retail news in context, analysis with attitude

The Street.com reports that Bill Simon, president/CEO of Walmart's U.S. operations, said this week that the retailer plans to build more than 200 new Neighborhood Market stores over the next 18 months; Walmart currently has about 290 of them operating.

According to the story, "Simon said the returns from its Neighborhood Market stores are approaching Supercenter returns, however he acknowledged the company had to refine its business model for the smaller stores to create operating efficiency. That included smaller assortments, changes to delivery frequency, even changes to its point-of-sale system and adding a district supervisor specifically for the smaller stores, among other things, he noted."


Internet Retailer reports that Yihaodian, the Chinese online retailer, has expanded into fresh food - starting with fruit, available now, and soon to include fresh meat and vegetables. Making the expansion possible - Walmart, which is Yihaodian's majority shareholder.

"Wal-Mart’s assistance takes several forms," the story says. "Wal-Mart warehouses store the fresh fruit that Yihaodian sells, though Yihaodian contracts with delivery services that can handle perishable items to deliver orders to consumers. Another important aid is that Wal-Mart, which sells fresh food in its bricks-and-mortar stores in China, hold import licenses for fresh food. Many Chinese prefer imported food items as there have been many press reports about contaminated Chinese food products.

Among the other things that Yihaodian offers - six fulfillment centers, an SKU count of two million, and same-day delivery in major metropolitan areas. The company says that its traffic is up 1,000 times where it was five years ago, with 10 million visits per day.

There is, in fact, a lot of upside potential: E-grocery has a one percent market share in China right now.


Reuters reports that Walmart "is gearing up for a pricing battle" in the toy category during the upcoming end-of-year holiday shopping season. However, the company is not expecting as much discounting in the "hot electronics" segment, which includes the new XBox One by Microsoft and Sony's Playstation 4.

KC's View:
Lots of Walmart news ... let's take the stories one by one...

• Not surprised that Walmart wants to have 500 Neighborhood Markets open basically by the end of 2014. This has been coming for a long time, delayed only by the company being unable to get the ROI it wanted. But now, it is all about location and market share, and finding ways to compete with bricks-and-mortar stores on one end, and Amazon.com on the other.

• Y'think that maybe Walmart is going to take learnings from China and apply them to its US online business? They'd be foolish not to try, at least where appropriate.

• Just a hunch, but this theory about low levels of competition in hot electronics could be wishful thinking on Walmart's part.