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Analyst: Neighborhood Markets losing share in some markets

Although Wal-Mart Stores has picked up the pace of its Neighborhood Market openings, the chain is losing aggregate share in roughly one-third of its markets in which it operates those stores, according to an analysis by BMO Capital.

Jon Springer, Executive Editor

July 15, 2014

2 Min Read
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Although Wal-Mart Stores has picked up the pace of its Neighborhood Market openings, the chain is losing aggregate share in roughly one-third of its markets in which it operates those stores, according to an analysis by BMO Capital.

In a report released Tuesday, BMO analyst Kelly Bania said Walmart has lost market share in four of the top 10 markets in which the chain operates Neighborhood Market stores between 2010 and 2013, including slight market share declines in its two largest markets by store count, Dallas-Fort Worth and Phoenix, respectively. Walmart’s share is also down in Las Vegas and Houston, Bania added.

The data suggests that “Neighborhood Markets may be less of a threat than expected” to conventional grocers like Kroger and that the concept in some cases may be cannibalizing sales from larger Supercenters in the same market.

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Speaking at the retailer’s annual meeting last month, Bill Simon, Walmart’s U.S. CEO, acknowledged that Neighborhood Market stores had a slight cannibalization effect on Supercenters in some markets, but said it was not significant in assessing the larger marketplace.

The report also noted that Walmart Supercenters appear challenged by declining populations in rural markets. Almost half of Walmart’s Supercenters are located in communities with populations of less than 500,000. According to the report, 83% of those communities showed population declines from 2012-2013.

Bania presented the data in a note upgrading Kroger based in part on the analysis of the Walmart threat.

 

About the Author

Jon Springer

Executive Editor

Jon Springer is executive editor of Winsight Grocery Business with responsibility for leading its digital news team. Jon has more than 20 years of experience covering consumer business and retail in New York, including more than 14 years at the Retail/Financial desk at Supermarket News. His previous experience includes covering consumer markets for KPMG’s Insiders; the U.S. beverage industry for Beverage Spectrum; and he was a Senior Editor covering commercial real estate and retail for the International Council of Shopping Centers. Jon began his career as a sports reporter and features editor for the Cecil Whig, a daily newspaper in Elkton, Md. Jon is also the author of two books on baseball. He has a Bachelor of Arts degree in English-Journalism from the University of Delaware. He lives in Brooklyn, N.Y. with his family.

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