Wal-Mart Stores, Inc. (NYSE:WMT)’s new concept of neighborhood market stores is a big threat to profit margins of Whole Foods Market, Inc. (NASDAQ:WFM), Kroger Co (NYSE:KR), and Trader Joe. Neighborhood market stores are the small retail format grocery stores. Presently, Wal-Mart has 645 such stores but in near future, their numbers are sure to grow in thousands. Wal-Mart’s massive plan to dominate the grocery market though these stores is working out fast. Neighborhood market stores have many advantages to customers in comparison to traditional supermarkets.
1) Easily reachable location – Neighborhood market stores have the most distinct advantage of easy access. Customers can reach to these stores without any hazel as they are situated in urban centers. While the Supermarkets are situated on city outskirts, Wal-Marts tend to increase the number of Neighborhood market stores in near future to make them even more accessible.
2) Provide easy to shop experience – Neighborhood market are like compacted supercenters. These stores, designed by Wal-Mart, offer easy to shop experience to customers, they to do not have to look around, so less time is consumed in shopping. The ‘Quick in – Quick out’ concept on which these stores operate provides them an edge over Traditional Supermarket stores.
3) Follow Wal-Mart’s low pricing strategy – Neighborhood market stores works on the same competitive principle of Wal-Mart Stores, Inc. (NYSE:WMT). Since, for these stores warehouses works as supply hubs they offer fresh produce to customers with a supercenter-oriented pricing strategy. Hence, Neighborhood market stores can provide the same low prices as Wal-Mart’s giant warehouse stores.
4) The convenience of grocery, fuel and pharmacy – Customers get fresh grocery and fuel at these stores. Wal-Mart’s strong hold in the market in segments of grocery, fuel and pharmacy has provided a competitive edge to these stores.
5) Has the Wal-Mart brand name – Wal-Mart is the biggest the biggest multinational retail corporation established in 1969. It is the world’s largest company by revenue. The Neighborhood market stores have the brand name which no one can challenge.