Food and Beverage Industry Perspective
The food industry is not too surprised by the Wal-Mart Express announcement since the company has been experimenting with smaller footprint stores for several years with Neighborhood Market by Wal-Mart and Marketside by Wal-Mart.
Neighborhood Market stores are approximately 40,000 square feet and have been around for over 12 years. The stores focus on food, have a more upscale look and can be located easier due to their sub 100,000 square foot size. Notice the primary focus is on food and a more convenient size.
UPDATE – Walmart Express is the latest push by Walmart to dominate the small footprint retail segment. Read Wal Mart Express – First of Walmarts Expansion in Chicago in an attempt to compete with Trader Joes and Fresh N Easy. Again the focus is on food, meal solutions and the size allows Wal-Mart to have a laser like focus on convenience. Walmart Express was derived form their experimental Marketside concept which was more of a proof of concept, sort of a sandbox for Wal-Mart to experiment in the small footprint arena.
Walmart is shifting emphasis away from its sprawling Supercenters to smaller stores to reverse a decline in U.S. sales at stores that have been open for at least a year, a key metric of retail health.
So, if you are a food entrepreneur starting or running a food business, why should you care? You're not thinking if selling to Wal-Mart.
I am not telling you to run off to Bentonville to make a new product presentation for the new Wal-Mart Express stores. My guess is they create the new Express assortment from their current merchandising assortment.
Wal-Mart Express is an indication of a Meta Trend, trends that have far reaching affects for consumers and the market. Smaller footprint stores are easier to locate, require less investment and can target a smaller group of consumers. There is less risk. Other retailers recognize this and may follow suit, which means there will be more points of distribution available for more products.
The market is segmenting into:
Price. The consumer will forgo some convenience for great prices.
Convenience. The consumer weighs time, cost of fuel, and immediacy of their needs vs. price and decides the former have a bit more value.
Other. These are retailers that focus on Affordable Indulgence, Health and Wellness, Specialty Foods, Gourmet, etc.
On the journey from Kitchen to Shelf to Consumers plate, consider designing your products to address one of these 3 channels of distribution for great success in starting or running your food business.