Blog: The future for Walmart is smaller stores

Petah Marian | 24 April 2012

Walmart should focus its attention on smaller stores as consumers shift away from out-of-town shopping centres, according to Kantar analyst Bryan Roberts.

Speaking about large out-of-town operators, he says they are "slowly becoming not obsolete, but out-dated, and are increasingly having to "run very fast just to stay still".

Roberts believes the renaissance of town centre and proximity shopping can be attributed to the rising cost of petrol, the fact consumers don't want to be faced with "lots of things I can't afford" in large out-of-town stores, and a rise in the number of online and discount retailers selling non-food products.

"For the first time in 50 years the average size of grocery stores is declining," he explains.

Speaking at the launch of a book he has co-written on ‘Walmart: Key Insights and Practical Lessons from the World's Largest Retailer,' Roberts notes Walmart's most credible long-term competitor is online operator Amazon, which is on target to reach a global turnover of US$100bn by 2015 - a decade faster than it took Walmart to achieve the same.

That said, stores will remain integral to the customer experience. "Amazon's Achilles heel is its lack of a physical store presence. Traditional retailers should be capitalising on their value-added proposition and investing in better training for customer-facing staff, boosting after-sales care and using their stores to make it easier for shoppers to pick-up goods ordered online."

"Home delivery e-commerce is the opposite of a convenience," Roberts emphasised.

While Amazon is a credible threat to Walmart, Roberts is quick to emphasise that suppliers bowing to Amazon's pressure to continually lower prices might not be the best strategy.

"Amazon is amazing at getting prices down, but it's difficult to get them back up again," and offering the online giant preferential rates is likely to irritate suppliers' other customers.

Unlike other retailers, Amazon makes so much money on its Kindle and virtual services that it "doesn't care that much about profit on retail".

As we shift towards a multi-channel future, it will become increasingly important for retailers to differentiate themselves depending on the format they operating in. "Retailers need to stop trying to be all things to all people in all formats," Roberts added.

 


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