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Walmart shrinks to grow sales

Thursday, July 28, 2011 - 02:08