In response to lower profits, flat sales and same-store sales that were down 0.4 percent, Walmart’s new CEO, Doug McMillon, promised “to accelerate openings of its better performing smaller-format stores” as a way of addressing the poor results.
Wal-Mart plans to double openings of its Neighborhood Markets and Walmart Express, to 270 to 300 in the U.S. this year. These Neighborhood Markets saw 5% growth. Despite Walmart’s poor stock performance over the last few years, Walmart has a lot of money to try new things. The decision to expand into more of a convenience format is a big one considering the challenge by dollar stores expansion plans (where valuations of recent have surpassed many analyst’s views).
Early criticisms that the Neighbourhood Markets were a much smaller store with everything squeezed into it – will be fixed over time as Walmart has all the resources to make it work (and need to make it work).