## Tuesday, October 20, 2009

### Walmart Fractions

Reading the newspaper yesterday,  I saw a statement that made me think twice:

Walmart ... is recruiting a new team of managers and buyers that will focus exclusively on the smaller [Neighborhood Market] stores, which, with 150 locations, currently represent only a fraction of Walmart’s total US sales.

I saw the word fraction. Sounds like math to me. Is this statement true? How can we check?

I know he is talking about sales revenue, but what if we compare square footage? Are Neighborhood Markets a fraction of the total Walmart square footage? How big a fraction?

Luckily the Walmart website outlines their various store options:

SUPERCENTERS
Walmart now has 2705 Supercenters and each store averages 187,000 square feet. That's 2705 x 187,000 = 505,835,000 square feet. Five hundred six million.

DISCOUNT STORES
The second category is called Discount Stores. There are 833 of these stores, and they average 107,000 square feet. I think 833 x 107,000 = 89,131,000 square feet. Eighty-nine million.

SAM'S CLUB
Sam's Club also appears on the Walmart website, so I will include its square footage too. There are 605 locations with an average of 132,000 square feet each. That's 605 x 132,000 = 79,860,000 square feet. Eighty million.

DISTRIBUTION CENTERS
Let's take a quick detour through the distribution centers. Although you can't shop there, these centers are necessary to support the stores. Walmart has more than 40 general distribution centers and about 70 specialty distribution centers. On average they seem to be about 1 million square feet, so that's 110 x 1,000,000 = 110,000,000. One hundred ten million.

(I suspect the distribution centers might help support neighborhood markets, too - but it's not clear.)

SUBTOTAL #1
Adding the three types of stores and the distribution centers (while ignoring  parking lots, room the trucks take up on the highways, and other esoteric data) gives us Seven hundred eighty-five million square feet of floor space.

NEIGHBORHOOD MARKETS
There are now 151 markets, with an average size of 42,000 square feet. That's 151 x 42,000 = 6,342,000 square feet. Six million.

MARKETSIDE STORES
Walmart is testing a new store format similar to Tesco Fresh and Easy stores. They have 4 of these in Arizona, with an average of 15,000 square feet per store. That's not even enough to make a rounding error on the big store totals, but we'll calculate the number anyway, since we can do it in our heads. I find that 4 x 15,000 = 60,000. Six percent of one million, or one-sixteenth of a million.

SUBTOTAL #2
Adding these two types of stores gives us Six million square feet of floor space.

CONCLUSION
Now we can do some math and reach a conclusion.

6 million ÷ 785 million = .00764

Are the neighborhood markets just a fraction of the total Walmart? Yes, they are. Here's a pie chart to show the comparison.

Neighborhood Markets are less than one percent, or in (simplified and rounded) fractional terms, they are 1/130th of the total Walmart presence.