Wal-Mart as Urban Cowboy

If you had any doubt about the Wal-Mart urban invasion, read the following account from the Miami Herald: "Wal-Mart, known for its giant stores and global omnipresence, is shifting gears to think small: focusing on smaller formats that fit in urban markets like South Florida...Wal-Mart Stores, despite reporting $405 billion in annual sales, is struggling to hold on to market share as stubbornly high unemployment and tight credit continue to squeeze most Americans."

Chicago, New York City, and now Miami-the Walmonster is definitely on the move and is hungry; and the focus will be on the low income shopper: "To refocus on those middle- and lower-income consumers -- households with annual incomes less than $70,000, who make up 68 percent of Wal-Mart shoppers -- U.S. CEO Bill Simon said the chain will feature more discounted items in its main aisles rather than throughout the store. It is restocking some items it dropped, focusing on classic clothing styles, offering more plus sizes and more basics like socks and underwear. ``In this environment we should be thriving and we're gearing up to do that,'' Simon said."

And Wal-Mart is going from one big size fits all, to an innovative and experimental approach that will be used to determine the company's best strategy to expand: "Wal-Mart is also shifting money it had been spending on remodeling existing stores toward opening smaller new stores. It plans to open 185 to 205 new stores in the next fiscal year, compared with 153 stores in the current year. But the costs will be about the same: $7.5 billion to $8 billion. The average size of its larger stores have shrunk about 15,000 square feet to 180,000 square feet. Simon said the company is accelerating the rollout of Neighborhood Market stores, which are 30,000 to 60,000 square feet, designed to compete with traditional grocery stores. And Wal-Mart will test 30 to 40 even smaller stores over the next two fiscal years, mostly in urban areas. Wal-Mart currently operates 2,843 large-format stores in the U.S. and 181 smaller neighborhood stores."

It is the neighborhood store concept, employing between 65 and 75 people, that will pose the biggest threat to existing NYC retailers-particularly if the Pathmark units are sliced and diced and auctioned off to the highest bidders. So, the game is definitely on-and opponents better bring their A-Game to this match-it's certainly no time to be bringing knives to a gun fight.