Wal-Mart Stores Inc. (NYSE:WMT) to Focus on Small Store Format- But Why?

The biggest retailer company in the world, Wal-Mart Stores Inc. (NYSE:WMT), is focusing to expand its chain of small retail stores in order to beat the local rivals that are trying to pocket the company’s customers. For this purpose, the company is not only trying to make its processes more efficient and effective but it is also trying to change itself in order to cater better to the demands of the customers. Wal-Mart Stores Inc. (NYSE:WMT) has planned to open up another 270 to 300 new stores by the end of the year 2014.

There are a number of reasons as to why the company is switching from big stores to smaller ones.

According to a latest research report released by Goldman Sachs, customers these days like to shop online and at smaller stores. Smaller stores like drug stores, dollar stores and warehouse clubs are getting more customers than big retail companies. The former president of U.S. Wal-Mart Stores Inc. (NYSE:WMT), Bill Simon, in February 2014, said that the needs of the customers are changing. Now-a-days, instead of pilling stock up, customers like to purchase fresh items whenever they need them, and hence, it is only suitable for them to turn to small stores, that are mostly located in their vicinity. On the other hand, the giants mostly operate at some distance from the city and it takes a lot of time and fuel for the customers to drive up there.

The current chief executive officer of Wal-Mart Stores Inc. (NYSE:WMT), Doug McMillon, said that the customers these days prefer convenience. This is the reason why small stores are thriving and the big ones are struggling to stay in the market.

The company, in October 2013, announced that it would open 120 to 150 small retail stores during the fiscal year 2015. In February 2014, the company revised the figures and set the target to 270 to 300 shops. The company is planning on increasing its capital budget in order to implement the plan.

According to Bill Simon, the switch from big stores to small stores will provide the company with an opportunity to have more stores at the same cost. He further stated that these stores will also be used as a pickup station point for the products that are bought online; hence, benefiting the online business as well.

The company also plans to start new projects, for instance Wal-Mart To Go. It has already opened one such store in Ark. This shop has a gas station at the entrance, a deli counter and a station where customers can make their own milkshakes. According to the senior Vice President of Wal-Mart small stores, Debra Layton, the store is quite a hybrid. She further stated that the company has no plans of pursuing the project but then again, you never know, if it turns out to be profitable, Wal-Mart may pursue it.

Wal-Mart Stores Inc. (NYSE:WMT) stocks are running quite high these days. During the recent trading session of November 3, 2014, the company started its stocks at $76.35 and closed at $76.28.