Wal-Mart’s new grocery business strategy

Wal-Mart is the nation’s largest retailor as well as the largest grocer. Its stock price increased more than 43 percent during the last year and fetches 14 times the next year’s earnings estimate of $5.36.

Now it wants to enhance its grocery strategy. Already the nation’s largest grocer wants to accelerate its expansion by establishing smaller “Neighborhood Market” and “Market Express” stores nationwide. This will put them in direct competition with other grocery stores, pharmacies, and even discount dollar stores. In the grocery market, Wal-Mart’s competitors include Kroger, Safeway and many others. In more than 30 major markets it is running an advertising campaign comparing its prices against its competitors. In Chicago it compares its prices to Safeway’s Dominick’s. In Portland, Oregon it opened its third grocery only store which is only one-fifth of the size of its typical superstore. More than half the yearly revenue of Wal-Mart comes from grocery sales.

The Neighborhood Market stores debuted in 1998 and now account for 184 stores in its arsenal of 4,400 Wal-Mart stores nationwide. They are yet to open a new Market Express store. However, they operate several “Small Marts” stores in Arkansas, Texas, Oklahoma and Florida. The new format allows it to establish stores in densely populated big cities.