Dive Brief:

• Walmart is growing its Neighborhood Market format with a newly opened store in Santa Rosa Beach, Florida, and another slated to open soon in Atlanta.
• The retailer’s two upcoming locations bolster the format’s convenience and support the retailer’s growing e-commerce business, Kyle Kinnard, senior vice president of Neighborhood Markets, said in an interview. The stores are the first to open as part of Walmart’s previously announced five-year growth plan.
• Both omnichannel-focused locations are larger than previous Neighborhood Markets, spanning around 57,000 square feet of sales floor and pickup and delivery space.

Dive Insight:

An uptick in e-commerce sales for Walmart was a primary factor in the company’s decision to increase the square footage of the Neighborhood Market format, according to Kinnard, who was named Neighborhood Market’s division head in March. 

Located in the Dune Lakes area of Santa Rosa Beach and the Vine City neighborhood in Atlanta, the two Neighborhood Market stores include an expanded fresh section, wider aisles and new accommodations in the pharmacy department. 

“We’ve made wider aisles [which are] easier for us to digitally pick, easier for customers to pick and not take up each other’s space,” Kinnard said, adding that these stores aim to accommodate Walmart’s growing digital business and increased orders. 

Walmart’s Dune Lakes Neighborhood Market store opened on May 8, and the Vine City location is scheduled to open on Wednesday, Kinnard said. The two stores, which Kinnard called prototypes, are also testing expanded fresh offerings: They both feature a larger produce department and include a bigger service deli with more hot case options.

The two new locations kick off Walmart’s growth initiative of opening 150 locations over the next five years, including Neighborhood Market stores and supercenters.   

Alongside enhanced grocery offerings, the Dune Lakes and Vine City Neighborhood Markets also include the addition of a Health Services Room to the pharmacy and a room for breastfeeding shoppers. 

“These health services are attached to the pharmacy [and] they provide our customers with privacy for vaccinations and consultations,” Kinnard said. While both of these accommodations are new for the Neighborhood Market format, he noted that they are already in place at Walmart supercenters. 

Kinnard did not say how many of these new grocery and pharmacy features may carry over into upcoming Neighborhood Market locations or how many Neighborhood Market stores are included in the 150 new locations under the expansion plans.

Walmart is growing as a grocery force, both in-person and online. During its most recent earnings call, the mass retailer recorded mid-single-digit growth in grocery with strong unit growth in produce and fresh meats. Walmart CFO John David Rainey noted earlier this year that the company has improved e-commerce profitability by lowering fulfillment costs and densifying its last-mile operations.