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Big-Box Players Find Small Formats Require New Strategies

Big-box retailers have received a lot of praise lately for rethinking the sizes of their stores and investing in smaller formats to improve productivity and drive growth in urban areas. But it turns out operating a small format store in downtown New York or Los Angeles is a completely different proposition than operating a 150,000-sq.-ft. store somewhere in rural Idaho, and the big-boxers might be struggling to adapt.

A story in today's Wall Street Journal points out that Wal-Mart, which has been working on its 20,000-sq.-ft. to 40,000-sq.-ft. urban Walmart Express stores, has been selling the same merchandise in those stores as in its regular supercenters.

The company wants to do the same in the U.S. At Wal-Mart's annual meeting last June, U.S. stores chief Bill Simon said he would like the Express Stores "to deliver the same experience that a supercenter can deliver, only in 15,000 square feet."

Problem is Wal-Mart has taken that statement quite literally, said Leon Nicholas of the consulting firm Kantar Retail.

"Wal-Mart can't pull itself away from a supercenter mind-set," he said. "Just look at the shelves. It is just absurd to see a dozen kinds of jelly or peanut butter when a shopper just wants to get in and out of the store quickly."

As a result, the company still doesn't have any plans to launch Walmart Express stores across the country, as the few stores it has opened remain in test mode.

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