RetailNet Group insights and observations on Walmart's Urban 90 Supercenter format

1. CONFIDENTIAL & ©RetailNet Group, www.retailnetgroup.com Page 1
New Walmart Urban 90 Supercenter Format
RetailNet Group recently visited a new Walmart Urban 90 store in Toronto, Canada, which
opened in late January, to see the adaptations in this smaller format supercenter prototype. As
indicated by its name, the Urban 90 store is 90,000 square feet, dramatically smaller than the
200,000 square foot box of a traditional North American Walmart Supercenter. The smaller
format supercenter takes only 34 weeks to build and launch, roughly 2/3 of a traditional
supercenter. This store is located on the second floor of the building, with Walmart renting
space to other businesses, such as fast food chains, on the first floor. For subscribers, click
here to access the full store tour on retailnetgroup.com.
Key Points to Consider
Full Assortment, Limited Space
Shelf-Ready Packaging
Dedication to Fresh
Seasonal Space
Commitment to EDLP

2. CONFIDENTIAL & ©RetailNet Group, www.retailnetgroup.com Page 2
Full Assortment, Limited Space
The Urban 90 format offers all
categories that a traditional
200,000 square foot
supercenter does, so
Walmart has addressed the
space restriction issue with
some reduced options in the
category and limited shelf
space dedicated to each
product. Throughout the
store, it is evident that
Walmart has significantly
reduced the shelf facings that
SKUs receive across
categories. For example, in
the refrigerated orange juice
section, some brands and
varieties receive only six
facings, and that small refrigeration unit holds a total of ten unique SKU’s.
At left, an end cap that might typically
highlight a single item instead features
six distinct products.

3. CONFIDENTIAL & ©RetailNet Group, www.retailnetgroup.com Page 3
Shelf-Ready Packaging
Limited facings equate to fewer
products on the shelves and in a
high-traffic environment, can also
increase the chances of empty
shelves and stock outs very quickly.
This increases the pressure on the
store personnel to ensure that
products are on shelves at all times.
Shelf-ready packaging is a major
help for this. Shelf-ready packaging
has frequently been used to allow
stores to stock shelves easily and
reduce labor costs, but in the Urban
90 format, speed to shelf can be
even more critical for employees to
restock the shelves.
Dedication to Fresh
Roughly 30% of store space is dedicated to fresh, indicating that Walmart’s urban format
supercenter will compete aggressively in this category. This is in line with Walmart pushing into
urban areas – a proximity
store is inherently more
convenient and can more
easily serve higher frequency
shopping trips. Walmart has
to compete in this space to
win the trips that fresh and
perishables generate.

4. CONFIDENTIAL & ©RetailNet Group, www.retailnetgroup.com Page 4
The commitment to fresh
provides an interesting
insight into some of
Walmart’s goals with this
new format. Evidenced by
their commitment to the
full assortment, they are
unwilling to sacrifice their
role as the one-stop shop.
However, they are
simultaneously making a
push toward capturing the
frequency and fill-in trip
with the focus on fresh and
the urban location.
Seasonal Space
To accommodate a full
assortment in a smaller
box, some departments
and spaces have been
reduced. For example,
action alleys are noticeably
smaller as there is not
sufficient space for the
typical amount of pallets.
However, the Urban 90
format still sets aside
significant space for a
seasonal department.

5. CONFIDENTIAL & ©RetailNet Group, www.retailnetgroup.com Page 5
Seasonal events are an important trip
occasion. It is a high impulse trip and
one that retailers can reliably count
on. Walmart’s focus on fresh while
also offering the full assortment
highlights the challenge they are
facing; finding the balance between
capturing more frequent trips and
being the one-stop shop and stock-
up retailer. Seasonal helps serve
both the frequency and stock-up trip.
Commitment to EDLP
One of the clear marketing initiatives highlighted by Walmart in the new format is the price
match guarantee as seen below. Signage promoting the ad match can be seen everywhere in
the store. The new format may confuse shoppers who are unsure how this smaller box
compares to the traditional supercenter with which they are familiar, so Walmart has clearly
made a focused effort to reinforce their low prices to consumers shopping the new store. The
retailer goes to great lengths to ensure that customers are aware that this store offers the same
Every Day Low Prices to which they are accustomed.

6. CONFIDENTIAL & ©RetailNet Group, www.retailnetgroup.com Page 6
Implications for Retailers and Suppliers
Walmart’s Urban 90 format aims to bring the one stop shop of the big box supercenter to a far
smaller footprint and more urbanized area, and RNG believes, that is ultimately an effort to
achieve greater space productivity. This concept is not unique, as other big box retailers are
testing similar small formats, including Target’s “City Target”, set to launch five stores this year.
(Click here to see RNG’s analysis of City Target) Walmart however, has made some interesting
adaptations from its traditional supercenter including limited facing in order to maintain a full
assortment and the high focus on fresh, as it appears to be trying to find a balance between a
stock-up big box retailer and capturing higher frequency trips as well. The limited product
facings present an inventory and labor challenge, and consistent and efficient execution of
these issues will be critical to making the smaller store economics work.
Retailers
Walmart’s trial of the Urban 90 format, if successful, may prove to be a blueprint for
other big box retailers launching small formats and entering urban areas. This
prototype’s success or failure will also have an impact on other retailers’ interest in the
small format concept.
Walmart’s entrance to more proximity-based, urban areas brings increased competition
to retailers competing in this space. With the success of this format, Canadian retailers
such as Sobeys, Metro, and Loblaws may find themselves with additional competition,
especially with this format’s commitment to fresh.
If Walmart can find the balance between being a traditional big box store and serving the
convenience and proximity trip, how will other retailers adjust to compete against one
that seemingly can compete on both ends of the trip spectrum?
Suppliers
Walmart’s decision to keep a full assortment with limited facings severely reduces the
shelf visibility of each SKU. For shoppers, this means brands on the shelf will be harder
to find and easier to overlook. How will brands stand out in the store and how will
suppliers balance product depth vs. product width with such limited shelf space?
For suppliers looking to get their products onto the shelf of this Urban 90 format or any of
the smaller formats being rolled out by big box retailers, thought should be given to
developing pack sizes to address the limited shelf facing issue and help alleviate the
inventory management concerns.
Because of the space restrictions, Walmart will have to manage inventory differently as it
simply will not have backroom space to hold the inventory of a traditional supercenter.
Inventory will turn more quickly, so suppliers will need to be more innovative and flexible
with inventory replenishment and optimization ideas.
As always, we appreciate your comments and feedback. Let us know what you think!
Doug Koontz
Research Analyst
RetailNet Group
doug.koontz@retailnetgroup.com