story by Kim Souza
Wal-Mart Stores has made no secret that it would like to build a Neighborhood Market in Bella Vista, just five miles from retailer’s home office in Bentonville, and also home to hundreds of Wal-Mart corporate employees.
Last month the retailer got one step closer to that goal with a $4 million purchase of 126 acres of property that sits on the Bella Vista line, but is located inside Bentonville because the acreage recently was annexed by the city. The deal for the 126 acres was completed earlier this year, according to a Jan. 30 deed filed at the Benton County Courthouse.
The retailer won’t be sneaking into the sleepy village as it will need loads of dynamite to clear the rocky bluff that greets passers-by at the intersection of Peach Orchard Road and U.S. 71 — the site Wal-Mart now owns. Lowe’s Home Improvement, McDonald’s and a Northwest Health clinic each sit just east of the Wal-Mart property, at the northern most edge of Bentonville’s city limits. While the retail giant has yet to present store plans to the city of Bentonville, city officials did rezone the property from agricultural to general commercial on Jan. 21.
Wal-Mart confirmed it purchased the annexed land in north Bentonville, but Erica Jones, corporate spokeswoman said Tuesday, (March 11) the retailer has no immediate plans to announce a store.
In late 2012, Wal-Mart abandoned plans to build a Neighborhood Market in Bella Vista following an unsuccessful attempt to get another traffic light installed on U.S. 71, and a property rezoning backlash.
Bill Simon, CEO of Walmart U.S., said during a March 4 speech at the Raymond James Investor Conference that Wal-Mart grew its Neighborhood Market stores 40% last year and returned 4% comparable sales for the year, and 5% in the fourth quarter.
He said the retailer is doubling the planned growth this year with about 300 additional stores, and 200 of those will be Neighborhood Markets and 100 will be the smaller Express or convenience format. Simon said the Neighborhood Markets are a pull forward of stores from a pipeline that was scheduled for the next two years. The smaller Express Stores require less planning and are more easy to site.
He said the Express formats will be rolled out in accordance with the density plan that will allow Wal-Mart to capture more of the convenience trip market it is losing to small box competitors. That quick trip shopping market is worth an estimated at $415 billion annually, and Wal-Mart is capturing just 10%, according to Simon. The small formats are Wal-Mart’s answer to picking up their share of the quick-trip sales.
“It is exciting. We think that we have come a long, long way with these two formats over the last three years. We're excited about their opportunity. We believe they represent tremendous growth potential for the company in a retail space that is defined on one end by digital and on the other end by pure physical. These provide the ability to compete as I have talked, across a wide array of competitors and many, many different spaces,” Simon said.
Wal-Mart plans to roll out three of its fully tethered ecosystems by later this year. The ecosystem involves supercenters, tethered to distribution centers and smaller formats as well as physical stores being connected to Walmart.com. The Express Store could be stocked by from a local supercenter, a consumer could order an exercise bike online and pick it up at her local Walmart Neighborhood Market.
SImon said even employees would be interchangeable between the stores within a local ecosystem, perhaps working three shifts at a supercenter and then picking up two others at smaller format closer to their home.
LOCAL EXPANSION, TETHERING?
Wal-Mart’s store expansion in Northwest Arkansas has ramped up in the past year, with eight new stores already announced, including a new convenience store model that is expected to open in the next few weeks. The majority of the announced projects are for Neighborhood Market formats, with the exception of the large supercenter under construction in Springdale and the convenience store in Bentonville.
The retailer’s real estate division has actively looked for other parcels across the region in addition to the recent purchase in north Bentonville and six other deals made in 2013 totaling more than $8.819 million, according to Benton County real estate records. This activity begs the question if Northwest Arkansas is one of three regions setting up for tethering.
Wal-Mart has revealed one of the three regions set up for tethering is in North Carolina where it built a number of stores last year, including Neighborhood Markets and Express formats. Northwest Arkansas has four of the retailer’s 20 smallest formats, soon to be five when the convenience store opens in Bentonville.
Simon said the retailer is testing density and the early data sources show that Wal-Mart captures new sales dollars, new trips and new customers when it puts small format stores between supercenters.
When a “Neighborhood Market is built in proximity to a supercenter we see an additional $300 a year from customer spend based on traceable tender. So this is additive to our business — because they are different trips, because they are shopped differently. A stock-up trip at the supercenter on the weekend; fill-in trip at the Neighborhood Market during the week,” Simon said.
He indicated during questioning at last week’s investor conference that the initial roll-out of the first wave of small formats would capitalize on the company’s strength and support system nearby in rural markets and go out one concentric ring further. That describes what is happening in Northwest Arkansas, with Pea Ridge, Farmington, Centerton and Siloam Springs all on tap to get new Neighborhood Markets this year.