Small formats gain momentum, grab attention
BENTONVILLE, Ark. — Walmart’s Neighborhood Market concept finally is getting its due more than 12 years after the first unit opened in late 1998. Next year, the company expected to open between 30 and 40 small stores, the majority of which will be Neighborhood Market units, in addition to a handful of pilot stores measuring less than 30,000 sq. ft. that the company views as a potential growth vehicle for either urban or rural markets.
The uptick in interest in smaller-format development comes as the Walmart supercenter is close to saturation. At the end of the third quarter, there were 2,882 supercenters in operation, and with next year’s plan to add between 155 and 165 supercenters, the company easily should surpass the 3,000-unit market. By comparison, there were only 181 Neighborhood Markets, four Marketside stores and two Supermercado stores. Overall, the level of capital expenditures and square footage expansion next year will remain the same as this year, with plans calling for between $7.5 billion and $8 billion spent on adding roughly 11 million sq. ft. of space.
The upshot for the coming year and beyond is that urban markets, and to a much lesser extent rural areas, represent the single greatest domestic growth opportunity available to the company, which is why there is an increased, albeit modest, amount of capital being devoted to smaller stores. However, aside from indicating that the majority of next year’s small- and medium-format stores will be Neighborhood Markets, the company has not disclosed the size or location of its experimental stores, or indicated whether they would carry a different name.
What’s clear is that there is intense interest in Walmart’s small-format plans and that the product mix is likely to include food, consumables and health and wellness due to the high-velocity nature of those categories. Plenty of retailers have experimented with or indicated they plan to open smaller stores in the years ahead, but they don’t attract the interest of Walmart due to the company’s deep pockets and the ability to expand rapidly a retail concept that meets financial performance targets.
In addition to the means and motive to pursue small-format growth, several things have changed since the first Neighborhood Markets stores opened in the late ’90s and fueled speculation about growth. Today, Walmart has the distinct advantage to leverage its abundant international experience as it operates thousands of small-format stores in multiple formats across multiple markets. In addition, the company has improved its sullied reputation to the point where elected officials in urban markets now are more likely to green light growth plans as evidenced by recent wins in Chicago and Washington, D.C.
That said, Walmart’s small format will remain a work in progress throughout the coming year, with any type of meaningful expansion unlikely to occur until 2012 and beyond.
Changing Channels — Hot products outside of food, drug and mass
NEW YORK — Sagging, the practice of letting one’s pants hang slightly below the waist in a way that exposes the underwear, is a fashion trend that has inspired heated debate of a sort unseen since the mink stole, pitting supporters of free expression against those who see it as indecent exposure. Like fur, it likely will stick around for some time, so inventor Andrew Lewis has taken the pragmatic route with Subs, launched by Hatch Ventures. Subs work like suspenders or garters, holding pants up so that they don’t fall down too low and inhibit wearers’ ability to walk and climb stairs. Subs retail for around $34.95, and products also come packaged in kits.
BOYNTON BEACH, Fla. — It may be stay- indoors season now, but spring will arrive in a few months, bringing Americans out for camping, fishing and other outdoor activities. United Spirit of America has unveiled Basic Edition, a line of personal care products designed for outdoor enthusiasts, military and law-enforcement personnel. The products make personal care easy while delivering protection against sun exposure, insects and germs. Products include a combination shampoo, body wash and shaving lather; a sunscreen spray that also acts as an insect repellant; anti-fungal foot powder; and anti-bacterial gel. Prices range from $1.99 for the antibacterial gel to $8.99 for the foot powder.
SAN ANTONIO — It’s common for parents washing babies’ cloth diapers to end up with an un- pleasant ammo- nia smell, but Texas-based Rockin’ Green has created a way to get rid of the scent. Funk Rock is designed to eliminate the ammonia smell that emanates from cloth diapers in half an hour or less. The product uses a natural ammonia-busting compound that eliminates odors with a few tablespoons. Funk Rock also works on odors from pets’ urine. It is available in 9-oz., one-month supplies for $12.95.
NEW YORK — It’s hard to convince most small children that medicine will help them when it tastes positively vile, but one doctor who encountered this dilemma with his two small children created Sippy Sure, a sippy cup that mixes medicine with more palatable beverages. The cup, launched by Iatrical Innovations, works by keeping the medicine and the beverage separate, but mixing them together when a child drinks from it in a way that will administer the medicine without the child detecting it. The cup retails for $8.99.
Dollar General raises guidance after strong Q3
GOODLETTSVILLE, Tenn. — Dollar General reported that its third-quarter net income was $128 million, or a diluted earnings per share of 37 cents.
Excluding a net loss of $8 million ($5 million after income taxes) relating to the early repayment of certain long-term obligations, net income for the 2010 third quarter was $133 million, or a diluted EPS of 39 cents, a 76% increase over net income of $76 million, or 24 cents per diluted share, in the third quarter of fiscal 2009.
The boost prompted the company to raise its full-year adjusted earnings per share guidance to the range of $1.78 to $1.81, Rick Dreiling, chairman and CEO said.
Net sales for the quarter increased 10.1% to $3.22 billion in third quarter 2010, compared with $2.93 billion in the year-ago period. Same-store sales increased 4.2% in the 2010 quarter and 9.2% in the 2009 quarter, with customer traffic and average transaction amounts contributing to the same-store sales increases in both periods.