How Walmart.com Is Downloading Into Shopping Malls
You're not going to want to hear this, Sam Walton.
Walmart (WMT) is teaching its new media appendage some old economy tricks.
A pair of Walmart.com stores have opened in Southern California shopping malls. Yes, Walmart.com.
The stores are much smaller than your typical mammoth Walmart Supercenter. One of the locations takes up a mere 1,000 square feet in mall space. However, it still manages to stock a few hot media and gadget items that promise to be brisk sellers this holiday season. Another key feature of the bite-sized shops is a fleet of laptops that customers can use to browse the virtual aisles of Walmart.com itself.
Food Fight at the Food Court
What were mall landlords thinking?
This is pretty brilliant if you're Walmart. You can open small outlets promoting your e-commerce efforts far away from your more traditional stores. Stressed-out holiday shoppers who can't seem to find what they want can walk in and take advantage of Walmart.com's massive online selection, historically low prices, and economical shipping options.
How do you think the rest of the tenants are feeling right now? Not only is the Walmart name cheapening the mall's roster, but now patrons have a place to double-check prices. Spoiler alert: Walmart.com will probably be cheaper.
The stores are temporary. They'll be gone by the end of next month. A Walmart spokesman also tells Reuters that the world's largest retailer does not plan to expand the concept beyond this two-outlet test. However, it still has to be pretty unsettling.
There are already way too many people who dislike Walmart's practices, and that's with the mammoth discounter anchoring suburban strip malls. It's certainly not going to be popular with retailers paying higher rent per square foot in more traditional malls.
Wake Me When December Ends
This two-month test is huge. What if it works? What if Walmart is able to grow its online sales in San Diego and Los Angeles without cannibalizing its physical stores in the area? What if Amazon.com (AMZN) is next? After all, now that Amazon is agreeing to collect sales tax in some states, why can't it follow suit?
There will always be disruptions in any industry. Electronics retailers who sold Apple (AAPL) merchandise in their mall shops and freestanding kiosks probably felt cheated when the tech giant began opening its own stores. This feels different, largely because it may encourage an entirely new shopping behavior.
Mall owners will simply argue that they're filling up vacant space while giving shoppers what they want. However, promoting a fast-growing online retailer seems to be weaning shoppers from the very brick-and-mortar shopping that mall owners need to survive. The last laugh will be on them.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple and Walmart Stores. Motley Fool newsletter services have recommended buying shares of Walmart Stores, Amazon.com, and Apple; creating a diagonal call position in Walmart Stores; and creating a bull call spread position in Apple.
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