Wal-Mart To Test
New Latino Store Concept
Jim Prevor’s Perishable Pundit, December 18, 2008
For several years now, the success of Wal-Mart in Mexico has been so substantial that Wal-Mart has been the largest private employer in the country, and the papers have been filled with articles exclaiming its achievements, such as Wal-Mexico: Wal-Mart’s Biggest Success.
More recently the company announced it was going to offer a separate membership Warehouse Club focused on serving Hispanics: Sam’s Club offering Màs in Houston
Also the original joint venture Hypermarket between Wal-Mart and the Cullum Cos. that ultimately generated into the Wal-Mart Supercenter was closed, and in the same community it was announced that Wal-Mart Replaces Garland Hypermart with first ‘Hispanic Community’ Store. This is a supercenter focused on the Hispanic clientele.
While the tiny little Marketside division has been getting all the press, as with our pieces here, here and here, and the media is playing up Wal-Mart’s Marketside vs. Tesco’s Fresh & Easy as some kind of “battle of the titans,” it appears that Wal-Mart has been working diligently on still another new concept store, one that has “Success” written all over it.
It is all very cloak-and-dagger with the whole enterprise being referred to by James Bond-like code names. The overall project is code-named — we kid you not — Project Sombrero.
It is hardly a secret though… more like the talk of the whole industry.
The concept is still evolving. Initially the first stores were to open in March of 2009 but that schedule seems to have slipped. Here are the basics:
- The stores will be significantly smaller than a new suburban supermarket today but quite a bit larger than a Fresh & Easy. Most around 25,000 to 30,000 square feet.
- The concept will launch in Houston, Phoenix and Los Angeles
- The concept is designed to compete effectively with Ranch Markets in Arizona, Fiesta in and HEB’s Mi Tienda in Texas.
- One can think of the concept as a cross between the atmosphere of a Mi Tienda and the price-orientation of Kroger’s Food4Less concept. Very value-oriented.
- Focus is on unacculturated and partially acculturated Hispanics, especially from Mexico.
- Limited rollout potential — If Marketside succeeds, Wal-Mart could roll out 10,000 of them. Project Sombrero probably can hit 500 stores max.
- Produce is a disproportionately large component of the store, and it leads with tropicals.
Wal-Mart knows this customer with its large Mexican operation. It already procures all the brands and has all the sales data. Capturing this consumer is a big win for Wal–Mart as it positions the company to transition these customers into Supercenter and Neighborhood Market customers as they become more acculturated.
In addition, this is one of the fastest growing demographic segments, so it is a place where Wal-Mart would want to be.
And unlike Tesco’s efforts with Fresh & Easy, the concept is highly targeted, not an attempt to be all things to all people.
Retail always requires the real operational test of letting consumers walk in the door — no amount of survey or focus group research can substitute for that. Also Wal-Mart has had problems with store level execution. Still this seems like an odds-on favorite to be the food retailing concept of 2009.