Wal-Mart's new grocery store
Posted
Aug 27 2008, 03:34 PM
by
Anthony Mirhaydari
Rating:
At last, Wal-Mart's new Marketside grocery concept has a look: It's purple and neon-green, with natural wood finishes.
Designed to break into the untapped high-income urban demographic of shoppers who traditionally reject the company's 261,000-square-foot Supercenters as the epicenters of all that is wrong with consumerism, capitalism, and the plight of our planet. The new small-store format makes no mention of its corporate parent. Deep exploration of the concept's fancy Web site finally reveals the master.
The first four 15,000 sq. ft. stores will be down in Arizona and are designed to go head to head with outfits like Whole Foods, complementing Wal-Mart's existing Neighborhood Market concept that takes on traditional grocers like SuperValu. U.K.-based Tesco and Safeway are both ramping up small grocery concepts in response to an emerging urban living renaissance and shift towards healthier living with fresh fruits and vegetables.
The new stores will feature fresh and prepared foods, with a focus on in-store preparation of breads and rotisserie meats. Wal-Mart is looking for the concept to potentially grow to 1,500 locations with annual sales in excess of $10 billion.
While many are already pooh-poohing the idea, I think it's a brilliant next step for Wal-Mart. The key to the company's success has been scale and minimalism, which has provided it with a durable cost advantage over competitors that is self-reinforcing. More scale means lower prices, which leads to more scale. Marketside is only a continuation of that scale strategy; albeit, in an all-new guise.
In the past, most of the shoppers Wal-Mart is targeting would have turned up their nose at the idea of frequenting a location owned and operated by the Beast from Bentonville. But now, as Whole Foods' recent troubles illustrates, even people who like their soy organic are increasingly appreciative of everyday low prices.
(Disclosure: I don't control a position in any of the companies mentioned)
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Wal-Mart's public relations disaster
Why Wal-Mart will save America
