Wal-mart: Smaller Stores, Buying Competitors & Supporting Main Street

These are busy days for the world’s largest retailer.

Wal-Mart Stores is looking to shore up its U.S. sales on a number of fronts as it seeks to reverse slumping same-stores sales that have plagued earnings for nearly two years.

At an investor conference on Thursday, Wal-Mart’s U.S. retail chief Bill Simon said the company planned to add hundreds of smaller format stores over the next three years and could eye buying competitors in that niche. It is also experimenting with a college campus store at the University of Arkansas, which has peaked the curiosity of other colleges across the country.

Wal-Mart officials and analysts have noted that the Bentonville-based retail giant’s sales have been hurt by dollar stores that have sprouted in rural and suburban areas across the U.S.

In its most recent earnings report, Wal-Mart acknowledged that its loss of sales to dollar stores in the U.S. impacted its operations "more than expected."

In this Bloomberg report, more details of Wal-Mart’s foray into a smaller format concept is revealed.

Next week in Arkansas, Wal-Mart will start building its first three Express stores, a format less than a 10th the size of an average supercenter, according to building permits obtained by Bloomberg News. The first urban Express store will open this summer on Chicago’s South Side, Crain’s reported yesterday.

Wal-Mart spokesman Steve Restivo confirmed the Arkansas store openings in an e-mail yesterday. He didn’t respond to e- mailed questions yesterday or today about stores in Chicago.

The new stores will include mid-sized Neighborhood Market locations of 30,000 to 60,000 square feet, and the rest will be smaller. Simon said today that the Neighborhood Market format will be renamed “Walmart Market.” The company also will introduce more stores on university campuses, he said.

On another front, Wal-Mart is quietly pushing for states to level the playing field between online retail outlets and bricks-and-mortar competitors. In Arkansas, the retailer is supportive of SB 738 by Sen. Jake Files (R-Fort Smith), which would force discount online retail giants like Amazon.com or Overstock.com to collect and remit sales and use taxes on items sold.

Dubbed the "Main Street Fairness" bill, Illinois Gov. Pat Quinn signed a similar bill into law on Thursday. Wal-Mart released a press statement related to the bill signing.

"Gov. Quinn has once again demonstrated he is willing to do what is right for Illinois and its businesses," said Julie Murphy, Senior Vice President of Operations for Walmart. "During these economic times, it is vital for the state of Illinois to collect the millions of dollars of unpaid sales tax while allowing it to level the playing field for brick and mortar businesses who support our local Illinois communities."

Currently, SB 738 has cleared the Arkansas State Senate and could be considered by a House tax panel next week.