The Big W is hoping a fresh face will help as it moves to crack an urban market worth as much as $100 billion. Walmart has overbuilt in rural and suburban areas to the point of cannibalization, one Walmart Supercenter devouring the profits of the other. The loser is left to die—and the vacant space is left to whatever retailer can afford to move in (and is not a Walmart competitor). A PBS documentary reported in 2001 that Walmart had left behind more than 25 million square feet of unoccupied space across the country.
Walmart U.S President and CEO Bill Simon rolled out the makeover concept last year at the Bank of America Merrill Lynch Consumer Conference. It promised hundreds of smaller formats over the next three years while noting that supercenters provides the best ROI—return on investment.
Ah, but no savvy image-conscious star waits until mid-middle-age to get a little work done. Walmart, the world’s biggest company, while still an ingénue of 36, introduced its first supermarket-sized stores in 1998—far smaller than the Supercenters, which can loom as large as 180,000 square feet.
In 2007 the mega-chain ramped up its rebranding big time, exchanging its signature tagline “Always low prices. Always.” for the present slogan “Save Money. Live Better.”
“Doing so put a positive spin on the company’s reputation for offering merchandise at rock bottom prices and suggested that buying items at low prices will help improve customers’ lifestyles,” reported Business Insider.com in March 2011.
What may pose more of a challenge to Walmart is the ability to “put a more positive spin” on working conditions for its associates. Walmart looks at low labor costs and the flexibility of its workforce. Read: a parsimonious approach to wages and a high turnover rate. From the industry researcher Value Line: “The company’s annual report says it ‘experiences significant turnover in employees each year.’ Although specific numbers are not revealed, management has admitted the turnover rate was once as high as 70 percent. We believe this number has fallen due to the need for employees to hold on to their jobs during troubled economic times.”
But in terms of consumer outreach, marketing mavens think Walmart did such a good rebranding job that “REBRAND, an organization that judges companies on their rebranding efforts, awarded Wal-Mart a REBRAND 100 Global Award of Distinction for its marketing campaign,” Business Insider reported.
Retail wonks still debate whether Walmart can in fact make a success of smaller scale stores that include groceries.
What is clear is that the uber-retailer has ditched the dumpy supercenter format for its moves into Los Angeles, New York, Chicago and other areas. For the urban incursion, Walmart has re-cast itself as a neighborhood market—nobody here but us locals.
In fact, Neighborhood Market is what they call the smaller format stores—typically around 40,000 square feet. While behemoth supercenters remain Walmart’s most profitable investments, according to Bryan Gildenberg, Chief Knowledge Officer (really) at Kantar Retail, Neighborhood Markets suit a more agile strategy in urban areas.
“I think eventually they will have 500 to 1,000 Neighborhood Markets in the U.S., which would place them — if [Walmart] was just a supermarket operator — as one of the top 10 or 15 supermarket operators in the country,” Gildenberg said.
Walmart has met with sturdy opposition in New York and L.A.—maybe that’s why, as an email from Walmart spokesman Steven Restivo points out, that the majority of new Walmarts opening this year will still be in the ‘burbs and rural areas.
But the retailer has figured out an urban modus operandi that doesn’t sound the alarm the way a big old supercenter plan would—it scouts out smaller venues in existing vacant retail space. As the Portland Oregon Business Journal describes Walmart’s move into an empty venue downtown, “By leasing space in vacant buildings, the retailer recycles old buildings and skirts the controversy that usually attends its larger construction projects, which often require public hearings because of zoning changes.”
The Neighborhood Market plans in Portland raised barely a murmur in a town famous for a super-PC posture and a population that might (or ought to) object to Walmart’s low-wage, part-timer dependent model.
Walmart in L.A. obtained permits to build a 33,000-square-foot Neighborhood Market in a retail space just inside Chinatown that has been vacant for years. But that approach failed to elude controversy as it did in Portland. Local businesses and residents have mobilized in opposition to the Chinatown Walmart and the permit process is under appeal. Plans are presently underway to survey the community about what they would rather see at that location.
Stores in Altadena, Burbank—cities in the L.A. area distinct from the City of Los Angeles–and Panorama City, a Los Angeles neighborhood in the San Fernando Valley, are moving forward. Burbank council members approved a 30,000 square foot Walmart store despite local resistance; the city now contends with a lawsuit. Altadena residents have also mobilized.
This weekend at least 10,000 are expected to gather in the heart of L.A. in opposition to the planned Chinatown store on Saturday, June 30 –the march is set for 10 a.m., with the rally to follow at noon.
Walmart has been very deliberate about its rebranding—experiments with different formats, moving away from the image of a crowded, cluttered cut-rate store.
The physical structure may have changed to be more appealing for urban dwellers (similar to Walmart’s groovy cousin Target, also turning 50 this year and with a similarly rapacious business model) but the reality of Walmart’s wage and health care model remain the same—a reliance on part-time workers who are structured out of decent wages and access to health care benefits.
Hard to re-brand that.
The Frying Pan
Posted: Friday, 29 June 2012Click here for reuse options!
Copyright 2012 LA Progressive