Big Box Uses Emerge As More Wal-Mart Sales Go Online

Retail behemoth Wal-Mart Stores Inc. is also a real estate company of gigantic proportion with roughly 4,000 super-sized boxes scattered coast to coast amid small town America.

In fact, Wal-Mart’s single largest asset is its real estate holdings which total some 720 million square feet of space – much of which is carved up in 180,000 square-feet cubes known as “supercenters.”

Roughly two-thirds of American shoppers live within five miles of a Wal-Mart Supercenter so it should come as no surprise to see Wal-Mart testing other uses for this prime space as more shopping transactions occur online, according to Robin Sherk, senior analyst with Kantar Retail.

The new supercenters are roughly 140,000 square feet, but there are plenty of 180,000 and 200,000 square feet stores across the country and lots of space that will need filling in the next decade or so as e-commerce becomes a bigger share of overall sales. Kantar has spotted several opportunities Wal-Mart is testing which could eventually become more mainstream fixtures within the giant supercenter locations as more general merchandise categories move online.

DESTINATION DISPLAYS
“Could we imagine the extra space in stores going back to suppliers? … Wal-Mart saying if you want to take 1,000 square feet out of the supercenter and create a toy destination, or meal solution destination or beauty destination then go for it,” Sherk asked a group of suppliers during a recent conference in Bentonville.

Sherk envisions the store-within-a-store concept that Apple is already testing in some locations being expanded to include other products in the future.

“When you walk into that space it is truly Apple providing that experience and expertise and that’s just the beginning of possibilities.” Sherk said.

She points to Disney’s destination store within an ASDA Supercenter in the U.K. as something that could go mainstream in the future. The Disney destination takes up about 3,000 square feet inside the store and is meant transport the child from a routine shopping trip into a magical Disney experience. Three of the in-store destinations are planned.

“I can totally see large areas like the lawn and garden section that seem like ghost towns for much of the year being used to draw event traffic like say having breakfast with Toucan Sam or some other fictional character,” Sherk said.

They key for retailers will be to figure out creative ways to drive traffic to these large boxes when consumers can have home delivery if they want it.

EXPANDED SERVICES
Wal-Mart continues to leverage its store traffic, which at 140 million shoppers a week is quite the captive audience.

Kantar envisions the retailer expanding its financial service offerings with the Bluebird card that is looking more like a mainstream product to replace the traditional checking account.

This year Wal-Mart also partnered with Mollen Immunization Clinics to administer 10 different vaccines recommended by the Center for Disease Control over a four-month period from August to mid November. Wal-Mart also worked with MetLife to write life insurance policies at 200 Wal-Mart stores in South Carolina and Georgia last year. And the retailer is testing in-store dental clinics in California.

“Anytime that there’s inefficiency in the system – and there’s no better poster child for inefficiency than the U.S. health care system – we believe there’s an opportunity for Wal-Mart,” said Walmart U.S. CEO Bill Simon.

This spring SoloHeath put health check-up kiosks in more than 2,500 Wal-Mart and Sam’s Club locations. These kiosks let users check eyesight and blood pressure and get information of diet, vitamins and pain management. Some analysts say this is a broad test that allows Wal-Mart to assess the demand for these type of health services from its shopping public. Analysts say there is no reason why parents couldn’t get their child’s routine sports physical or a teeth cleaning at Wal-Mart while they pick up a few grocery items on the way home in the evening.

Sherk says unique services can be trip drivers to the retail center, which is why Wal-Mart is actively pursuing the ventures with an end goal to capture a larger share of the wallet.

DISTRIBUTION/ FULFILLMENT
One logical use for the massive space is warehousing fulfillment centers for online home delivery orders, given their close proximity to neighbors in more rural areas.

“Wal-Mart has to be saying to itself that they own this space, because no one else has their physical reach,” Sherk said. “If customers chose to come in and pick it up or the orders can be delivered from close proximity.”

With that she said the lockers within a store and also drive-through stores will likely become mainstream in the next decade for online orders.

Wal-Mart has pick-up today, order online and pick up at the store nearby, but Sherk says in the coming years that could mean order your pet food, baby diapers and a small bill of groceries, pay a small fee to have Wal-Mart shop the list and store the items in a locker for you to pick up later.

“Perhaps we just pull up to the lawn and garden center and they load it in the back of our car. I see this appealing to baby boomers who no longer want to trek through the massive stores,” Sherk said.

As Amazon Prime is expected to go next-day delivery later this year, supply chain expert Dr. Jim Tompkins, CEO of Tompkins International, said retailers will have to find some way to compete or risk losing market share.

Sherk says Wal-Mart has some real opportunities with same-day delivery on thousands of products, if they can figure out how to use their supercenter assets as fulfillment centers. At the same time, she says these supercenters also need to be a destination for services and the broad merchandise assortments their customers have come to expect.