Miles of Aisles for Milk? Not Here

HARMAR TOWNSHIP, Pa. — Like cars and homes, grocery stores are beginning to shrink.

After years of building bigger stores — many larger than a football field and carrying 60,000 items — retailers are experimenting with radically smaller grocery stores that emphasize prepared meals, fresh produce and grab-and-go drinks.

The idea is to lure time-starved shoppers who want to pick up a few items or a fast meal without wandering long grocery aisles or paying restaurant prices.

Safeway has opened a smaller-format store in Southern California, and Jewel-Osco is building one in Chicago. Wal-Mart plans to open four “Marketside” stores in the Phoenix area this fall, and Whole Foods Market is considering opening smaller stores.

And here in the northern suburbs of Pittsburgh, the grocery chain Giant Eagle opened a Giant Eagle Express last year that is about one-sixth the size of its regular stores. It has gas pumps, wireless Internet and flat-screen televisions in a small cafe, a drive-through pharmacy and an expansive delicatessen that offers sushi, rotisserie chickens and ready-to-heat dinners. . . . more

Mom-and-pop stores buried?: WVU study finds Wal-Mart hasn't changed size of small-business sector

Sep. 7--FAIRMONT -- In a recent study, Dr. Russell Sobel found that Wal-Mart hasn't changed the overall size of the U.S. small-business sector.

Sobel is a professor of economics at the West Virginia University College of Business and Economics and holder of the James Clark Coffman Distinguished Chair in Entrepreneurial Studies. He has been teaching at WVU for 14 years.

Sobel and Andrea Dean, who is working on her Ph.D. in the WVU Department of Economics, cowrote a study titled "Has Wal-Mart Buried Mom and Pop?: The Impact of Wal-Mart on Self Employment and Small Establishments in the United States."

Their research will appear in an upcoming issue of the journal Economic Inquiry. The team was also asked to write a version of the article for the general public, which was published in Regulation magazine.

Once that magazine was released, WVU started getting a lot of positive publicity from national media, Sobel said.

He said the idea for the research came about five years ago. During his four years as director of the WVU Entrepreneurship Center, Sobel worked to help entrepreneurs start their own businesses every day. A common topic of discussion was how big-box stores like Wal-Mart impact the business climate.

"I thought it'd be great to get the data and actually answer that question," he said. "Does (Wal-Mart) affect the overall size of the business sector?"

Sobel was interested in trying to collect and apply real statistical research to determine the effect.

Sobel and Dean gathered data on the number of businesses across the states and through time, broken up by the amount of employees. They found statistics for establishments with one to four employees, businesses with five to nine workers, and sole proprietorships.

In addition, Sobel and Dean collected information on the average revenue for these small mom-and-pop retailers, profitability per establishment, and bankruptcy. They completed the study in about two years.

The study isn't trying to look at all the issues related to Wal-Mart, but focuses solely on the impact of Wal-Mart on the small-business sector, Sobel said.

"The perception is that when Wal-Mart comes into town it drives out these small mom-and-pop businesses," he said. "Everybody sees that happen."

It's easy to talk about businesses that fail when a Wal-Mart store opens, but Sobel was also interested in examining the new ones that start up in their place. He wanted to look at the aggregate measures of the whole small business sector and include all the possible effects.

Sobel said the data is clear, and no matter how it's measured, the net effect of Wal-Mart's presence is zero. The study found that Wal-Mart had no impact on the overall size of the small-business sector, which is just as big and vibrant as it was 30 years ago without Wal-Mart.

High Street in downtown Morgantown, for example, saw the closing of a lot of stores, but now this street is filled with new small businesses. Of course, some businesses that compete with Wal-Mart are not going to survive. But as some stores fail, others replace them and offer new things -- which is a process called creative destruction, Sobel said.

"Wal-Mart doesn't run anybody out of business," he said. "It's consumers who when Wal-Mart comes into town choose to shop there. It's really consumers who run those out of business."

The big-box stores carry brand-name products and are all about cost, hours and convenience. According to purchasing habits, consumers know exactly what they want for some items. A shopper just wants to get those particular products at the least possible cost, Sobel said.

He said people shop at Wal-Mart to save money, and families can in turn take the extra dollars they save and spend them at other businesses.

Wal-Mart has created new opportunities for people who may have never been able to open a new business downtown, Sobel said. Maybe these small businesses couldn't compete in downtown years ago, but they have better chances today.

He said mom-and-pop stores that close around 5 p.m. may find it difficult to compete with Wal-Mart's long hours. But in the face of big box stores, small businesses thrive when it comes to personal attention and advice. Consumers want a store that they can call on the telephone and that knows about the products.

Entrepreneurs have the same number of opportunities in starting small businesses and are just as plentiful now as in the past, Sobel said.

"Small businesses around today are just as profitable as the ones before," he said.

Source: Plain Vanilla Shell

Discount stores score big in August

Consumers flock to low-cost stores such as Wal-Mart, Costco and BJ's in back-to-school season, abandoning higher-end retailers such as Abercrombie, The Gap, Limited.

NEW YORK (CNNMoney.com) -- Consumers nervous about the weak economy abandoned higher-end clothing store chains for discount retail giants such as Wal-Mart, Costco and BJ's, which reaped back-to-school sales in August.

"Americans haven't slowed their spending," said Ken Brown, president and retail analyst with ResearchConnect.com. "They just moved their spending, from some of the retailers with bigger-ticket items to the discounters."

That was why the August same-store sales for Wal-Mart, BJ's and Costco increased and trounced analysts expectations, while sales plunged for Abercrombie & Fitch and The Gap, experts said.

"This is Wal-Mart's year to eat share," said Dean Hillier, retail expert with management consultant firm A.T. Kearney.

The discount stores
Discount stores tend to thrive in a weak economy, because many consumers perceive low-cost retailers as the best places to stretch their dollars in purchasing necessities. Some analysts had expected - incorrectly, it turned out - that discount retailers would experience a softening in sales as the government-issued stimulus payments that came out in the spring and summer dried up.

Wal-Mart (WMT, Fortune 500), the leading retailer in the world in terms of annual sales, said Thursday that sales at stores open at least one year increased 3% during the four weeks ended Aug. 29, compared to the same period last year. The figure didnot include fuel sales.

A consensus of analysts interviewed by Thomson Reuters had expected a gain of 1.6%.

"Quite honestly, I think their brand is a comfort zone for consumers during bad economic times," said Hillier. "They're the trusted brand in uncertain times."

Wal-Mart, the biggest food retailer in the world, attributed the gain to strong sales in groceries and "health and wellness" products. The company also was lifted by back-to-school sales, and said that sales in certain electronics - such as flatscreen TVs, cell phones and GPS units - continued to do well.

Wal-Mart's U.S. sales, not counting its Sam's Club division and fuel sales, rose 2.8% in August, compared to the same period last year. Analyst consensus from Thomson Reuters had expected a gain of 1.4%.

BJ's Wholesale Club (BJ, Fortune 500) said Thursday that same-store sales jumped 15.4% in August, lifted largely by rising gas sales from inflation. BJ's beat analyst expectations of a 14.1% gain, according to a consensus of projections compiled by Thomson Reuters.

But even without gas, BJ's outperformed higher-end retailers with a same-store sales gain of 8%, matching the consensus projection from analysts. The company said that food was among its biggest sellers, with an 11% gain in sales of perishable foods.

Costco Wholesale (COST, Fortune 500), another top low-income merchant, reported Wednesday that same-store sales jumped 9% in August, compared to the same period last year. But the company still fell short of a consensus of analysts pooled by Thomson Reuters, who had expected a gain of 9.9%.

Costco said that its sales gain was bolstered by the 40% surge in the price of gasoline. Without gas, Costco said same-store sales rose 6%.

Higher-end retailers
August is generally a good month for retail sales, as parents and college students stock up on clothing and supplies before the start of the school year. But these shoppers stayed away from retailers of higher-end clothes, according to analysts, who noted that many consumers are simply continuing to wear the clothes that they own.

The Gap (GPS, Fortune 500), which owns Old Navy and Banana Republic, said that same-store sales fell 8% in August. This was much worse than the 1% decline experienced in August 2007, but it wasn't quite as bad as the 9.7% decline expected by a consensus of analysts surveyed by Thomson Reuters.

The worst-performing part of its business with Banana Republic North America, with a 14% plunge.

"I don't see those guys coming back any time soon," said Brown of ResearchConnect.com, referring to The Gap and other clothing retailers.

Abercrombie & Fitch (ANF) said same-store sales fell 11% in August, which wasn't as bad as the 7.9% projected by analyst consensus from Thomson Reuters. Limited Brands (LTD, Fortune 500), owner of Victoria's Secret and Bath & Body Works, reported that same-store sales fell 7% in August, slightly worse than the 6.9% decline projected by analysts.

Walmart Converts More Than 1,700 Garden Centers Into Game Time(SM) Headquarters

Retailer Huddles to Provide Savings on Local Team and Tailgating Necessities

BENTONVILLE, Ark., Aug. 28 /PRNewswire-FirstCall/ -- Walmart today announced its game plan to completely transform more than 1,700 of its Garden Centers into "Game Time(SM) Headquarters," customized for supporters of local college or professional football teams. Beginning this week and running through September 30, Walmart will feature everything from team merchandise and decor to favorite game-time snacks and beverages at unbeatable prices. According to tailgating.com, 42 percent of tailgaters spend more than $500 each season on food and supplies. Walmart can help tailgate enthusiasts prepare for six home games this season with enough food and gear for a "special team" of four for about $66 per game -- savings of more than $100 for the season. Suggested items* for the tailgate set-up include:

* 4 NFL® or NCAA® Hats (prices start at $5.00)
* 4 NFL® or NCAA® T-shirts (prices start at $6.00)
* 4 NFL® or NCAA® Armchairs ($19.88 each)
* 1 Uniflame® 18.5" Charcoal Grill ($17.00 each)
* 6 bags of Kingsford® Charcoal ($6.97 each)
* 1 NFL® or NCAA® 24-Can Softside Cooler ($13.88 each)
* 6 packs of Ball Park® Beef Franks (2 for $5.00)
* 6 packs of Tyson® Boneless, Skinless Chicken Breast ($6.00 each)
* 6 packs of Sara Lee® Hot Dog Buns ($1.97 each)
* 3 bottles of Hunt's Ketchup ($1.50 each)
* 6 Lay's® or Doritos® XXL Chips (2 for $5.00)
* 6 T.G.I. Friday's® Cheddar & Bacon Loaded Potato Skins ($4.88 each)
* 6 fresh Vegetable Trays ($9.88 each)
* 15 2-Liter Bottles of Pepsi® Drinks (5 for $5.00)

"With 36 million tailgaters in the U.S., the kick-off to football season is now one of our favorite all-American pastimes," said Janet Bareis, vice president of Walmart Corporate Marketing. "But we know our job on the team is to make sure tailgaters don't spend a dime more than they need to -- that's why we've put together some winning prices all in one place in the store."

For fans who want to watch the big game at home or celebrate while the team's away, on August 29, Walmart will launch the Game Time(SM) tailgate planner. This widget, created just for football enthusiasts, allows fans to download their favorite team's schedule, and create and send e-mail invitations to friends for game day events and tailgating parties. And for fans looking to coordinate a backyard gathering for a small group or for the entire neighborhood, http://www.walmart.com/gametime is a great place to access free tools to help them manage their guest list, plan their menu, download a shopping checklist, and calculate costs for everything the perfect tailgate requires. The site also offers several recipes and tips for better organization.

Source: Yahoo.com

My Healthy Access Announces Grand Opening of Wal-Mart Based Telemedicine Clinic

Telemedicine Clinic Jointly Operated by My Healthy Access and NuPhysicia LLC

HOUSTON--(BUSINESS WIRE)--My Healthy Access, Inc. (OTC:MYHA - News) and NuPhysicia, LLC are pleased to announce the grand opening of their jointly operated “Walk-In Telemedicine Health Care” clinic located within the Wal-Mart (NYSE:WMT - News) Supercenter located at 10500 Broadway, Pearland, Texas 77584. A grand opening celebration has been scheduled for today, August 20, 2008, at 10 am. Among those expected to attend the grand opening are Tom Reid, Mayor of Pearland, Texas and Alicia Ledlie, an executive with Wal-Mart Stores, Inc.

Pearland location of “Walk-In Telemedicine Health Care” is the first retail health clinic to utilize a Telemedicine based healthcare delivery system. Under the Telemedicine model, physicians serve patients using proven remote Telemedicine systems and protocols through paramedics who welcome and examine patients under direct supervision of a physician.

Source: Yahoo Finance

“Changing to a Telemedicine based health care delivery system allows us to substantially decrease out per patient overhead, while simultaneously increasing the level of care each patient receives,” said Kathleen Delaney, President of My Healthy Access, Inc. “We are thrilled at the positive response that we have received from our physician directed Telemedicine services, and I have no doubt that this delivery system is the future of retail health care.”

As Supercenters Gain, Wal-Mart Still Attracts The Affluent

While the limping economy has hurt most retailers, Wal-Mart continues to be a big beneficiary. A new report from Information Resources Inc. finds that the Bentonville, Ark.-based company is posting market-share gains in an impressive 84% of the top 100 consumer-product goods categories.

While lower- and middle-income shoppers increased their spending at Wal-Mart when the economy started to soften, the report finds that the bigger change has been upper-income consumers who have flocked to Wal-Mart in the last six months, as gas prices soared.

Source: ConsumerLab.com

As Supercenters Gain, Wal-Mart Still Attracts The Affluent

While the limping economy has hurt most retailers, Wal-Mart continues to be a big beneficiary. A new report from Information Resources Inc. finds that the Bentonville, Ark.-based company is posting market-share gains in an impressive 84% of the top 100 consumer-product goods categories.

While lower- and middle-income shoppers increased their spending at Wal-Mart when the economy started to soften, the report finds that the bigger change has been upper-income consumers who have flocked to Wal-Mart in the last six months, as gas prices soared. The report says that the combination of $4 prescriptions, competitive prices in key food categories, and wider product assortments are responsible for the shift.

"Low prices and one-stop shopping have proven to be an incredibly powerful combination at a time when consumers are forced to strategize to maximize gas usage and stretch budgets as far as they will go," the company says in its release. "Wal-Mart is exceptionally well positioned for growth."

Of course, Wal-Mart isn't the only store benefiting from this shift in shopping patterns, as consumers balance the need to save money on groceries with the pressure to use less gas. The result is fewer, larger trips, and all supercenters have been capturing share in all income and lifestage segments, as well as attracting those who shop heavily in competing channels.

In the 12 months ended in June, IRI says three-quarters of all shoppers typically visit five or more channels for consumer products. But while 50% say they are often shopping around for better deals, only 10% are now willing to drive further to get them. While grocery stores still lead the way with a 55.2% share of shoppers, that represents a decline of 0.2%. Supercenters are next, with a 15.1% share--a gain of 1.4%.

The report finds that grocery stores have lost ground in the fresh/perishable, frozen and center store categories, including high-demand meal ingredient and meal component foods. And Wal-Mart--despite a decline in share its private-label goods--has made considerable gains in meal ingredients, meal components and convenience meals.

Source: MediaPost

Retailers' 2Q results may not be as bad as thought

Amid the pile of downbeat sales reports for July from retailers, there was a sliver of hope: Second-quarter profits may not be as bad as expected when merchants such as Wal-Mart Stores Inc., Macy's Inc. and J.C. Penney Co. post their results starting this week.

Several companies, from Gap Inc. and Penney to teen retailer Hot Topic Inc., raised their outlooks last week — with help from strict inventory controls and slashing expenses — even as they reported sales declines in July at established stores.

Still, retailers overall are expected to report a fifth consecutive drop in quarterly earnings, according to Ken Perkins, president of research company RetailMetrics LLC. Worries abound about how merchants will stem the erosion of their profits as they confront what could be a deeper spending funk in the critical months ahead.

Among the hardest hit have been clothing stores, which have seen a sales slump worsen in recent months as shoppers buy only what they need. Analysts will be looking for any clues from the earnings reports on when the apparel sector will see a recovery.

The challenge becomes, "how do we drive traffic in a really slow environment?" says Perkins. He expects that his estimate for a 5.7 percent decline in second-quarter profits from a year ago may now be a bit too harsh amid the better outlook many merchants have given. Still, with the economic uncertainty and the cost pressures retailers are facing, he said it's hard to "nail down" a figure.

Nevertheless, the back-to-school season "doesn't look promising," said Michael Appel, a managing director of Quest Turnaround Advisors.

With the benefits of the federal stimulus checks dried up, retailers face even bigger challenges as they try to get shoppers to splurge on skinny jeans and fancy backpacks for their children. Consumers already struggling with high food and gas bills and increasing layoffs are less confident in the economy. And while oil prices have receded a bit, paychecks are not keeping up with overall inflationary pressures on basics.

The reports for July on same-store sales, or those at stores open a least a year, underscored Americans' growing financial strain as shoppers focused even more on buying necessities like detergent and avoided mall-based clothing stores.

Such frugality is creating a wider disparity between low-price operators like Wal-Mart and mall-based chains and department stores. Disappointments in the apparel sector cut across all types of chains from teen retailer Abercrombie & Fitch Co. to department stores such as Penney and Kohl's Corp.

Merchants can't even depend as much on international sales to offset weaker U.S. business as markets in Spain and other European countries are softening as they get dragged down by the slowing U.S. economy.

Analysts will be closely watching Wal-Mart, which has been a beneficiary of the slowing economy but did feel some pain in July. It announced that same-store sales for the month were below analysts' consensus estimates and also predicted slower growth in August. The discounter, considered a barometer of consumers' financial well-being, said that its customers are increasingly unable to stretch their paychecks to the next payday.

That cautious tone caused Mark Miller, an analyst at William Blair & Co., to downgrade shares of Wal-Mart to "market perform" from "outperform" based on expectations for slower sales and profit growth in the second half. In a note to investors, he said that Wal-Mart's July sales performance was a "material deceleration" from the previous two months. Still, he believes the company is on track to meet or exceed Wall Street's current expectations for second-quarter earnings of 84 cents per share when it reports results on Thursday.

Macy's, which no longer reports monthly same-store sales, is expected to post earnings of 19 cents per share when it reports second-quarter results Wednesday, according to Wall Street consensus estimates. Appel said he will be looking for updates on how the company's new efforts to better tailor its merchandise to local areas are faring and whether business has improved at the May Co. stores now converted to Macy's.

Meanwhile, TJX Cos., which sells name-brand labels at a discount, has benefited from shoppers looking for cheaper alternatives than the mall. The company, which is set to report results Tuesday, raised its earnings outlook last Thursday even after reporting that same-store sales fell a bit short of Wall Street estimates.

Source: International Herald Tribune

Wal-Mart eyes $10 billion sales per year for Marketside

NEW YORK (Reuters) - Wal-Mart Stores Inc says its new Marketside stores could expand to a chain of more than 1,000 stores with more than $10 billion in annual sales, the Financial Times reported, citing a job posting for the retailer, which the FT said was subsequently removed.

A Wal-Mart spokesman, when contacted for comment, said that Marketside is a very small-scale pilot project, and that the world's largest retailer has no firm plans for it beyond that.

Wal-Mart will open four Marketside stores in the fall in the Phoenix, Arizona, area, according to the community grocery store concept's website.

The FT online report said the retailer plans to open 10 of the 15,000-square-foot (6,000-square-meter) Marketside stores initially, including the four in the Phoenix area.

A job advertisement for the retailer said the Marketside format "is expected to start with 10 stores and evolve to between 1,000 - 1,500 stores with over $10 (billion) annual sales," the FT reported.

Wal-Mart has said earlier it is developing the Marketside stores to attract shoppers looking for a quick option to purchase fresh groceries.

The new store concept comes after British supermarket rival Tesco Plc entered the U.S. marketplace last year with its Fresh & Easy Neighborhood Markets in California, Arizona and Nevada.

Source: Reuters

Stimulus checks, back to school to aid retailers' July

NEW YORK (MarketWatch) -- Retailers' sales are expected to continue to get some lift in July from the last batch of the U.S. government's stimulus checks was mailed and back-to-school purchases increased by aggressive promotions.

U.S. retailers' sales at stores open at least a year in July are expected to rise 2.2%, its fourth straight monthly gain when companies report Thursday, according to a survey of analysts by Thomson Reuters. The gain, pales against a 2.9% growth rate a year earlier as the U.S. economy softened the past year.

Same-store sales are a key retail performance benchmark, because they exclude sales from new and recently closed locations.

The U.S. government's $100 billion-plus in stimulus checks have helped sales in the past three months. Demand also was lifted by clearance sales and other promotions; tax-free holidays in states such as Virginia; and by warmer weather that lifted demand for such items as T-shirts and shorts.

Still, while sales are expected to see a lift, analysts said concerns linger regarding the outlook for the rest of the year, especially after back-to-school shopping is completed in September. Gasoline prices have pulled back, but still are near a record high level that's changed U.S. consumers' shopping patterns and led them to reduce trips to malls and consolidate purchases in one-stop trips.

"Back-to-school happens every year and parents are budgeted for it," said Jharonne Martis, an analyst at Thomson Reuters. "After August there is no back-to-school or rebate checks to boost consumer spending. We will see then how robust the U.S. consumer can be."

Value-oriented retailers in their respective segments, from discounter Wal-Mart Stores Inc. and wholesale club Costco Wholesale Corp. to off-price retailer Ross Stores Inc. and teen retailer Aeropostale Inc. are expected to outperform in their respective segments, analysts said.

Department stores and specialty apparel retailers that sell more discretionary merchandise will continue to be laggards as penny-pinched consumers cut back on clothing and accessories purchases in the face of rising food costs and other economic malaise, analysts said.

While retailers market graphic prints and skinny jeans to excite shoppers, the apparel retailers in general have suffered from lack of a major must-have fashion item, analysts said. To spur shoppers, retailers such as J.C. Penney Co. launched exclusives with designer tie-ups such as Kimora Lee Simmons' Fabulosity. They also have touted value, started their back-to-school season earlier or signed special partnerships on a nationwide scale to draw demand.

"It's a tale of two retail worlds, Wal-Mart and everyone else," said Michael Niemira, chief economist of International Council of Shopping Centers. "Everyone else' is still struggling with the economic environment." Wal-Mart, with its "Save Money. Live Better" tagline, has outperformed its chief discount rival Target Corp. It in July raised its profit forecast after reporting better than June sales at both its namesake and Sam's Club chains. While Wal-Mart expects July sales to rise between 2% and 4%, Target sees its July sales in the range of minus 1% to plus 1%.

While discounters and wholesale clubs are expected to fare better, they also are not excluded from the dilemma retailers face of whether to raise prices to offset rising costs or risk losing market share. Costco, which has been a beneficiary of shoppers making one-stop trips to purchase bulk items at lower prices, in late July warned that its fourth-quarter profit would miss analysts' estimates, hurt by its strategy to hold prices in check to lure shoppers in the face of rising energy and other commodity costs.

Source: MarketWatch.com

Discounters, Specialty Stores Boost Jobs in July

WASHINGTON — Discounters and specialty stores added jobs in July in contrast with overall retail trends as the U.S. unemployment rate reached a four-year high, the Labor Department said.

The stores apparently benefited from the residual effects of government tax rebate checks, analysts said. However, textile and apparel manufacturers cut payrolls.

General merchandise stores, which include discounters like Wal-Mart Stores Inc., added 3,900 jobs last month to employ 2.9 million people. Department stores, which are also included among general merchandise merchants, trimmed 2,200 positions to 1.5 million. Clothing and accessories stores added 700 jobs, bringing the number of employees for the sector to 1.5 million.

The total retail sector trimmed 16,500 jobs to employ 15.3 million people, with the job losses propelled by auto and home improvement sectors.

The manufacturing sector continued its decades-long contraction. Domestic apparel manufacturers trimmed 1,100 jobs. Textile manufacturers shed 3,800 jobs to employ 149,400 people, including a loss of 2,600 positions at textile mills that produce apparel fabric. Textile product mills, which manufacture mostly home furnishing fabrics, cut 1,200 jobs to employ 148,000 people.

In the overall economy, the downward trend continued, as employers cut 51,000 jobs, the seventh consecutive month of national employment declines. The jobless rate rose to 5.7 percent from 5.5 percent in June. The Labor Department said Friday that it adjusted June job losses to 51,000 from 62,000.

“Retail stands out as one of the sectors being hit hardest by this latest contraction of payrolls,” said John Lonski, chief economist, Moody’s Investor Services, adding that overall retail employment was down for the eighth consecutive month.

“Consumers have diminished job prospects, dwindling paychecks and higher travel costs to shopping centers, which doesn’t bode well for the retail sector,” said Richard Yamarone, director of economic research, Argus Research Corp.Stores are paring inventory and offering steep discounts to try to counteract the slowing economy, and at the same time trying to trim their employment costs, he said.

“This has resulted in notable declines in service, particularly in department stores,” Yamarone said. “Long lines, unkempt displays and essentially no help on the sales floors are commonplace at many large department stores. Now that there aren’t too many tax rebate checks left, we suspect that retail-related layoffs will trend higher in coming months.”




Source: WWD

BIGresearch: Walgreens Losing Ground Among Prescription Drug Shoppers?

Wal-Mart Filling More Prescriptions Among Lower Income Shoppers

Walgreens remains the retailer of choice in the Prescription Drugs category among all adults (14.4% say they shop there most often), according to the July Retail Ratings Report from BIGresearch ( http://www.bigresearch.com). However, it appears that Wal-Mart is closing the gap and increasing share of preference in this category.

Walgreens' share decreased almost a point from July 07 (15.2%), resulting in a negative Consumer Equity Index(TM) (CEI)* of 94.35. #2 CVS saw a marginal decrease in consumer share year over year (13.2% in Jul 08 v. 13.6% in July 07), giving them a negative Consumer Equity Index(TM) (CEI)* of 97.68. Conversely, #3 Wal-Mart is growing in popularity with a two point increase in share to 10.4% (v. 8.4% in Jul 07) and a CEI of 123.71, indicating almost a 24% growth in share. *CEI measures growth in share year over year. An index of 100 is flat, while an index of 105 indicates 5% growth.

Wal-Mart is also improved among consumers with household incomes greater than $50,000. 8.2% say they shop there most often for prescriptions (v. 6.3% in July 07), giving third place Wal-Mart a CEI of 131.73. This is a significantly higher rating than the leaders in the category: Walgreens (94.53) and CVS (100.31).

Over the past year, CVS and Wal-Mart have been battling it out for the number 2 position among consumers with household incomes less than $50,000. However, Wal-Mart surpassed CVS in July. This coupled with Walgreen's two-point nose dive in consumer preference share, gives Wal-Mart a piece of the lead among this consumer group.

Prescription Drugs (Shop at Most Often) - HH Income Less Than $50K
           Share           Share          Share
Store        Jul 2007        Jul 2008       +/-       CEI
Wal-Mart     12.0%           13.8%           1.8      115.43
CVS          13.9%           12.2%          -1.8      87.36
Walgreens    15.8%           13.8%          -2.0      87.37
Source: BIGresearch, Retail Ratings Report, Jul 08

"The current economic environment appears to be helping Wal-Mart increase their share among lower income shoppers," said Pam Goodfellow, Senior Analyst at BIGresearch. "Wal-Mart's growth seems to be at the expense of Walgreens and CVS."

Source: MarketWatch

Retailers already have back-to-school sales on their minds

Summer has barely begun, but retailers are already focusing on back-to-school sales, which are expected to be especially critical this year as consumers rein in spending.

The back-to-school season is the industry's second-biggest selling period after Christmas. And as new fall merchandise starts to arrive in stores this week, competition is expected to be fiercest in the middle market, among chains such as Kohl's Corp., J.C. Penney Co. and Macy's Inc.

Many of their clients, squeezed by high gasoline prices and the weak economy, are turning to discounters like Wal-Mart Stores Inc., with whom the chains can't compete on price. Instead, they rely heavily on unique merchandise and attention-grabbing marketing to attract consumers.

They could face an uphill battle. Sales of back-to-school and college merchandise between July 4 and Labor Day are expected to be flat to slightly lower this year, following a year-earlier increase of 21 percent to $65.7 billion. Some industry research suggests consumers may minimize apparel purchases this year in favor of necessities like textbooks and computers.

Nor is there a clear must-have electronic gadget likely to nudge parents or teens to splurge, says Kathy Grannis, a spokeswoman for the National Retail Federation. That's a switch from the past two years, when gear like cellphones and MP3 players gave back-to-school sales a major boost.

Kohl's hopes to drum up interest by kicking off what it calls its biggest back-to-school campaign ever next week, a week earlier than usual. This month, it will launch an exclusive line of girls' apparel and accessories by singer Avril Lavigne.

The chain's ads will feature celebrities ranging from Lenny Kravitz to teen actress Hayden Panettiere, who recall favorite fashion moments. Kohl's is soliciting similar videos from young shoppers through a contest on social-networking site Facebook.

J.C. Penney is launching five exclusive or private-label brands for back-to-school this month, the largest number it has ever launched simultaneously. "It's a huge time of the year for us, and we're spending against it," says Mike Boylson, Penney's chief marketing officer.

The new lines include Fabulosity apparel and accessories, designed by former model Kimora Lee Simmons, and Dorm Life, a line of home furnishings aimed at college students. To promote the lines, Penney created an online game called "DorkDodge," in which a girl has to navigate a thicket of undesirable boys to get her dream guy. It also plans to air a 60-second spot in theaters recreating scenes from the 1985 teen film "The Breakfast Club," which is having a resurgence.

Macy's is also targeting young shoppers. Next month, it begins filming a documentary that follows five young adults as they roadtrip across the U.S., visiting 12 cities and meeting musicians and music producers -- all while wearing clothing by Macy's American Rag label. The 10-episode show, titled "Ragged Road," will begin airing on YouTube.com in September. It will feature live video blogs.

Source: Daily Herald

When the going gets tough, shoppers turn to the giant discounter

There was a time when Betsy Baker would have been embarrassed to be seen shopping at Wal-Mart.

But that was a few years ago, before the price of gold shot up and the economy slowed, all but ruining her family jewelry business. And it was before her monthly house payments skyrocketed to $3,800 a month from $1,800, and she found herself trying to get rid of a house that is worth substantially less than she paid for it. It was before her family conceded that they could not escape their economic woes without filing for bankruptcy.

“We just got walloped, and you know, it’s — you get past the point of embarrassment, you get past the point of shame, and you go into, like, survival mode,” Baker said. “You have to pay for the necessities: It’s cars, it’s lights, it’s water, it’s groceries for your family. It’s gas.”

It’s also a switch to shopping at Wal-Mart. These days, Baker, who lives in Bradenton, Fla., goes to Wal-Mart at least once a week to stock up on snacks, frozen pizzas and other household staples. Before she would have been embarrassed to give a gift with a Wal-Mart tag on it, now she regularly buys things for her new granddaughter there. Her teenage daughter, who until recently was appalled at the idea of shopping at Wal-Mart, now brags to her friends about scoring a pair of shorts there for just $7.

“I think Wal-Mart has changed, and truly I have changed, too,” said Baker, 47.

A year ago, Wal-Mart seemed to be mired in a world of woes. The discounter’s sales growth was anemic and its share price was slumping. Its two big nemeses, WakeUpWalMart.com and Wal-Mart Watch, two union-backed campaigns critical of Wal-Mart’s labor practices, regularly lambasted the retailer for its wages, benefits and treatment of workers. An attempt to appeal to more affluent shoppers had backfired badly, leaving the company’s apparel and other departments struggling. The company had been forced to scale back growth plans.

Then came a triple whammy for American consumers: an economic downturn, rising gas and food prices and a deep housing slump. While other retailers have suffered from those woes, Wal-Mart has benefited, drawing in shoppers who previously spurned the retailer and retaining the business of those who say they dislike shopping there. Wal-Mart’s share price is up and its same-store sales, a key measure of a retailer’s health, have improved.

Simply put, a weak economy may turn out to be Wal-Mart’s strong suit.

‘Dollar for dollar, it’s just cheaper’When Wal-Mart announced plans to move into Cindy Parker’s town of Dunkirk, Md., community members held meetings and circulated petitions to try to block the megaretailer from planting its stakes. Parker, 40, vowed not to shop there.

“I said, ‘I will protest with my pocketbook,’ but I did not,” Parker said recently.

Instead, Parker found out that she was expecting a third child, prompting her to stop working just as prices for everything from milk to gasoline started rising. Now she regularly stops at Wal-Mart for cereal, Gatorade, diapers, formula, baby food and even a bathing suit.

“Dollar for dollar, it’s just cheaper at Wal-Mart,” she said.

Parker had watched a movie about Wal-Mart’s business practices, and she admits having mixed emotions about supporting the company. But, she said, “At times like this you’ve got to take care of yourself.”

Still, Parker said there are things she wouldn’t buy at Wal-Mart, such as regular clothes for herself for her husband. She also has found that certain items, such as trash bags, are low in quality.

Wal-Mart spokeswoman Melissa O’Brien said the Bentonville, Ark.-based retailer has “absolutely” benefited from the fact that more Americans need to pinch pennies. But she thinks the company’s efforts to make shopping there more appealing — including extensively remodeling stores, working to improve customer service and revamping the product mix — also have helped keep them coming back.

Wal-Mart, which reports June sales this Thursday, also has worked to make its image more modern. It has almost completely done away with the bright smiley-face that once defined its brand and even announced plans to modify its logo. The simpler logo, which spells the company name "Walmart" without a hyphen and features a sun design, is being rolled out in U.S. stores and ads.

The company also has undertaken a major effort to improve its reputation, countering attacks over its wages and benefits and working to make its business more environmentally sustainable.

That’s paying off with shoppers like Chris Sorah. The 39-year-old Mount Carmel, Tenn., resident says he shops at Wal-Mart more now because he’s been impressed with the retailer's efforts to use more environmentally friendly materials and he likes that the company has made it easy and affordable for him to buy green cleaning products and other items.

The challenge for Wal-Mart will be to keep the newer customers loyal even if the economy improves. Company executives are optimistic.

“We believe that customers will continue to shop at Wal-Mart,” said David Tovar, another Wal-Mart spokesman.

But there are signs that the discounter still faces an uphill battle.

A recent Harris Interactive survey showed a statistically significant drop in people’s perception of Wal-Mart’s reputation between its 2006 and 2007 surveys. The score of 64.95 means “you’ve probably got some real serious red flags in a number of the attributes,” said Robert Fronk, Harris Interactive’s reputation strategist.

Indeed, some shoppers continue to have the same complaints that have dogged the company for years.

Teresa Behal shops at Wal-Mart to save money, but that doesn’t mean the 49-year-old Durant, Iowa, resident likes it. With such a large store, she said it can seem like a workout to get from the shampoo aisle to the milk case. Behal often is disappointed in the quality of the produce, and she says it can take too long to check out. She also sometimes thinks she’s not getting as good of a bargain as one might expect.

“It’s not a fun experience,” said another shopper, Amy Knight, 42.

Knight, who lives in Tampa, Fla., used to avoid Wal-Mart because she doesn’t like how the company treats its workers and doesn’t think the company is involved enough in local communities. She also dislikes how crowded the stores are.

Recently, however, the moving business she runs with her husband has been hurt by the housing downturn combined with high gas prices. That’s left the mother of four with less money to spend on necessities, and now she is a regular Wal-Mart shopper. Still, she’s hoping it won’t be forever.

“Honestly, as soon as I can afford not to shop at Wal-Mart, I will,” she said.

‘You shop at Wal-Mart? Why?’Sieglinde Proctor used to count herself among those who felt like they could afford not to shop at Wal-Mart. When she did broach the idea of shopping there with friends, she said they were dismayed.

“People would say, ‘You shop at Wal-Mart? Why?’” she recalls.

Now, Proctor wonders why she ever wasted money shopping elsewhere. The 60-year-old Gulfport, Fla., resident estimates that she saves $15 every week by shopping at Wal-Mart —money she badly needs in these hard economic times.

“I have to try to survive and I’ll do whatever I need to do, … and Wal-Mart’s been a huge part of it,” she said.

Still, there are some people who say that they will never shop at Wal-Mart, no matter how bad the economy gets. Jill Lane, 45, has long felt that Wal-Mart hurts local businesses, but she really lost faith in the company after reading reports that Wal-Mart sued a disabled former employee to recoup its own medical costs. The company eventually dropped the widely panned effort, but in Lane’s mind the damage was already done.

Others question whether Wal-Mart really offers the best bargain.

With three of her nine children still living at home, Kim Leatherberry estimates that her grocery bill runs to about $1,600 a month. Still, Leatherberry doesn’t think she saves much by shopping at Wal-Mart, especially if she hunts for bargains elsewhere. The cost of getting there also is a factor: She has to drive 20 miles to reach the nearest Wal-Mart.

Over the years, Leatherberry also has become disillusioned by the quality of certain Wal-Mart purchases. The 45-year-old, who lives in Garnavillo, Iowa, says that even with rising prices she tries to avoid Wal-Mart unless she can’t get what she needs anywhere else.

“I go in there and I get so frustrated, and I just prefer not to shop there,” she said.

Source: MSNBC.com

Wal-Mart plans fall opening for Marketside stores

NEW YORK, June 25 (Reuters) - Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz) has launched the website for Marketside, the small, community grocery store concept that the discount retailer is developing, and it plans to open the first locations this fall.

Wal-Mart will open four Marketside stores in the Phoenix area, and they will feature "a wide selection of complete meal solutions, fresh ingredients, and everyday favorites at affordable prices," according to the website.

Wal-Mart has stayed mostly quiet on its plans for Marketside. The new store concept comes after British supermarket rival Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz) entered the U.S marketplace last year, opening Fresh & Easy Neighborhood Markets stores in California, Arizona and Nevada. Fresh & Easy will open its 62nd store on July 2.

At a briefing with reporters earlier this month, Wal-Mart said it is developing the Marketside stores to lure shoppers looking for a quick option to buy fresh groceries.

Eduardo Castro-Wright, head of Wal-Mart's U.S. division, said Wal-Mart shoppers might shop at the company's large supercenters once a month and go to its grocery-based Neighborhood Markets once a week, but would use Marketside for quick trips to buy perishables.

He said the stores will feature a smaller assortment than a traditional grocery store and will focus on fresh goods.

Source: Reuters

Wal-Mart cuts capital expenditure forecast

NEW YORK, June 17 (Reuters) - Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz) on Tuesday lowered its capital expenditure forecast for its current fiscal year, saying it remains focused on moderating supercenter store growth in the United States.

The discount retailer said that for its fiscal year ending Jan. 31, 2009, it now expects capital expenditures to be in the range of $13.0 billion to $14.0 billion, down from its previous view of $13.5 billion to $15.2 billion.

At its analyst meeting in October, Wal-Mart cut its capital expenditure forecast and scaled back on planned supercenters -- or locations that combine a full grocery store with a discount store -- as it faced slowing sales in a saturated U.S. market.

The world's largest retailer said the pullback would allow it to concentrate on boosting sales at its existing stores by remodeling older locations and improving its merchandise assortment.

In recent months, Wal-Mart's sales at stores open at least a year, or same-store sales, have been outpacing those of competitors as cash-strapped U.S. shoppers look to buy basics like food and medicine at discounted prices.

In May, Wal-Mart's U.S. same-store sales rose a stronger-than-expected 3.9 percent while smaller rival Target Corp (TGT.N: Quote, Profile, Research, Stock Buzz) reported a same-store sales decline of 0.7 percent.

Speaking at a William Blair & Co conference, which was broadcast over the Internet, Wal-Mart Chief Financial Officer Tom Schoewe said the retailer's May sales were boosted in part by inflation and tax rebates, which are currently making their way into the hands of consumers.

He said the real question remains how much of a benefit it will continue to see once all the checks make their way into the hands of consumers by mid July.

Source: Reuters

Wal-Mart Going Upscale with Marketside Concept

Wal-Mart's formula for success has involved offering low prices on everyday staples to consumers looking to save any penny they can in an economic environment where fuel and food costs keep going up.

Interestingly, it appears that Wal-Mart may be deviating from its usual script with its new small format Marketside concept. The new stores are being built around a "premium" positioning rather than focusing the consumer on low-prices, according to a Financial Times report.

Wal-Mart's tact is curious considering the low price approach that Tesco has taken with its entry into the U.S. market under the company's Fresh & Easy Neighborhood Market banner. It would appear that the Marketside concept will be more like Safeway's Market by Von's small store format.

Tim Mason, chief executive of Tesco US, told the Financial Times that he doesn't see the new Safeway format as being directly competitive with Fresh & Easy. "It is very expensive and it has got an awful lot of service counters in it - so it has a meats counter, a bakery counter, a fish counter - which take an awful lot of service in a small store, so it is doing a slightly different thing," he said.

Wal-Mart has indicated that Marketside will focus on delivering "meal solutions" for consumers. The company's recruitment ads describe the store as offering "unique solutions for time-starved consumers in a premium fresh/convenience oriented format."

The Financial Times speculates that Wal-Mart may be developing a separate private label line for Marketside rather than import its existing store brands into the new environment.

Source: RetailWire.com

Wal-Mart and Penney roll out casual furniture

Wal-Mart's new Canopy and J.C. Penney's new Linden Street home furnishings brands don't have the name recognition of an Ikea or a Pottery Barn, but they're going after the same customers.

Last month, Wal-Mart Stores Inc. mailed shoppers a 33-page Canopy catalog and launched the Web site www.canopyliving.com.

Online, the find-a-store function leads shoppers to Wal-Mart locations.

The catalog notes that items delivered to Wal-Mart stores have free shipping.

The Wal-Mart name scarcely appears, by design. The company says it's trying to create a brand identity for Canopy, a line of ready-to-assemble furniture, bedding, rugs, lighting, dinnerware and table linens.

Penney created Linden Street because it noticed customers were gravitating to its simpler furniture, window coverings and bedding.

They were buying comfortable everyday furniture. The emphasis was on function with some fashion, but not so ornate.

Analysts say the two retailers are launching modestly priced furniture lines this summer to satisfy a shift that's been coming for some time.

Even before the housing downturn put home furnishings retailers in a spiral, Americans were migrating to a more casual style and lower prices for furniture.

Penney's and Wal-Mart's moves signal a recognition that the furniture industry has to "find ways to attract a new generation," said Jerry Epperson, a longtime furniture analyst for investment banking firm Mann, Armistead & Epperson.

"They aren't going to do it selling $5,000 to $10,000 dining room and bedroom suites," he said.

"Younger people are buying items, not suites, and they want them to be practical and functional."

Smaller living spaces, younger households and the desire for everything to be both functional and fashionable have led consumers to ready-to-assemble furniture and modestly priced pieces that will move from first apartment to family room.

Ikea, now in 33 U.S. markets, gets credit for showing the way. Others say it goes deeper than that.

If we're comfortable buying clothes at Target and wedding dresses at J. Crew, why not buy a sleigh bed from Wal-Mart or a candlelight chandelier from J.C. Penney?

Shifting tastes

There's "a very real shift" to less expensive furniture, said Nick McCoy, furniture analyst at TNS Retail Forward.

Even before the economic headwinds, Retail Forward's shopper surveys found a mindset toward changing furniture more often, rather than buying and sticking with heirlooms.

Crate & Barrel recognized the shift a few years ago and created CB2 to compete with Target and Ikea.

While Wal-Mart's and Penney's timing may seem awful, Mr. Epperson said it's excellent.

Whatever product is on the floor when the economy turns will get the attention of shoppers, he said.

Every city has had independent furniture stores that have gone out of business.

Major specialty furniture chains from Pottery Barn to Restoration Hardware are hurting in this downturn, but they have loyal customers.

Whether their shoppers gravitate to a Penney or a Wal-Mart remains to be seen, Mr. McCoy said.

"Still, everyone should be paying attention to cross-shopping. People may at least try it out with a piece or two," he said.

Price and function are the hooks.

"Ikea is one of the most successful in recent years, and they are a lower-price retailer," Mr. McCoy said. "Linden Street and Canopy are lower-priced, too, but these days everything is competing with gas pumps and grocery stores."

Jeff Allison, Penney's executive vice president for home, said that although the furniture business is tough, "we're in it and we're going to continue to be in it."

Linden Street is in 30 home categories, and he expects that window coverings and items that people can replace easily will initially do best.

"We'll be cautious with the furniture part of it," he said.

To get Linden Street's larger pieces into stores that don't have furniture departments, Penney will use the merchandise instead of store fixtures.

It will set up beds, nightstands, rugs and lamps in the bedding department to display sheets and comforters.

Signs will let shoppers know the furniture is for sale, too.

Linden Street

Penney's in-house design team created Linden Street.

The theme is simple, with two wood finishes – pine and cherry – and three colors for slipcover sofas. Lots of function is built in, such as an electrical outlet hidden in a nightstand.

Steve Castella, vice president in product development for soft home goods, said the creative team looked at what was missing from Penney's furniture offerings when it formulated a new lifestyle brand.

Those items matched with individual pieces that online customers were buying: "less formal, done-up, embellished and more monochromatic," said Deb Schweiss, J.C. Penney home trend director.

Then the team focused on how people live, said Kevin Rooney, vice president in product development for hard goods.

"People take their laptop to bed and don't want to crawl behind a bed to plug it in. There are different sizes of dining rooms, so we came up with the modular storage units," he said.

Price was an overriding issue, he said. Linden Street is priced at Penney's opening and midprice levels.

Canopy

Wal-Mart is already the largest U.S. seller of furniture, but it's better-known for dominating grocery, toy and many other categories.

It's trying to broaden the appeal of its home furnishings with Canopy and will add Better Homes and Gardens products this fall, Wal-Mart spokeswoman Tara Raddohl said.

Unlike Penney's new brand, Canopy is ready-to-assemble furniture with "friendly" instructions available online.

Only about 15 stores, mostly in the Southeast, have vignettes set up.

Catalogs are available in all home departments.

Source: The Dallas Morning News

Sam's Club tests new concept

FAYETTEVILLE, Ark.—Wal-Mart's Sam's Club is testing a new store concept that focuses solely on its small business members.

The new store club concept called Sam's Club Business Center, which is opening in a Sam's Club location in Houston in July, will focus on bulk items such as office supplies and food needed by restaurants, convenience stores, offices and other enterprises.

The store will not carry apparel, certain consumer items and recreational merchandise.

"This building will help teach us something," said Doug McMillon, chief executive of Sam's Club, as he addressed a media gathering Thursday in advance of Wal-Mart Stores Inc.'s annual shareholder's meeting on Friday.

McMillon said "if we like the financials" then the company will convert Sam's Clubs to the new concept in certain locations that cater heavily to small business owners, as does the Houston location.

Sam's Club has been working closely with its small business members, which have been struggling with inflationary pressures on food and fuel.

"We are an agent for our members and our members watch every penny," McMillon said.
With nearly 600 stores nationwide, Sam's had sales of $43.3 billion last year.

Source: The Boston Globe

Wal-Mart Beats Expectations - May same-store sales rise 4.4 percent

Wal-Mart Stores Inc. said Thursday total U.S. same-store sales during the four-week period ending May 30 rose 4.4 percent due to strong sales of grocery, health and wellness and entertainment products.

Same-store sales, or sales at stores open at least a year, is a key measure of retailer performance, because it measures growth at existing stores rather than from newly opened ones.

Analysts polled by Thomson Financial, on average, forecast a 1.6 percent increase in same-store sales.

Excluding fuel sales, same-store sales for the month rose 3.9 percent.

Same-store sales increased 4 percent in its Wal-Mart Stores (nyse: WMT - news - people ) segment, while same-store sales at Sam's Club stores increased 6.5 percent during the month.

Analysts anticipated same-stores sales growth at Wal-Mart stores to rise 1.7 percent and Sam's Club sales to rise 2.6 percent.

"Our comparable-store sales continue to increase because of our price leadership, merchandising initiatives and operational improvements," Eduardo Castro-Wright, Wal-Mart U.S. president and chief executive officer, said in a statement. "We also believe we're seeing some benefits from the stimulus checks."

At Wal-Mart Stores, entertainment products such as flat-panel televisions and computers helped bolster sales as well as health and wellness products as the retailer expanded its $4 prescription program to over-the-counter medications.

At Sam's Club stores, sales of fresh foods, dry grocery and consumables were strong, the company said.

For the four weeks ended May 30, total sales, which includes Wal-Mart Stores, Sam's Club and international sales, increased 9.8 percent to $31.04 billion from $28.26 billion, a year earlier.

Wal-Mart estimates same-store sales during the five-week June period will rise between 2 percent and 4 percent, excluding fuel sales. The period runs from May 31 through July 4.

Source: Forbes

Wal-Mart puts the squeeze on food costs

The retailer is using its clout with vendors to hold onto its everyday low prices.

(Fortune Magazine) -- With gas, grain, and dairy prices exploding, you'd think the biggest seller of corn flakes and Cocoa Puffs would be getting hit by rising food costs. But Wal-Mart has temporarily rolled back prices on hundreds of food items by as much as 30% this year. How? By pressuring vendors to take costs out of the supply chain.

"When our grocery suppliers bring price increases, we don't just accept them," says Pamela Kohn, Wal-Mart's general merchandise manager for perishables. To be sure, Wal-Mart (WMT, Fortune 500) isn't the only retailer working to cut fat from the food chain, but as the largest grocer - Wal-Mart's food and consumables revenue is nearly $100 billion - it has a disproportionate amount of leverage. Here's how the retailer is throwing its weight around.

Shrink the goods. Ever wonder why that cereal box is only two-thirds full? Foodmakers love big boxes because they serve as billboards on store shelves. Wal-Mart has been working to change that by promising suppliers that their shelf space won't shrink even if their boxes do. As a result, some of its vendors have reengineered their packaging. General Mills' (GIS, Fortune 500) Hamburger Helper is now made with denser pasta shapes, allowing the same amount of food to fit into a 20% smaller box at the same price. The change has saved 890,000 pounds of paper fiber and eliminated 500 trucks from the road, giving General Mills a cushion to absorb some of the rising costs.

Cut out the middleman. Wal-Mart typically buys its brand-name coffee from a supplier, which buys from a cooperative of growers, which works with a roaster - which means "there are a whole bunch of people muddled in the middle," says Wal-Mart spokeswoman Tara Raddohl. In April the chain began buying directly from a cooperative of Brazilian coffee farmers for its Sam's Choice brand, cutting three or four steps out of the supply chain.

Go locovore. Wal-Mart has been going green, but not entirely for the reasons you might think. By sourcing more produce locally - it now sells Wisconsin-grown yellow corn in 56 stores in or near Wisconsin - it is able to cut shipping costs. "We are looking at how to reduce the number of miles our suppliers' trucks travel," says Kohn. Marc Turner, whose Bushwick Potato Co. supplies Wal-Mart stores in the Northeast, says the cost of shipping one truck of spuds from his farm in Maine to local Wal-Mart stores costs less than $1,000, compared with several thousand dollars for a big rig from Idaho. Last year his shipments to Wal-Mart grew 13%.

In fact, it's the small suppliers that are feeling the pain from Wal-Mart's pushback the most. Bushwick has seen its costs rise 10% over the past year, but has passed only half that amount on to Wal-Mart and its other retailers. For consumers who are having a hard time paying $3.80 for a gallon of milk, however, without those measures that sticker shock would be a lot worse.

Source: CNNMoney.com

Supercenter Rollout to Continue in Canada

MISSISSAUGA, Ontario — Wal-Mart Canada on Thursday said it will continue a national rollout of its supercenters in Canada this year, planning to build more than a dozen new stores by the end of its fiscal year in January.

In addition, Wal-Mart said it would expand eight or nine existing discount stores to the supercenter format, and relocate two discount stores as supercenters in their current markets. Included in the retailer’s 25-27 new projects this year is its first supercenter in British Columbia, which opened last month in Duncan. Wal-Mart Canada, a division of the Bentonville, Ark.-based retailer, opened its first Canadian supercenters in 2006 and currently operates 32 locations in three provinces.

Source: SupermarketNews.com

Wal-mart to serve fried chicken

The world's largest retailer starts serving a Latin American fried-chicken favorite, Pollo Campero, to expand its reach to the nation's growing Hispanic population.

LITTLE ROCK, Ark. (AP) -- Pollo Campero, a Latin American fried-chicken favorite that had been seen in the United States only in takeout boxes aboard arriving flights, has teamed up with Wal-Mart to expand its reach to the nation's growing Hispanic population.

A restaurant bearing the Guatemalan chain's mascot chicken in a cowboy hat now sells its famed product inside a Wal-Mart (WMT, Fortune 500) Supercenter in Rowlett, Texas. Officials with the chain's fledging U.S. arm, Campero USA Corp., hopes to expand its reach into more than 20 Wal-Mart locations across the country by the end of 2009.