BENTONVILLE, Ark. — Wal-Mart Stores here may put a crimp in Tesco's volume growth, beginning in the Phoenix area, if it follows through with reported plans to open a scaled-down version of its Neighborhood Markets format there later this year, analysts told SN. Although Wal-Mart officials declined to confirm speculation that the company will open smaller-format stores later this year, Deborah Weinswig, an industry analyst with Citigroup Global Markets, New York, told SN that Wal-Mart sources confirmed the reports to her of plans for a 20,000-square-foot format that would be a modified version of its Neighborhood Market, with a large assortment of fresh foods. "It's not intended to take on Tesco but just part of a natural evolution for the company," Weinswig told SN. According to industry reports, the new format will be called Marketside, with the first four locations scheduled to open this summer in Chandler, Gilbert, Mesa and Tempe, Ariz. A Wal-Mart spokesman said the company tests a lot of different ways to serve customers, "and looking at a smaller Neighborhood Market would be one way of doing that." Weinswig said it makes sense for Wal-Mart to consider testing the new format in the Phoneix area, "because Arizona has been a very good market for the company over the past couple of years, [and] the company could be taking advantage of available leased space in [that] market." Tesco operates at least seven stores in the Phoenix market that it opened over the last few weeks, with more scheduled to follow.
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