REAL ESTATE

Wal-Mart to spend $753 million to expand Canada presence

BY Katherine Boccaccio

Mississauga, Ontario — Wal-Mart Stores isn’t about to let the grass grow under its feet in Canada. The discounter plans to spend about $753 million this fiscal year to expand its store presence in Canada, before rival Target Corp. begins its push in the country.

The plans call for at least 73 projects — including new store builds, store expansions, remodels, and relocations — during the fiscal year that ends Jan. 31, 2013. The program will add 4.6 million sq. ft. of retail space to Walmart Canada’s operations, and up its store count to more than 375. The company currently has 333 stores in the country.

The move will put Wal-Mart ahead of competitor Target, which has launched a Canadian debut that calls for 125 to 135 stores by early 2013.

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Walmart calls out healthy foods

BY CSA STAFF

WASHINGTON — In an effort to assure customers that private-label products are meeting the proper nutrition criteria, Walmart is implementing a transparent initiative called "Great For You," an icon that calls out healthy foods sold in Walmart stores, Walmart announced on Tuesday in Washington, D.C.

Initially appearing on fruits, vegetables and the retailer’s Walmart Great Value and Marketside brands this spring — and eventually made available to national brand products that qualify — Great For You is looking to make it easier for shoppers to build healthier diets. Items that tout the icon must meet criteria based on the latest nutrition science and authoritative guidance from the 2010 Dietary Guidelines for Americans, the Food and Drug Administration, the Department of Agriculture and the Institute of Medicine. Walmart said Great for You also "can be complementary to other nutrition labeling systems being used by the food industry."

“Walmart moms are telling us they want to make healthier choices for their families, but need help deciphering all the claims and information already displayed on products,” Walmart SVP sustainability Andrea Thomas said. “Our ‘Great For You’ icon provides customers with an easy way to quickly identify healthier food choices. As they continue to balance busy schedules and tight budgets, this simple tool encourages families to have a healthier diet.”

The announcement builds on the retailer’s declaration last year to make food healthier and more affordable. The initiative includes reformulating packaged food to reduce sodium and added sugars and eliminate industrially produced fats by 2015; making healthier food more affordable by providing savings on produce and reducing the price premium on better-for-you food items; developing solutions for food deserts; and increasing charitable support for nutrition education programs.

“Today’s announcement by Walmart is yet another step toward ensuring that our kids are given the chance to grow up healthy,” First Lady Michelle Obama said. “Just over a year ago, Walmart committed to save shoppers a billion dollars in their cost of fruits and vegetables and the fact that Walmart exceeded this number is a real accomplishment and a milestone in our efforts to support families eating better. In addition, the healthy seal will be another tool for parents to identify the best products for their kids. Giving parents the information they need to make healthy choices is a key piece of solving childhood obesity.”

Additional details about Walmart’s Great for You icon can be found here.

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A ‘Penney’ for your thoughts…

BY Jeff Green

There has been a lot of chatter in our industry circles — really, everywhere — about the recent big announcement from J.C. Penney CEO Ron Johnson regarding the iconic brand’s plans for the future. Anyone who’s visited a J.C. Penney lately — present company included — can see the brand needs to make some changes. They’ve been losing traction to competitors like Target and Kohl’s in recent years, and, in my opinion, have had some trouble defining themselves in a fairly crowded and competitive segment. Similar to the issues facing Sears, J.C. Penney seems to be suffering from an identity crisis.

I see this new strategy as less of a rebranding and more of a “reinvention.” It’s certainly about more than just changing the logo — although that’s happening also — to a newly stylized JCP (though simple is always better, I’m not 100% sure I like it). This plan has been characterized by some as an attempt to “rewrite the retail rulebook,” and, while I think that’s clearly a bit of an exaggeration, this is an ambitious step for a company that has traditionally been more, well … traditional. It might literally and figuratively pay off for them, but the brand is headed into uncharted territory here, and I have some questions and concerns about some aspects of the strategy.

Some of the highlights of the new plan include a smaller new store prototype; a leaner, dramatically lower and more intuitive pricing structure that will be as much as 40% lower than the current figures; a redesign of store layouts to feature a number of compartmentalized “shop-in-shops” for a smaller, but much more diverse list of global brands; monthly merchandising and marketing resets; and significant pared down staffing and infrastructure aimed at making the retailer leaner and more efficient. This is clearly a serious attempt to redefine who they are, and I can’t help wondering if they missed out on an opportunity to go “all in” and change their name. Even a sagging retailer like J.C. Penney has some strong brand equity associated with that familiar name, but I wonder if that is a good thing or a bad thing? I also worry about the lengthy timeline. The new store prototype won’t be rolled out until 2015, and many of these changes will be introduced gradually over the next 3+ years. I wonder if that might be a case of too much too late; big changes not happening quickly enough.

Overall I think the plan moves J.C. Penney in the right direction. If they can pull it off, there is a huge upside: developing their own niche and bringing in a younger customer base. I’m most optimistic about some of the structural and organizational changes. It’s a big and important step to trim thousands of redundant employees and essentially flatten the org chart. I’m also very excited about the plan to introduce more international brands. Given J.C. Penney’s current reach, that will mean greater consumer accessibility to a number of new brands in new markets. One of the challenges that I think the new JCP might have is successfully striking a brand balance and establishing a logical brand blend. Does Martha Stewart really go with Mango and Sephora?

So can Johnson work the same magic that he helped bring about at Target and Apple over the last two and a half decades? So far the reception in the world of retail and in the financial markets has been quite positive — J.C. Penney shares were up nearly 19% immediately following the announcement — but I’m a little reluctant to spike the football before we’ve crossed the goal line. I know one thing: it’s going to be fascinating to watch it all play out.

What do you think? Is this strategy going to be a game-changer for JCP? Will other retailers follow suit if JCP has success? What other retailers need to make big changes to improve their brand status?

Please make a public comment below or feel free to e-mail me privately at [email protected].

Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.


Click here for past columns by Jeff Green.

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