Walmart completes pullout of Neighborhood Market format from Connecticut

Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. No non-grocery posts.
cathandler
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Walmart completes pullout of Neighborhood Market format from Connecticut

Post by cathandler » May 16th, 2017, 2:45 pm

The West Hartford store closed last year. WMT briefly toyed with deploying the format in the Boston area but ran into fierce opposition. Just as well, it appears.
http://www.wfsb.com/story/35431279/walm ... -its-doors

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by buckguy » May 16th, 2017, 3:56 pm

Bishops Corner was an odd choice for a first store in Hartford. They would have been better off in Bloomfield or East Hartford.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by BillyGr » May 17th, 2017, 8:53 am

They are also closing their only Neighborhood Market store in NY (Outside of the city area), in Niskayuna, on the same date as the one in CT.

That one is in a newer shopping plaza, but in close proximity to all three supermarket chains in the area and a Target across the street with the added grocery remodel, so many other options in the vicinity.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by TW-Upstate NY » May 18th, 2017, 9:08 am

Let's be honest about all this: Walmart uses grocery as a loss leader to get you in the store so you shop on the GM side of things. When they took it one step further with stand alone units, things weren't so great. The only thing they could point to to justify the entire Neighborhood Market concept was pharmacy and as we've been noting here on the board lately, that too is going sour for a lot of operators. I wouldn't be surprised if they dropped the entire concept completely one of these years and just keep grocery in the Supercenters.

cathandler
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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by cathandler » May 18th, 2017, 10:22 am

Walmart also looked into putting the Neighborhood Market format in New Jersey but abandoned the idea. I think Walmart has figured out that the grocery sector is so overstored in the Northeast that a dedicated grocery format isn't going to produce the kind of return they expect of their stores. That said, I don't think the Neighborhood Market format itself is headed for extinction.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by pseudo3d » May 18th, 2017, 11:12 am

cathandler wrote:Walmart also looked into putting the Neighborhood Market format in New Jersey but abandoned the idea. I think Walmart has figured out that the grocery sector is so overstored in the Northeast that a dedicated grocery format isn't going to produce the kind of return they expect of their stores. That said, I don't think the Neighborhood Market format itself is headed for extinction.

Neighborhood Market does well in some markets and poorly in others. In Dallas it did well, paving the way for future Supercenters and absorbing former Albertsons stores as the chain shrank, but in Houston it never gained traction (I don't think they ever had more than half a dozen) and wasn't nearly as successful. The heavily unionized area probably make it difficult to compete as well.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by wnetmacman » May 18th, 2017, 12:14 pm

TW-Upstate NY wrote:Let's be honest about all this: Walmart uses grocery as a loss leader to get you in the store so you shop on the GM side of things. When they took it one step further with stand alone units, things weren't so great. The only thing they could point to to justify the entire Neighborhood Market concept was pharmacy and as we've been noting here on the board lately, that too is going sour for a lot of operators. I wouldn't be surprised if they dropped the entire concept completely one of these years and just keep grocery in the Supercenters.


Walmart uses gas stations and pharmacy as a loss leader. Grocery is a mainline department, and while they do undercut the competition from time to time, it is NOT a loss leader like it was initially in the early 90's when there were only a handful of Supercenters.

My personal observation is that they are just simply plunking the Neighborhood Markets down wherever they can get a cheap piece of property. I know of two cases somewhat local to me that in towns of less than 20,000 with Supercenters, they put a NM on the other side of town next to a popular competitor, and to most observers, it's failing miserably with huge crowds still at the competition and bare parking lots at Walmart.

pseudo3d wrote:Neighborhood Market does well in some markets and poorly in others. In Dallas it did well, paving the way for future Supercenters and absorbing former Albertsons stores as the chain shrank, but in Houston it never gained traction (I don't think they ever had more than half a dozen) and wasn't nearly as successful. The heavily unionized area probably make it difficult to compete as well.


In Dallas and Houston, it's not Union/non-Union. They do well in Dallas because the only competition is Albertsons/Tom Thumb and Kroger. Kroger isn't as big in Dallas as they are in Houston, and Albertsons/Randalls isn't as big in Houston as Albertsons/Tom Thumb is in Dallas. In Houston, HEB has a big presence, as does Fiesta (though they have grown in Dallas in recent years) and a handful of other small players (Food Town, Sellers Bros. and Brookshire Bros., to an extent). Simply put, there is more competition there, and fewer places to go in with a smaller store. There are DOZENS of Supercenters there, however.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by klkla » May 18th, 2017, 1:20 pm

wnetmacman wrote:Walmart uses gas stations and pharmacy as a loss leader. Grocery is a mainline department, and while they do undercut the competition from time to time, it is NOT a loss leader like it was initially in the early 90's when there were only a handful of Supercenters.


I think this is where they have lost their way. They should have never strayed from using grocery as the loss leader. It gets people in the store more often and allows them sell more nigh margin non-food items. The Neighborhood Market has been a distraction for them IMO.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by pseudo3d » May 18th, 2017, 1:56 pm

wnetmacman wrote:
pseudo3d wrote:Neighborhood Market does well in some markets and poorly in others. In Dallas it did well, paving the way for future Supercenters and absorbing former Albertsons stores as the chain shrank, but in Houston it never gained traction (I don't think they ever had more than half a dozen) and wasn't nearly as successful. The heavily unionized area probably make it difficult to compete as well.


In Dallas and Houston, it's not Union/non-Union. They do well in Dallas because the only competition is Albertsons/Tom Thumb and Kroger. Kroger isn't as big in Dallas as they are in Houston, and Albertsons/Randalls isn't as big in Houston as Albertsons/Tom Thumb is in Dallas. In Houston, HEB has a big presence, as does Fiesta (though they have grown in Dallas in recent years) and a handful of other small players (Food Town, Sellers Bros. and Brookshire Bros., to an extent). Simply put, there is more competition there, and fewer places to go in with a smaller store. There are DOZENS of Supercenters there, however.


Sorry, I didn't make it clear, the union argument was for the Northeast. But you're right, the reason WNM did well in Dallas and less in Houston is because the markets are that different (see the thread where I analyzed Kroger's growth patterns in Dallas). I honestly think that the reason WNM had better performance in Dallas is because Kroger wasn't as widespread and Albertsons and Tom Thumb were more expensive, whereas in Houston H-E-B and Kroger are fairly widespread with competitive prices. Walmart has gone full in with several Supercenters in inner-city areas in the last 10 years or so though, as well as expanding the Wal-Mart stores in the suburban areas.

I honestly think that the remaining stores in Texas will probably be phased out eventually as they replace them with full-line Supercenters or close them as Aldi continues its growth in Texas.

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Re: Walmart completes pullout of Neighborhood Market format from Connecticut

Post by cathandler » May 18th, 2017, 7:20 pm

klkla wrote:I think this is where they have lost their way. They should have never strayed from using grocery as the loss leader. It gets people in the store more often and allows them sell more nigh margin non-food items. The Neighborhood Market has been a distraction for them IMO.


They're getting back to that pricing strategy, at least in markets where Aldi is a significant competitor.
http://www.cnbc.com/2017/02/27/wal-mart ... aisle.html
Here in the Northeast, WMT's price positioning is pretty much a wash vs the leading EDLP grocer (Hannaford.)

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