The Supply Side: Walmart continues to revamp convenience stores, fuel stations

Walmart has in recent years quietly invested in smaller convenience stores with fuel that are linked to supercenters and grocery formats. The retailer has tweaked the format size based on market demand and now has plans to open or remodel more than 45 fuel stations this year.

Walmart told the Northwest Arkansas Business Journal that none of the new or remodeled stores planned for this year will be located in Northwest Arkansas.

Walmart said some of the new fuel stations will be new openings for 2025 added to existing stores, and some will be added to new store locations. The retailer declined to provide specific locations or financial details of the fuel station investment. They will not offer any EV charging stations. Those slots are solely located in select Walmart store parking lots, such as Walmart Store No. 5260 at Pleasant Crossing in Rogers.

The retailer said each location could differ slightly by size, but all will offer the shoppers the same prices on snacks and beverages as what is sold in the adjacent store.

FORMAT EVOLUTION
The first Walmart convenience store opened in Bentonville in March 2014 and is tethered to Walmart Store No. 100, a supercenter format located a few blocks away on Walton Boulevard. The 2,500-square-foot convenience store features 16 fuel pumps, discounted fountain drinks, hot and cold snacks, a small amount of consumer packaged foods, coffee, milk and other cold bottled beverages, along with beer, lottery tickets and other impulse-buy items.

This Walmart convenience store is the largest one Walmart operates, but over the past decade, the retailer has added around 400 other smaller fueling stations/convenience stores in 34 states. By the end of this year, Walmart will operate around 450 fueling station formats, ranking it among the top 20 largest U.S. convenience store retailers.

Walmart said the convenience format is one way it can better service customers. With the growing number of Walmart+ members, the retailer continues to see added demand for fuel, given the 10 cents per gallon savings the membership provides. Walmart does not provide membership numbers, but analysts estimate the retailer had more than 60 million households as Walmart+ members as of early 2024.

“This expansion allows Walmart to continue to provide a best-in-class, convenient shopping experience, with a focus on accessibility and ease. We’re continuing to invest in our nationwide, physical store footprint. By adding dozens of fuel and convenience stations this year, we are bringing even more value to our customers,” said Dave DeSerio, vice president of fuel and convenience at Walmart.

Walmart has continued to modify the size of its fuel station formats over the years, drastically reducing the size of the store and number of fuel pumps relative to the space available. Even the smallest of the fueling stations are busy as consumers line up for fuel savings, often going inside for the 79-cent extra-large fountain drink or snack. Cashiers at two Northwest Arkansas fueling stations said they stay busy, and the low-price fountain drinks and lottery tickets are among the biggest sellers inside the store. Cashiers who work in Walmart fueling stations do so exclusively and do not rotate with other store staff. They also report to the store management in the adjacent Walmart store, which has the responsibility over the smaller fueling format.

Scott Benedict, retail consultant and former Walmart exec, said revamping the model is Walmart’s way. He said lessons learned from the first store in Bentonville likely provided Walmart with a good idea of what customers want the most, so they could adapt future stores to better suit changing customer demands.

MURPHY PARTNERSHIP
Walmart execs have said over the years the company would like to have fuel stations, pharmacies and grocery pickup at every store it operates, but regulatory rules around fuel differ from state to state. Walmart also has a pre-existing partnership with El Dorado-based Murphy USA that operates more than 1,100 fueling stations at Walmart stores in 27 states.

The partnership with Murphy USA for more fueling stations ended in 2016. Walmart decided to go its own way as a fuel provider, but said at the time Murphy USA will continue to operate at the Walmart locations established through a deal dating back to 2012. The Murphy sites are smaller than Walmart’s fueling station/convenience stores, but Murphy does honor the discount on fuel for Walmart+ subscribers.

In 2016, analysts said Walmart’s size and past success gave it an advantage in running the convenience stores, noting that over time Walmart could represent a challenge to Murphy on future sites. Murphy USA operated 1,244 fueling station/convenience stores at the end of 2024 and the company said it planned to add 500 additional locations in the decade.

Benedict said Walmart has the advantage over Murphy USA locations because of its scale and retail expertise. He said Walmart’s expansion of fuel stations is timely because there are more people commuting to work given that the business world has mostly returned to the office.

CONVENIENCE PAYS
Benedict said the convenience store format is a trip driver. He said it’s a way to reward loyal customers who can pull in and get fuel savings, but also grab a snack or run inside the bigger store for an item or two, creating sales they may have missed.

“Studies have shown that fuel stations at retailers will bring more people inside the bigger store, but Walmart also incorporates its grocery pickup with fuel trips for added convenience. People who make more frequent store visits bring in more money for the store. On top of fuel stations, the convenience store allows for more impulse buys from tobacco, to fountain drinks or lottery tickets that Walmart might not get otherwise,” Benedict said.

As a frequent convenience store shopper, Benedict said the tiny Walmart format checks a lot of boxes including driving customer loyalty. He said customers like himself will exit the highway when they see a Walmart fueling station because of the fuel savings and lower cost of snacks compared to nearby traditional convenience stores.

Walmart has also rethought how it sells convenience items inside its bigger store formats. Around 2016, Walmart installed soda fountains in the front of its grocery and supercenter formats. Customers could grab a cup at the check out station, scan the cup and then proceed to the fountain after checking out to get their drink. Walmart also sold milkshakes, tea and coffee in the soda fountains in the front of stores. Walmart took the fountains out a few years later. In 2024, Walmart added bottled drinks, sandwiches, salads, heat-and-eat burritos, bakery goods and snack foods in a convenience store display at the front of the store.

Benedict said merchandising the smaller formats can be a challenge, but Walmart has data insights across its formats to mitigate risks. He said Walmart offering convenience foods at the front of its bigger formats also makes sense because busy families are often looking for quick meal solutions for dinner or lunch at a value.

He said this is an opportunity for Walmart stores that have a Murphy USA fueling station because they receive no impulse sales from those formats. However, by offering convenience foods and drinks in the front of the Walmart store, they give shoppers a wide array of snack food and meal options.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics, and is sponsored by HRG.