Will Walmart Express Be the Retail Giant's Winning Weapon Against Dollar Stores?

Wal-Mart ExpressWalmart (WMT) recently opened its first Walmart Express, a 15,000 square-foot store that's a fraction of the size of its Supercenters, which average 185,000 square feet in area. Through these Express stores, Walmart aims to compete with the dollar stores that are increasing their footprint in the United States retail market. Walmart also competes with other big-name retailers like Target (TGT), Costco (COST), Amazon (AMZN) and Best Buy (BBY).

Our price estimate for Walmart stands at $74.46, which implies just about 40% upside to the market price.

The Right Road for the No. 1 Retailer

Walmart Express stores will carry everything consumers might need at the spur of the moment, from milk and eggs to DVDs. All locations will have a pharmacy while some will also sell gasoline. All stores offer check-cashing services and accept food stamps. Walmart plans to open about 15 to 20 Walmart Express locations this year, in rural municipalities in northwest Arkansas and North Carolina and also in urban markets in Chicago.

According to a report by the Associated Press, the Walmart Express design is sized to fit into cities where space is at a premium, as well as in rural areas that can't support a superstore. The first one was opened in rural Gentry, Ark. Walmart is also experimenting with a prototype for urban markets in Chicago which is expected to open this summer.



Dollar Stores Heightening Competition


Dollar-store chains have expanded quickly in recent years and pose intense competition to Walmart. They open stores closer to customers' homes, a big advantage in times of high gas prices. According to a Credit Suisse analyst, the average round-trip to a dollar store is six miles vs. 30 miles for a typical Walmart trip. These stores have enjoyed strong revenue growth as they've lured more shoppers with bargain prices and wider selections.

We believe Walmart's focus on Walmart Express stores could provide a big boost to its top line growth. This could also help Walmart build on its already established image as the world's largest low-cost retailer and gain an edge in this market segment.

See our complete analysis for Walmart stock here

Trefis is an online investment research platform targeted towards individual and professional investors. Trefis also includes a community of users that can create and share their models and analysis on trefis.com.


Like our charts?
Embed them in your own posts using the Trefis Wordpress Plugin.



Increase your money and finance knowledge from home

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Add a Comment

*0 / 3000 Character Maximum

531 Comments

Filter by:
Holly

When Wally World (Walmart) came to town and the small family stores, which their were alot of around here, started to close. That is when I stopped going there completely! Nothing they sell is made in the USA. Those are jobs went overseas and the junk they are making is getting shipped back here for us to buy, AND WE'RE BUYING IT! Not me!

June 15 2011 at 10:19 PM Report abuse +1 rate up rate down Reply
jennd7

I never shop at WalMart anymore...and if I must, all I do is complain about the prices! It isn't any kind of bargain anymore and agree that the lines are too long. Black friday is a joke there too...you never get what you want. The registers open at 5:00a, but the store is loaded before that and everything iis taken.

June 15 2011 at 8:08 PM Report abuse +1 rate up rate down Reply
L78lancer

If nothing else, Walmart has been clever and proactive in responding to it's competition. It has essentially eliminated mom and pop stores, subdued most of the larger stores with the exception of Sam's Club...I wonder why?...and now it has turned its attention to dollar stores. By the way, while it was in pursuit of world retail domination it has also quietly made huge in-roads againts the large pharmacy chains across the nation. My guess is that they will turn next to cars, real estate or even airlines (Sam's is already involved in selling cars, auto service, travel, and dabbles in real estate). Watch out GM. I believe at one point Walmart's revenues placed it at 12th when compared to the GDPs of nations of the world. The last time a nation moved so aggresively against it's competition the Cold War Broke out and lasted 40 years.

June 15 2011 at 7:00 PM Report abuse rate up rate down Reply
dlwoolls

I stopped shopping at Walmart due to the lenghthy wait time at check out. Walmart needs to realize that our time is much more valuable than saving a few bucks. They know about consumers being frustrated with the checkout and refuse to do anything about it. I have left full carts more than once when two registers are open with lines twenty people deep. Then off to the side I see red vested employees standing around. Don't tell me they don't know how to operate a register to help clear out the consumers. I live in an area with three close Walmarts and two of these stores consistently have too few registers open.

Then there is employee treatment - A WHOLE OTHER ISSUE!

June 15 2011 at 2:48 PM Report abuse +1 rate up rate down Reply
pedro

Well all I can judge of the dollar store it sounds pretty accurate pricicing to influence to you but, thee other day I'd chose a product I wwish I can use, when I intended to ring it up distincticntive pricing until I've seen a unique and better amount amount, their was my destination Super walmart can't wait until super target approaches from wast gto west I want to see a competition war

June 15 2011 at 2:43 PM Report abuse rate up rate down Reply
JoshW

How is this different from Walmart Neighborhood Market?

June 15 2011 at 2:39 PM Report abuse rate up rate down Reply
1 reply to JoshW's comment
Dawn M.

I was asking myself the same thing. We had Walmart Neighborhood Market when I lived in Las Vegas, NV. Now that I moved to Tempe, AZ we have a Walmart Marketplace which looked like a small grocery store with nothing else in there.

June 15 2011 at 6:04 PM Report abuse rate up rate down Reply
tpsp289

I ALWAYS WONDERED WHY THEY HAVE 30 OR MORE REGISTERS AND 2 CASHIERS MAYBE.THATS WHY I WOULD DRIVE 10 MILES TO GO ELSEWHERE.WALMART DONT GET MY $.

June 15 2011 at 2:34 PM Report abuse +1 rate up rate down Reply
1 reply to tpsp289's comment
stag01987

As a former employee, I asked that same question to the customer service manager and an assistant manager. They stated that the only reason they have so many checkout lanes is for black Friday. I told the managers there is no excuse to make people wait in line. The usual response I received was a shoulder shrug and a dumb look.

June 15 2011 at 5:40 PM Report abuse rate up rate down Reply
michaelcbarefoot

I work at Walmart and I think this is a dumb idea. Ambitious and foolhardy and dumb. This is just some cheap underhanded way to get the stock moving again. Employees like me simply don't make enough to invest weekly into the new 401 k plan so a lot of us go to the local Dollar General or Family Dollar to pick up things. Maybe they got tired of hearing about us going there and watching everyone else go there to shop. I mean after all create some buzz and the investment dummies run to the well to buy all the stock and you get to try to burn a well established business to the ground like Family Dollar or Dollar General. I don't think so. These stores are thousands strong and they buy from the same place just like Wallyworld and it will only benefit the customer because the two smaller chains will simply be able to drop their prices too and hurt the supercenters even more. Walmart is going to lose this one. Hide and watch ...........what will most likely happen is it will only further hurt Walmart employees like me who have been there a long time who are now forced to invest in bogus 401 k plans instead of them giving us profit sharing. Walmart is way out of touch and needs to get back to Sams way of getting it done.

June 15 2011 at 2:31 PM Report abuse +2 rate up rate down Reply
Jim

They both sell nothing but items made in china!

June 15 2011 at 2:19 PM Report abuse +1 rate up rate down Reply
incompletetouch

Dollar store sells $1 box or bag cat food, And other items because it's convenient with out a crowd. At WalMart and paying almost 4 dollars for cat food when it's easire at a dollar store with out fighting a herd of people. WalMart should do the same sell Items as Family Dollar, and Dollar stores, then it might get me in WalMart more often.

June 15 2011 at 2:11 PM Report abuse rate up rate down Reply