Walmart Goes To College: Retail Giant Tests Small Store Near MU

Support manager Adam Schwindel puts the products on the shelf at the soda section. Sodas and beverages  are also sold quickly at the store.
Support manager Adam Schwindel stocks shelves in the soda section of Columbia's Walmart Express. Sodas and beverages sell quickly at the store. | Li Lin/Missouri Business Alert

“Bananas!” Adam Schwindel exclaimed when asked about his store’s best-seller. “We sell more bananas than you believe.”

Schwindel, the support manager at the new Walmart Express near the University of Missouri in Columbia, said the store had sold an average of 170 bananas per day in the past week. “Fast, grab-and-go things, that’s the big ticket items,” he said.

The 3,700-square-foot shop is the fourth of the retail giant’s experimental, small-sized stores situated on or near college campuses. It follows locations at the University of Arkansas in Fayetteville, Arizona State University in Tempe and the Georgia Institute of Technology in Atlanta.

Bananas is among the best sellers at the Walmart Express. On big days, over 200 bananas are sold.
Bananas are among the best sellers at Columbia's Walmart Express. On big days, more than 200 are sold. | Li Lin/Missouri Business Alert

There are about 20 other stores around the nation that carry the Walmart Express name, Walmart spokeswoman Erica Jones said in an email interview. “While these average about 3,000-3,500 square feet, the typical Express store averages about 15,000 square feet,” Jones said. “With this smaller footprint, you’ll see a more limited selection of items.”

Ninth Street is a main thoroughfare in Columbia, and the Walmart Express is located in an alleyway just off the street, situated between a parking garage and the southern edge of MU’s campus. It’s sandwiched between a nail salon and a Thai restaurant, on the ground floor of a new, five-story building with retail on the street level and apartments above.

The store held a ribbon-cutting ceremony on Jan. 8, and it has since initiated a slew of promotions, including radio advertisements, truck advertisements and human billboards. Word of mouth had a noticeable effect after MU’s spring semester began on Jan. 21. “We sporadically had maybe a couple of hundred customers before students got back,” Schwindel said. “Then we went to thousands of customers per day.”

A pilot miniature

Store manager Farai Madzura (left) has been a member of Walmart since 1998. He started as a hourly associate, and now manages the experimental Express store.
Store manager Farai Madzura (left) has worked for Walmart since 1998. He started as an hourly associate, and now manages the experimental Express store. | Li Lin/Missouri Business Alert

About 50 of the new Express stores could fit inside one Walmart Supercenter. Eleven full-time employees keep the new Columbia store going. Small as the store is, customers can find most of their daily necessities there, including a full pharmacy.

Customers cannot use shopping carts to navigate the aisles, which are just 38 inches wide. Refrigerators and coolers are packed with bottles and cans. Staples like bread, eggs, milk, soda and energy drinks are the hot sellers here.

The selection of items has been tailored by Walmart researchers to meet the needs of students and the workforce in downtown Columbia. Sometimes, certain items are mismatches and don’t sell. In that case, managers alert the home office to make a change in the selection.“For example, not a lot of people are buying drop cloth for painting,” Schwindel said, “but people want spackling compound to fill the holes on the wall of their rented house.”

The shelves packed with products are only about 3 feet away from each. Make the use of the limited physical room is critical to the Express store.
Shelves are packed with products, and extra inventory is stacked on top. Making use of limited space is critical to the Express store. | Li Lin/Missouri Business Alert

Like many other convenience stores, Walmart Express struggles with a lack of space for inventory, Schwindel said. Much of the excess inventory at the story is stacked on top of shelves, piled up all the way to the ceiling. Vendors don’t send merchandise to the store every day, and they don’t deliver on weekends or in severe weather. Keeping the shelves stocked with merchandise that customers want, which is critical for all retailers, can be especially difficult for stores of this size.

The downtown Columbia store has a sister store, a Walmart Supercenter about 3.5 miles away, that sends fresh fruit overnight by order. The Supercenter also helps absorb the smaller store’s extra merchandise as clearance.

The Express store honors Walmart’s “Everyday low price” policy; if a customer finds the price of a product is cheaper elsewhere, Walmart Express will match it. Currently, the Express store doesn’t sell fresh vegetables, tobacco or liquor because the extra licensing, inspection and equipment costs are too much of a burden for the small store.

Employees say they enjoy running the small store because they get to know many customers on an individual level. “I have customers who live right upstairs I see every day,” Schwindel said. “I know pretty much what they are buying, what time they are buying, and what it’s going to cost them.”

A vast potential market?

The store also sells Mizzou products.
Walmart Express sells a variety of University of Missouri gear. The school sits just across Ninth Street from the store. | Li Lin/Missouri Business Alert

The first of these miniature Walmarts opened on the campus of University of Arkansas in January 2011. About one year later, the retailer decided to bring the concept to Columbia, where Walmart co-founder Sam Walton attended high school and college and members of the Walton family still live.

“Columbia is a city with numerous Walmarts, Target, Marshalls and other discount stores in the market area. It has been a very good market for Walmart and a strong and competitive retail market,” said David Overfelt, president of Missouri Retailers Association.

In setting up its Express stores on or near major college campuses, Walmart is establishing itself as an option for thousands of young people who may be shopping for themselves for the first time. “Being on campus is tremendous good visibility and long-term branding,” Overfelt said.

Brian Yarbrough, an equity analyst at Edward Jones who covers the retail industry, said that Walmart has “been testing the smaller stores format for a while. They are planning to probably start growing that format more rapidly than they have in the past years.”

But Walmart’s Jones wouldn’t say if the company has plans to establish more stores of this kind. “These stores are still a test format,” she said, “and we have no announced plans beyond the ones currently open.”

Among the 4,807 stores Walmart operated as of the end of 2013, there were 333 Neighborhood Markets and 59 smaller formats, including Amigo, Supermercado, Super Ahorros, Walmart on Campus and Walmart Express.

During Walmart’s earnings call on Feb. 20, C. Douglas McMillon, the company’s president and CEO, said, “In the U.S., we see a great opportunity to accelerate our small format store rollout to complement Walmart’s core Supercenter fleet. Customers want this convenience.”

Many students come in-and-out quickly to get a sandwich for lunch.
The 3,700-square-foot store doesn't have carts, as its aisles are just more than three feet wide. | Li Lin/Missouri Business Alert

Yarbrough interpreted the establishment of smaller stores as Walmart’s response to the growth of dollar stores and the saturation of domestic retail markets. “It turns out that there’s nowhere else for them to grow in the United States as far as adding big box stores,” he said.

For small towns that only have a few thousand residents, there isn’t always enough demand to support a Walmart Supercenter. Currently, Family Dollar, Dollar General and Dollar Tree together operate more than 20,000 stores. Yarbrough said he can foresee that number doubling in the near future based on those chains’ growth targets.

Prices at the Express stores align with prices at Walmart Supercenters, but they still cannot compete with dollar stores. “I believe the Walmart Express will be a higher end of merchandise, probably looking at competing at the CVS and Walgreens,” Overfelt said.

Walmart is not alone among big box retailers in making the move to smaller stores. Retail giant Target has also joined the game, introducing small-format CityTarget stores in Chicago, LosAngeles, Portland, Ore., San Francisco and Seattle. And the Minneapolis-based retailer is scheduled to open its first TargetExpress, which at 20,000 square feet will be Target’s smallest format yet, this summer near the University of Minnesota.

About 93 percent of domestic consumers shop at least once a month at big box retailers, but only 12 percent of consumers identify convenience as their primary reason for going to the big box stores, according to a 2012 survey conducted by Empathica Consumer Insights Panel. Jones said the small formats aim to provide customers with a convenient shopping experience.

“The potential (of the small stores) is not only in Missouri, but nationwide,” Overfelt said. “You can see from San Francisco to New York, from the Canadian border to the Mexican border and the Gulf.”

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