Wal-Mart's Small World

According to Crain's, Wal-Mart is looking to roll out a smaller urban store model in the coming months: "Wal-Mart Stores Inc. is planning an aggressive push into urban markets with a new small format that's a fraction of the size of its supercenters. The expansion, expected to be spelled out next month at the retailer's meeting with analysts at its headquarters in Bentonville, Ark., is aimed to pump up sluggish U.S. sales. Real estate executives said that over this past summer, the world's largest retailer has been scouring for small locations, around 20,000 square feet, in urban areas including New York City, San Francisco and other cities. That size is larger than a typical drugstore but smaller than a supermarket."

So, while the more virulent manifestation of the Wal-Mart disease may rear its ugly head-in the form of a supercenter-at the Gateway Mall in East New York, the generalized illness appears ready to metastasize into NYC's neighborhoods: "I see this as a smart move, instead of coming into a market as a 900-pound gorilla," said Faith Hope Consolo, chairwoman of real estate firm Prudential Douglas Elliman's retail leasing division. She noted that Wal-Mart has been talking to landlords and brokers. "They're on an aggressive roll," she added. "This is a creative time. Everyone is thinking out of the box." She noted that in New York City, Wal-Mart has been looking in Queens and the lower part of Manhattan."

And irony of ironies, the Walmonster is sharply trending in the direction first paved by supermarket unions-fresh food in underserviced neighborhoods: "Since 2008, Wal-Mart has been testing smaller stores called Marketside. They now total four and average 15,000 square feet. The format focuses on fresh food. And the discounter now has almost 200 Neighborhood Market by Walmart stores, which offer a mix of fresh food, pharmacy, beauty, stationary and pet supplies and are about 42,000 square feet. Wal-Mart has been shrinking its supercenters, which carry a wide assortment of food and general merchandise, to about 150,000 square feet from 195,000 square feet. But the company has maintained that it plans to use smaller formats in urban markets."

Those of us who aren't fans of the Wal-Mart business model better be prepared for the onslaught: "Bill Simon, the new president and CEO of Wal-Mart's U.S. business, told investors last week at a Goldman Sachs retail conference, said that "we will have a healthy mix of supercenters and small formats, including our grocery format, Neighborhood Market and smaller formats," he continued."

We expect that our cohort of Wal-Mart opponents will be gearing up shortly to take on the retail giant-with the belief that, however the Walmonster configures itself, it will be bad news for small business and labor. Let the games begin.