Walmart's smaller stores perform best

Walmart's smaller stores perform best

In Walmart's third quarter, the world's biggest retailer saw its like-for-like turnover grow for the first time in two years, mainly owing to its smaller (according to American standards) stores.

Turnover growth, profit drop in United States

Walmart's total turnover in the third quarter grew 2.8 % to 118 billion dollars (95 billion euro). Walmart US - the retail branch of its American market, worth 59 % of turnover - even grew 3.4 %. Walmart International, worth 28 % of turnover, grew at a slower pace (+ 1.7 %) due to averse exchange rates. At level exchange rates, Walmart International's quarterly turnover would have grown 2.9 %.

 

Its operational profit shows the opposite: Walmart US' third quarter profit dropped 1.2 % compared to the year before, while its international activities (containing 6,100 stores in 26 countries outside the US) grew 3.7 % compared to the year before. 

 

"Smaller" stores perform best

The US was crucial for Walmart's general performance: representing 59 of total turnover, Walmart US managed a 0.5 % like-for-like turnover increase in the third quarter. It is much better than the same quarter the year before (- 0.3 %) and the first time in two years the American retailer managed to report like-for-like turnover growth.

 

Remarkable is that Walmart's supermarket formula, Neighborhood Market, also managed like-for-like turnover growth (+ 5.5 %). The formula has been around since 1998 and consists of 474 Neighborhood Markets averaging 3,500 sqm of store space, considerably smaller than Walmart's largest stores. Its 474 'discount stores' average 10,000 sqm, while its 3397 Walmart Supercenters even average 17,000 sqm.

 

By comparison, the small Neighborhood Markets perform considerably better than Walmart US's larger formulas. Still, its Supercenters are the reason Walmart has become the world's largest retailer in the first place.

 

Online sales grew 21 %

Walmart is satisfied with its third quarter performance, even though the board did point to the increased marketing pressure which will impact its important fourth quarter as well. Walmart will use lower fuel prices as a marketing weapon, to lure more people to its stores.

 

The board is also satisfied with its online perfomance: its third quarter online turnover grew 21 %. Its American online branch, which has its own online supply chain and store-based online order handling, has even contributed to the quarter's like-for-like turnover growth.

 

Online sales also grew internationally, according to Walmart International's CEO David Cheesewright. "I’m excited about the steps we’ve taken to accelerate growth in e-commerce, including the launch of new expanded assortments and services in Mexico and China. We also expanded the number of collection points for online customers in the U.K. and China."

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