A new supermarket concept debuted in Buenos Aires last week. Its significance to the global community? This wasn’t just any grocery store launch but Walmart’s latest development in the world of small-box retailing, following on from similar bite-sized launches across the US, UK, China and India.
Like all of the retailer’s small formats, Walmart Supermercado follows the basic principles of:
What is interesting about this concept however is that, unlike in other markets where Walmart has recently launched mini stores, in Argentina Walmart already operates a small-box format - Changomas Express (introduced a couple of years ago). However, this is where the similarities end. Changomas Express, like many of Walmart’s bodega formats in Latin America, target lower-income consumers whereas the Supermercado format will be going after a more affluent group – the first store is located in Caballito which, according to my Argentine colleague Florencia Schiavon, is an up-and-coming middle class neighbourhood in Buenos Aires. Meanwhile, the store’s mahogany shelves and soft lighting has more than a faint whiff of Neighborhood Market about it.
It’s all about getting closer to the consumer, something Walmart has recognized is no longer always achievable with its Supercenter format. In Argentina in particular, Walmart has been late to embrace smaller formats, falling behind key rivals such as Carrefour and Cencosud with their respective Market/Express and Disco concepts. Walmart Supermercado is roughly 7,000 square feet, similar to an Asda Supermarket and about half the size of a Walmart Express. Overall, we’re optimistic about this concept here at Planet Retail. It is a great way to backfill markets with a more appropriate format for the consumer base and, if it proves a success, I could certainly see it being exported to a number of Walmart markets around the world. The key concern however is around cost, particularly if this format will be used to penetrate higher-income, urban areas where real estate costs will inevitably be greater.
For a full analysis from our Latin American analyst Carlos Hernandez, click here (client only).