Wal-Mart to open mid-sized stores to boost profit margins, tap into burgeoning market

on Thursday, April 14, 2011

Wal-Mart to open mid-sized stores to boost profit margins, tap into burgeoning market  Wal-Mart is known for its over-sized stores that are filled to the brim with every product a person could possibly be seeking. However, in an effort to cut costs and boost its profit margins, the retailing giant is embarking upon an altogether unexpected experiment to create smaller sized stores that are more profitable than its current warehouse-sized shopping centers.

NPR reports that Wal-Mart plans to build as many as 40 mid-sized grocery stores and "express" marts in 2011 as it looks to boost efficiency and cut costs. The company has been pressed by investors to squeeze more profits from its domestic stores and the move represents the company's commitment to doing so, analysts assert.

Wal-Mart is hoping to cash in on the recent surge in demand for dollar stores and small drugstores - though local mom and pop stores could suffer as a result. The inventory in the new stores will differ from the company's current stores, according to company spokesman David Tovar.

"The new format will feature an assortment of fresh food, dry grocery, consumables, health and beauty aids, over-the-counter medicines, and limited general merchandise," Tovar said in a statement.

Wal-Mart hopes to benefit from the surge in popularity of dollar stores and other local drugstores that occurred during the recessions as consumers were loath to pay higher prices for goods. If the strategy is successful, mid-sized stores could pop up throughout the U.S., contends Nelson Lichtenstein, the author of a book about the retail giant.

"If the Wal-Mart is initiative is successful," Lichtenstein asserts, "of course, it will have a competitive impact on small urban retailers of less than 20,000 square-feet - of which there are lots of stores, like green grocers."


 

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