Facing a fifth consecutive quarter of negative U.S. sales, new Wal-Mart Chief Executive Officer, Doug McMillon, is looking to breathe new life into the chain by deviating from the company’s usual formula. In a move that could signal the beginning of the end of the “big-box” superstore era, McMillon is focusing his efforts on rapidly opening smaller, neighborhood/convenience-type stores. Between 10,000 and 40,000 square feet, these stores are a drastic reduction from the 200,000 square feet of typical superstores.
In the face of growing competition, McMillon is also looking to change Wal-Mart’s pricing model. The change is most evident in its e-commerce. Instead of the “everyday low prices” mantra Wal-Mart is known for, its website now uses a “dynamic pricing” model, based on variable data and competitive promotions. The website now even features high end items that might attract new customers for the company. Some investors, however, are weary all the money going to expanding e-commerce and the new store formats might take business away from traditional stores and be detrimental to the company.
Smaller stores and a revamped website aren’t the only things McMillon wants to experiment with. Wal-Mart is looking to add gas stations to stores and to build free-standing liquor stores in states like Florida, where law prohibits the sale of liquor in grocery stores. Time will tell if Wal-Mart is able to successfully evolve.