Wal-Mart Hopes To Boost Sales By Opening Convenience Stores

fromKUAF

Wal-Mart is trying out a new business model and it's a drastic downsizing from its supercenters. Wal-Mart has opened its first convenience store.

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Walmart's annual shareholder meeting is today. Some shareholders may ask executives at that meeting what they plan to do to boost sagging sales. Consumers have not been buying from the company's supercenters the way they used to. So Walmart's been experimenting with smaller stores and even a convenience store. Jacqueline Froelich of member station KUAF, in Fayetteville, reports.

JACQUELINE FROELICH, BYLINE: Just down the street from Walmart headquarters in Bentonville, there's a brand new brown-brick convenience store, trimmed in lime green. Signature Walmart yellow sparks hang above the busy gas kiosk. Inside the 5,000 square foot store, with vaulted ceilings, there's that cavernous Walmart vibe. At the checkout area, young moms are paying for diapers and milk. And nearby, harried executives in high heels browse the designer deli and eye the milkshake bar.

BETSY HARDIN: It's the first of its kind. So, you know, today, more than ever, we know that our customers are really looking for new and different ways to shop.

FROELICH: Walmart spokesperson Betsy Hardin says the company's first convenience store opened in March.

HARDIN: We wanted to make sure that this store has a broad assortment and a very small footprint. So we're trying to make sure that it's - our customers can come in and grab anything they may need.

FROELICH: Sales at Walmart's big box supercenters have been flagging in recent years. So the company's hoping to boost sales by opening smaller stores that are closer to where the customers are. They rolled out dollar store-sized discount stores and even college campus shops. And if Walmart rolls out more of these convenience stores, it could be tough competition for chains like 7-Eleven. Jeff Lenard, spokesperson for the National Association of Convenience Stores.

JEFF LENARD: The main challenge for convenience stores is distribution. If they're able to link their distribution system to the convenience store, it's going to be very difficult for anybody competing against them.

FROELICH: Items in this new store are supplied from the local supercenter and are priced the same. A gallon of milk costs $3.28 but that same gallon costs 40 cents more at a nearby competitor. And analyst Carol Spieckerman, president of the retail consulting firm, newmarketbuilders, says the girth of Walmart's supply chain poses a direct threat to all small stores.

CAROL SPIECKERMAN: Retailers including Dollar Stores, that are traditional small format operators, have actually raised prices based on their convenience factor, that's sort of the dirty little secret. But for Walmart to go out of the gate and say, you know, we're not going to be gouging on price, I think it's going to build trust with customers very quickly.

FROELICH: Laundry soap, to peanut butter, to duct tape - this Walmart To Go is stocked with 3,500 items. That's a third more than 7-Eleven. The name, Walmart To Go, isn't the same as the company's online pickup and delivery service, another convenience format now being tested in the Denver Metro area. At a rival convenience store two towns over, David Emerson gases up on a lunch break. He says he usually just buys candy and soda at places like this. But would he buy even more if things were cheaper?

DAVID EMERSON: Yes, certainly. Anywhere that discount prices - I mean, the economy's not what it used to be.

FROELICH: Walmart says it has no plans to build more of these convenience stores. The company always says that about new test stores. But early this year, the world's largest retailer did announce plans to build 300 more small format stores. For NPR News, I'm Jacqueline Froelich in Fayetteville, Arkansas.

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