Walmart seeks inner-city growth

Walmart seeks inner-city growth

American supermarket chain Walmart is increasingly looking towards inner-city growth, because prime locations outside the city are running out and local governments are no longer resisting the chain as much.

Supermarket chain resistance dwindles

Every Walmart used to be outside of the city centre, mainly because there were too many building restrictions and parking spaces were too limited. Locations to keep building new supermarkets are running out if the chain wishes to remain on the outskirts of cities and that is why the chain is now looking to inner-city expansion.

 

Labour union resistance to large supermarkets because of low wages and its negative impact on local stores has dwindled now that the crisis has many cities jumping at the opportunity to create additional jobs through these supermarkets, even if they are Walmarts. The revenue generated also means it is an additional source for taxation.

 

Competition and ecommerce have also helped

It is not only a lack of space that pushes Walmart into cities, as increased competition is also forcing Walmart's hand. An increasing amount of store chains have added food to their array of products, in an attempt to get more local consumers, and that means these customers may leave Walmart behind.

 

Ecommerce has also impacted Walmart's decision, because deliveries may be countered through the appearance of a local supermarket. Local stores can also serve as a pick-up point for online purchases, which is a logistic advantage as stores have to be supplied anyway.

 

Stores occupy smaller spaces

The move towards the inner-city also means a move towards smaller spaces, as demonstrated by Walmart's newest supermarket in Washington DC, which is 7,400 sqm, half of the usual supermarket size. Become bigger through smaller stores seems to be the new creed.

 

The chain is building stores specifically catered to inner-cities: its new neighbourhood store is 3,700 sqm, a quarter of the traditional supermarket and Walmart expects to get 500 such stores in inner-cities by the end of the year.

 

Walmart's Express formula has been tested through 20 pilot stores and is a mere 1,400 sqm, while there are two 465 sqm stores on school grounds.

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