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Walmart’s Urban 90 format will have a local focus

Walmart Canada will launch a new store format “Urban 90” in east Toronto, showing its flexibility in urban areas that will focus on items specific to the community.

The announcement was made by David Cheesewright, president and CEO of Walmart Canada at the Jefferies Global Consumer Conference on Tuesday.

The 4.5-acre site was once a used car lot in east-end Scarborough on the north side of Eglinton Ave. East just west of Markham Rd. on what used to be a General Motors dealership.

Walmart typically needs eight to 10 acres for its stores.

The Urban 90 prototype store will effectively be a smaller footprint Walmart Supercentre, carrying a full assortment of fresh food and general merchandise.

“The merchandise assortment will be reflective of the local community,” said Rosalyn Harris, manager, public relations, Walmart Canada. “We’re confident it will be  store that local residents will be proud to have in their community.”

While Cheesewright said the store would be opening in about two months, Harris said the store is expected to open in January.

This follows as the retailer in the U.S. has focused on small-store formats, called Wal-Mart Express, aimed at both rural and urban areas that don’t have nearby grocery stores or where building a full-sized Supercenter is impractical.

The smaller format is about 15,000 sq. ft. and features 45 parking places, and stands 15–20 ft. tall.

The first Express store opened earlier in June in Gentry, Ark., with two more planned to open later this summer in Chicago’s urban area.

By year’s end, it’s expected there will be 15 Express stores in the U.S.

Walmart in the U.S. already operates smaller 40,000-sq.-ft. stores called Neighborhood Market.

In Canada, Cheesewright said that the retailer is in very good shape to deliver growth with great returns.

Part of Walmart Canada’s success has been the ability of regional stores to focus on what’s right for the Canadian market and customer while getting the best out of Walmart globally, said Cheesewright.

Unlike in the U.S. with its smaller Express stores, over the next four to five years, a big part of Walmart’s growth will continue to be Supercentres–opening/remodelling about 40 per year–and its bank (Canada is only one of two countries that offering banking).

And when it comes to building Supercentres, Walmart is doing it more efficiently:
They’re 40% cheaper to build  and done quicker (in 34 weeks versus 52 weeks).

Cheesewright also offered a look into the company’s customer insights, tracking at store and corporate level to get a good handle on what its customers want.

He said that during the recession, there was “less of a reduction of consumer confidence during the recession” here.

However, Cheesewright said there was a bit of disconnect in Canada because even though consumers here were more confident about the welfare of the economy, they didn’t show a quick to return to spending, especially on big-ticket items.

Despite this, statistics showed Canadians love shopping at the retailer, with a bit over 80% of Canadians shopping there, totalling a little over 8 million customers a week. “One of our big advantages to growth is that we don’t need more customers, we just need to build loyalty for those that are already there,” said Cheesewright.

And Walmart is building loyalty with its customers with its “everyday low prices” (EDLP) strategy.

Walmart measures 2,000 prices against 56 different competitors so more than 100,000 prices a week are measured in Canada. Cheesewright said they have a really focused practice on price, with 70% coverage on everything they sell.

A typical store carries 100,000 SKUS (and no less than 65,000 SKUS).

The strategy is working with the price gap edging up; on average Walmart’s prices are 12% cheaper than the market.

On the fresh food side, 135 Supercentres have a full food offer, and enhanced grocery offer, giving shopper a one-stop shop.

When it comes to Walmart’s fresh replenishment, it’s based on a U.K. model, and called “pick by line.” It’s stockless and runs out of two distribution centres that are stocked in the morning, “picked to zero,” going out to stores by afternoon to keep product fresh.

“Very few operations use this model in North America; it’s more common in Europe,” said Cheesewright.

Going forward, Cheesewright said they would be focused on driving private label as the retailer is seeing “well over double-digit growth” in that area.

When it comes to their senior team, Walmart has worked on two things: female diversity and international experience. Currently, 45% of the team has multi-country experience.

“We’re in good shape as we’re a mature Walmart business[here in Canada],” said Cheesewright. “Our job is to deliver a centre of excellence for developing talent and best practices.”

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