CHICAGO — Wal-Mart Stores’ urban expansion has won at least one convert in Chicago schoolteacher Rachel Green.
Green, 54, said she’s visited Wal-Mart’s new Express store at least seven times since it opened July 27 in the West Chatham neighborhood on Chicago’s South Side. Because she lives across the street, the Express store is very convenient, and the prices are “extremely right,” Green said.
“A lot of people from all around come to this store,” Green said Aug. 15 in the Express parking lot while toting two small bags of groceries she’d just purchased inside.
The store’s overall selection isn’t sufficient — “just the basics,” Green said. “But if I need an extra head of lettuce or some carrots, I can just come here.”.
Wal-Mart aims to add thousands customers more like Green in coming years as the world’s biggest retailer ramps up store openings in large U.S. cities, where it has relatively little presence compared to its core rural and suburban markets. Wal-Mart Express is part of a handful of small-store formats the company is increasingly emphasizing amid languishing sales at its traditional supercenters.
At about 10,000 square feet, Express stores are one-tenth of the size of a typical supercenter, with food items comprising about two-thirds of inventory. West Chatham’s is Wal-Mart’s first big-city Express store, with three other pilot locations in northwest Arkansas, where the company is based.
“We’re very pleased with the opening of the first four Wal-Mart Express units, and the initial results are positive,” Bill Simon, chief executive of Wal-Mart’s U.S. operations, said during a conference call released Aug. 17 along with quarterly financial results.
In Chicago, Wal-Mart plans to open another eight stores, in small formats as well as supercenters, by spring 2013, the company said in a news release. Those include a supercenter in West Chatham.
The company also is targeting New York City, San Francisco and Washington, D.C., for smaller-store openings.
Within the next decade, Wal-Mart will reach saturation in the U.S. with supercenters, said Natalie Berg, global research director for Planet Retail, a London-based consultant. “Smaller stores enable them to proactively go after the urban consumer, while at the same time fighting off the pesky threat of dollar and drugstores.”
Part of Wal-Mart’s focus “is on fixing their core supercenter business,” Berg said, “And the second thing is reaching urban consumers. It’s a huge opportunity for them to grow with their existing model.”
As of July, Wal-Mart had 11 small stores in the U.S., along with 183 Neighborhood Markets, which average about 41,000 square feet, according to company filings. Smaller stores are still a fraction of Wal-Mart’s total U.S. locations, which include 2,939 supercenters.
As the largest U.S. food retailer, Wal-Mart is a major buyer of fruit, vegetables and other fresh foods, and it’s poised to expand its market share in coming years as it adds urban stores. The company also has said it wants to increasingly serve “food deserts,” or urban areas lacking access to fresh food.
Based on the West Chatham store, which is in a predominantly black neighborhood, fresh produce is playing a large role in Wal-Mart’s urban plans.
On Aug. 15, customers entering the store were met with a display of bananas at an “everyday low price” of 44 cents a pound. Immediately to the right was an aisle of fresh produce and meat. Among produce items were red delicious apples at $1.47 a pound, bags of Earthbound Farm organic baby carrots at $1.58 per 1-pound bag and boxes of Dole strawberries for 99 cents per 1-pound container.
But low prices and convenience are in the eye of the beholder. Harold Fields made his first visit to the West Chatham Express store on Aug. 15 and left unimpressed. Fields, 51, and a resident of the nearby Roseland neighborhood, said the store is a little cramped for his taste, while prices for many items seemed about average or even a little higher compared with other grocery stores in the area. He said he probably won’t be back.
“They said it was small. They weren’t lying about that,” Fields said from the Express parking lot. “It’s so tight. It’s too small for me.”