Wal-Mart Opens New Neighborhood Prototype

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Wal-Mart Opens New Neighborhood Prototype

While not saying so directly, the new Wal-Mart Neighborhood Market store in Tulsa appears to take a page from the playbook of Tesco, Wal-Mart's rival in the United Kingdom, which is planning to open its first stores in the United States later this year.

The latest prototype for Wal-Mart's stand-along, small box (for Wal-Mart) grocery concept features a bigger selection of organic foods -- indicated with small flags -- more unique specialty products, a larger selection of frozen foods, European breads, a frozen cake case, the company's own brand of infant formula and easier-to-reach display fixtures for produce, according to published reports.

The sixth Neighborhood Market in Tulsa is 39,000 square feet and features the latest décor and product mix, said Pam Kohn, senior vice president of Wal-Mart's southeast division and the company's Neighborhood Markets. It also features new track lighting and a makeover in the health & beauty section. The store, which opened Wednesday, is the prototype for the additional 15 to 20 Neighborhood Markets planned to open this year.

With 112 stores already operating across the U.S., the Wal-Mart Neighborhood Market is the company's youngest store concept (introduced less than 10 years ago). While Wal-Mart's stated goal for the concept is to provide consumers "the Wal-Mart value in a smaller, convenient 'neighborhood' store format," many industry watchers see it as a supermarket-comparable format, as it combines grocery, pharmacy, and health and beauty.

"Over the last several months we have studied our customers, seeking to understand their preferences about our store's convenience and products," said Kohn in a statement. "The new design package is a great example of what we now know customers are seeking in this type of store."

The most dramatically noticeable changes, according to Wal-Mart, are within the new grocery and health and beauty areas. The product selection includes increased selections in organics and produce, while the grocery area features a new layout that highlights these changes. The bakery has a "warm" feel next to the new streamlined deli area, and fresh produce is placed along vertical fruit baskets. The redesigned deli offers rotisserie chicken and a variety of freshly prepared foods including sandwiches, salads, desserts, bottled drinks, milk, juices, waters, and energy drinks. There are also more freezer doors that hold additional frozen food items than any other Neighborhood Market store today.

The store also features 30-minute photo lab and a drive-through pharmacy with two drive-up lanes. It will be open to customers 24-hours a day, seven days a week and will include six full-service and four self check-out lanes.

The midtown store is open 24-hours, seven days a week as well. In addition to grocery and health & beauty, it also sells household cleaning and paper goods, stationary, pet products and hardware items.

Tesco, which battles Wal-Mart's ASDA chain in the United Kingdom, is investigating more than 300 sites in the western U.S. for its own 14,000-sq.-ft. grocery/convenience store format, expected to open later this year. Tesco is noted for its fresh foods and bakeries.

Many observers have noted that Wal-Mart has been conservative with the growth pace of its Neighborhood Market format. The first Neighborhood Market opened in Bentonville, Ark., in 1998, and currently there are only 112 of the units open around the country. The retailer has preferred to focus on opening its much larger supercenters which have historically generated a higher return on investment.