Walmart delivers regionalized health care with new clinic model
BENTONVILLE, Ark. — Walmart clearly is not unique in the fact that some of its stores offer access to an in-store health clinic, but what is unique is that several years ago, the retail giant decided to scrap its retail clinic model of partnering with a handful of independent operators in favor of a more regionalized, healthcare system-driven model.
“As part of our commitment to be a ‘Store of the Community,’ these clinics are connected to the communities they serve via local hospitals and health systems that the community already knows and trusts. The clinics are designed to enhance the efficiency and effectiveness of our country’s healthcare system,” the retailer stated.
Dubbed “The Clinic at Walmart,” the facilities offer routine “get well” and “preventative” visits that typically cost $50 to $65. Like other retail-based health clinics, The Clinic at Walmart offers treatments for such common ailments as sore throats, sinus infections, upper respiratory infections, bladder infections and earaches. The locations also offer routine testing and procedures, including cholesterol screening, blood sugar testing, vaccinations and routine physicals.
As of press time, there were 98 in-store clinics in Walmart stores across 22 states. The most recent opening took place on Nov. 15 at a Walmart in Peoria, Ill., via a partnership with OSF Medical Group. It marked the first walk-in health clinic to be owned and operated by OSF Medical Group in a Walmart.
The Peoria-area OSF Medical Group has more than 85 doctors and mid-level providers in 22 locations throughout Peoria and surrounding communities, including Roanoke, Washington and Hopedale. Just one month prior, Walmart celebrated the opening of The Clinic at Walmart in Nevada’s Spanish Springs, operated by Saint Mary’s Medical Group.
Additional partnerships that Walmart has inked include St. Vincent Health System in Arkansas, Portneuf Medical Center in Idaho, Baptist Healthcare System in Kentucky and Christus Medical Group in Louisiana, among others.
By partnering with local healthcare systems such as these, the retailer is taking a more regionalized, healthcare system-driven approach, and is looking to leverage local hospitals and health systems that residents likely already know and visit for their healthcare needs. Furthermore, if a clinic patient does not have a primary care provider when he or she stops by The Clinic at Walmart then these partnerships can further facilitate that relationship and connect the patient with a primary care physician.
“We are confident that our model of partnership with hospital systems will provide access to quality healthcare services for folks who don’t want to wait in a busy emergency room or can’t get in to see their physicians,” stated John Agwunobi, president of Walmart’s health-and-wellness division.
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.
Sam’s opens its ‘Portfolio’ to a health-and-wellness focus
BENTONVILLE, Ark. — Sam’s Club promises to be an even more formidable competitor in the health-and-wellness space in the years ahead, judging from the strategic priorities now in place as part of a broad-based strategy known as Project Portfolio.
Not to be confused with Walmart’s Project Impact strategy, despite the abundant similarities, Sam’s Project Portfolio approach has as one of its key elements an increased focus on health and wellness. Space devoted to those categories, as well as to food, is being expanded as clubs are remodeled. Unchanged in the new Project Portfolio merchandise layout is the prominent position of the health-and-wellness area at the front of clubs.
The changes are occurring under the leadership of president and CEO Brian Cornell, who joined the retailer a little less than two years ago and quickly embarked on a strategy to expand space and improve the productivity of frequently shopped categories while reducing exposure to such less-attractive growth areas as large appliances and hardlines.
By the end of the current year, Sam’s expected to have 100 of its approximately 600 clubs in the Project Portfolio format, which Cornell contended improves sight lines and clarity, and results in sales improvement in focus categories. As evidence of the strategy’s success, Cornell highlighted the 2.4% increase in same-store sales Sam’s produced in the third quarter.
During the coming year, Sam’s expects about $700 million of its approximately $1 billion capital budget will be used to remodel 60 to 70 clubs, with an additional $300 million spent on the new construction or the relocation and expansion of seven to 12 clubs.
The emphasis on food and health and wellness in the Project Portfolio strategy is understandable given the growth characteristics, frequent replenishment cycle and a margin profile that enables Sam’s to demonstrate value. Also playing a factor is the background of the executives now leading the company. Cornell joined Sam’s in March 2009, after serving as president and CEO of Michael’s for two years. However, his more relevant experience was obtained in the supermarket and consumer packaged goods world. He arrived at Michael’s from Safeway, where he served as chief marketing officer, and prior to that he held senior management positions with PepsiCo and Tropicana.
A month after Cornell’s arrival, Sam’s named Linda Hefner as EVP merchandising. She joined Walmart in 2007 as a merchandising EVP to lead the home business. Hefner came to Walmart from Kraft Foods, where she served as EVP global strategy and business development, and prior to that was a senior executive with Hanes, which at the time was a division of Sara Lee.
In August, Sam’s appointed Todd Harbaugh EVP operations. He is a 20-year veteran of Walmart who spent the past seven years at Sam’s, where prior to his current position he served as SVP inventory management, supply chain, pricing, planning and execution.