The Tesco Effect: Wal-Mart to Open Smaller Format Stores in 2008

Will the notoriously stubborn retailer be able to compete on Tesco’s terms?

Sure, Alex.

Especially since both WM and Tesco’s “Fresh and Easy” are non-union shops…

Wal-Mart is having difficulty cutting into Tesco’s market share in the UK so it wouldn’t be any surprise if Tesco’s small-format stores kick the Beast’s butt here in the US.

Ah, competition. The backbone of the free market system.

good i am glad walmart is doing this.they have every right to be competetive.of course no one bitched about traffic,safety and livability when the tesco stores were built why?

I welcome this. I go to so many places in the country, where I want to buy something, and the stores are lousy and close early. No Wal-Marts in the area. Perfect places for smaller Wal-Marts.

However, I would also support Tesco, because bbrd just told me that they don’t force their workers to join political organizations.

Several months back, I posited an idea that W/M could possibly look to buyimg out smaller venues such as Dollar General or Family Dollar. I was roundly criticized. I still think it is a possibilty,IMHO,and this move gives me even more faith in my opinion.

of course no one bitched about traffic,safety and livability when the tesco stores were built why?

Matt, Tesco’s “Fresh & Easy” stores are small-footprint stores (roughly the size of a Walgreens or CVS/Pharmacy)—they can be propped-up on any streetcorner.

This level of convenience is obviously becoming more attractive to WM (I echo econ’s statement).  I say “go for it”.

I was roundly criticized.

Which time?  There are so many!

I still think it is a possibilty,IMHO,and this move gives me even more faith in my opinion.

Still doubtful—Wal-Mart hasn’t done any buyouts of any competiting store since the early 80’s.

bbrd: You may be correct-WalMart keeps on doing things the old way-

ddrb,

“I posited an idea that W/M could possibly look to buyimg out smaller venues such as Dollar General or Family Dollar.”

Are you actually advocating Wal-Mart, putting Dollar General and Family Dollar out of business, so they can GROW bigger?

bbrd,

Wal-Mart’s “Neighborhood Markets” are their attempt to get into the smaller market areas!!  In my area, the “Neighborhood Market” is located across from K-Mart, at any given time of day, the “Neighborhood Market” has twice as many cars in their parking lot than the Big K-Mart!!

RDS: No, I’m not advocating any such thing. But thank you for the opportunity to explain why I had thought this could be a possibility, regarding Dollar General. In july of 2007, all shares of Dollar General were acquired by a private equity group of investors,and the shares are no longer publily traded. These investors include Kohlberg Kravis Roberts(KKR);GS Capital Partners(Goldman Sachs); and,Citi Private Equity. The stores upon acquisition were closely scrutinized for design flaws(no loading docks,skimpy parking,low profitability)-400 stores that didn’t meet muster were closed.Now, Henry Kravis was the leverage buyout king(RJR Nabisco). It would not be beyond possibility,IMHO, that these properties could be attractive to W/M,and, Kravis is known for buying companies and reselling them. In light of Citi’s $$$$ problems now,this could prove interesting.

BTW: According to Wikipedia, there is also a Dollar General Market-but I am totally unfamiliar with this configuration,as there are no such in my area, nor have I seen any while traveling.

I saw a Dollar General Market on my travels, last year.

The main difference is these stores have more grocery offerings (particularly, pre-packaged meat & produce) than their traditional siblings.

Sort of a “cross” between a traditional DG and Aldi.

Wal-Mart’s “Neighborhood Markets” are their attempt to get into the smaller market areas!!

True, but these stores, while smaller than an “old school” Wal-Mart Discount Store, are still of equal size to any of their grocery competition, meaning WM would still need to go through the usual B.S. just to find a large-enough piece of property to put these stores on.

Such plots of land are getting harder and harder to find. 

Enter the shuttered drug chains, who is losing locations due to on-going corporate mergers with rival chains.

In other words, readily-developed real estate, ready to sell!

From what I have read, WM’s new concept that has been rumored over the past couple of days is aimed solely at the convenience (grab-n-go) market.

From my point of view, if WM buys such vacated durg store locations, it makes it harder for certain critics to throw stones at WM.

bbrd: Wouldn’t the points you have made in your above post give credence to acquisition of Dollar General sites? (I think I blogged about this this past fall.)Would they not fit the profile of “grab-n-go’?

(Not to make this look like ddrb’s chat room, but...)

“Yes” and “No” to your question - the DG Market stores are situated in 1970’s-era strip centers (and typically replaced old stores that Kroger and other big grocery chains simply outgrew).

The Tesco stores in the west are stand-alone facilities that have about the same square footage as a stand-alone Rite Aid/Walgreens/CVS.

As for Wal-Mart, they’ve had a few golden opportunities in recent years to buy-out retailers with “prime” space, but haven’t, which underscores my point that WM will not buy-out a competitor.

Also, it has been speculated in the media that Wal-Mart is buying properties in Arizona that formerly belonged to Albertsons drugstore division (Osco/Sav-On), before that company’s successor (Supervalu) sold all the freestanding drug stores to CVS/Pharmacy.

Obviously, CVS bought those stores only to get the pharmacy records.

bbrd: If it would appear to be anyone’s chatroom,you or Matt would be more likely candidates. I didn’t post anything for almost a month-but you and Mary (or are you the same?) kept quite busy,juding from older threads.

ddrb,

At least the posts remained on topic, which is refreshing, with NO insults and diversions!!

of course no one says shit about or bitches about tesco killing k-mart and hurting them and taking their business away,but if walmart did that screwed by,ddrb,ken, and their walmart hater buddies wouldnt like it and would bitch big time

i got lost on my way to www.walmartjunkiefool.com you people are all stupid because walmart is my god and every thing else posted in the universe is from unions and once the mothership gets here i can leave you all you walmart haters and rest upon my pile of walmart junk

OOPS!!  I spoke too soon!!

“At least the posts remained on topic, which is refreshing, with NO insults and diversions!!”

RDS in
Wednesday, January 16 at 12:33 AM

“And, what about John Edwards, wasn’t his father a ‘poor’ southern ‘mill’ worker, I think that falls into the catagory of a ‘hick’ too?”

RDS in
Wednesday, January 16 at 12:45 AM

Ah yes, another high-water mark for RDS.

Agent 86,

Where on this thread, did you find that second post by me, I’m sorry, but I can’t find it on this one!! 

Pay attention!!

Your hypocrisy is easy to find RDS-

RDS hypocrisy

SDV,

And, your ignorance is easy to find as well!!  I said that the posts on this THREAD remained on topic, not some from a different thread, idiot!!  What a doorknob you are!!

RDS. Your statements are hypocrisy all over the place. Who cares about what particular thread you claim you didn’t say something stupid, like this.

ddrb,

“Don’t you know that Hillary is a Big City New Yorker now?  And, what about John Edwards, wasn’t his father a ‘poor’ southern ‘mill’ worker, I think that falls into the catagory of a ‘hick’ too?”

RDS in
Wednesday, January 16 at 12:45 AM

Screwed,

“Associating people because of their geographic location, is just plain stupid and what we can expect from you!!”

RDS in
Thursday, January 17 at 01:40 PM

Pull any thread and RDS becomes totally unraveled!!!

Agent 86 in: I recall when I began posting here lasr summer,when RDS gave me grief by insinuating that my house was on wheels,in other words,a trailer. No, I don’t live in a trailer ,next to a Walmart,or anyhere. But if my recollection is correct, Mike Huckabee and his wife DID live in a double wide trailer,for quite a while,right next to the Arkansas Governor’s mansion,while he was still governator of Arkansas.I seem to recall he being on some late night talk show being interviewed about it.What association could one make of that geographical location?