Wal-Mart has always been known for its gigantic, suburban, 180,000 square foot supercenters. Given certain plans, however, that may not be the case forever. Now, the chain is about to make an about-face and try to set up a base in more urban areas, using much smaller stores. This is because Wal-Mart has essentially exhausted its suburban base, while it has not at all forayed into major cities such as New York, Chicago, or Los Angeles. Obviously, the city is no place for large, warehouse-sized stores. So, Wal-Mart is going to try to implement some changes. Wal-Mart plans to experiment with some smaller stores whose primary products are groceries. This way, they can target the blue-collar workers, because in their movements through the recession, they focused more on middle class workers who were "trading down." Soon, Wal-Mart's "every day low prices" may be found everywhere as well.
Obviously, this is a HUGE step for Wal-Mart. In order to remain successful, they need to extend their reach as far as they can. Right now, sales for Wal-Mart are stalling, and this may be exactly what they need to jump start their profits again.
However, there are still many obstacles as well. Many big cities still oppose Wal-Mart because it has had labor disputes and other ethical troubles in the past. Target and Best Buy have already made moves into the cities with no problems, but Wal-Mart is not approved by everyone. Other outlets like Dollar General or Aldi's are also great competitors that Wal-Mart has to look out for. Moving into the cities may not be the easiest road for Wal-Mart, even though it will have its pay out.
Wal-Mart, just like every retailer, will always have to face problems and obstacles, but if it can overcome these, it will find great success in the cities. Urbanization will be a change, but it will definitely be for the better.
Catherine Reeves
Sources: http://online.wsj.com/article/SB10001424052748703673604575550243762557882.html?mod=WSJ_Retailing_leftHeadlines
What are the arguments against the inclusion of Wal-Mart in urban areas? Does it have to do with the controversy around Wal-Mart's ethics? Does the protest imply that consumers don't view Target or Best Buy as threats, as companies that may become mega-giants like Wal-Mart?
ReplyDeleteIt's true that this new market expansion could garner a large amount of revenue, but I imagine the initial costs will be great, since Wal-Mart will have to redesign their store layouts and selling style to fit the new areas.