At a shopping center industry event in Atlanta this week, Walmart announced plans to create what it calls Town Centers--outdoor gathering areas with seating, green spaces, playgrounds, restaurants, jogging paths, fountains, and maybe even live music. The idea is that these will serve as a "natural 'go-to' destination" for dining out activity, according to a Walmart website. With seasonal farmer's markets, festivals, food trucks, and such necessities as urgent care and fuel offered as well, Walmart hopes to turn these areas into spaces where communities will naturally gather. Kind of like the town squares and downtown shopping areas small towns used to have, back before big box stores such as Walmart destroyed them.
"We want to provide community space, areas for the community to dwell--a farmer's market, an Easter egg hunt, trick or treating," LB Johnson, vice president of U.S. Realty Operations for Walmart said during his keynote speech at the 2018 International Council of Shopping Centers Southeast Conference & Deal Making. "We want to provide pedestrian connectivity from our box to the experiential zones that are planned on our footprint. We want to augment these experiences and activities with more food and beverage, with health and fitness, essential services and entertainment." A Walmart video shows restaurants like bartaco, stores such as Pressed Juicery, and Orange Theory fitness among other tenants in Town Centers.
Space for these new Town Centers will come out of the sprawling 6-to-8-acre parking lots that are typical for a Walmart Supercenter, Johnson said. The first of these is planned at a Supercenter in Loveland, Colorado, near Fort Collins. The company says it will break ground in spring of 2019 on a two-phase development that will bring food and beverage, wellness, and entertainment to the site. Future Town Centers are planned for Missouri, Iowa, Arkansas, and Oregon.
According to the Walmart website, some of these Town Centers will have a "mobility hub" where people can catch buses, rent bicycles, or grab a ride-share or taxi--much like at an actual town center. In some cases, the site says, there will also be paved paths to town for those who want to walk or bike.
"A transformation is underway," Johnson said in his speech. "We are working with the local community to really master plan a vision, not only for Walmart, but shared with the municipality. We are using terms like collaboration space." And, he added, "We are going to hold ourselves accountable to the community for improving well-being."
Kiosks and lockers for picking up purchases.
Maybe so, but this is also very smart business. The new Town Centers will also incorporate pickup kiosks for online groceries and special 10-minute parking for Grab & Go lockers, a Walmart offering already launched in Canada in which customers can order items online and then retrieve them from lockers at Walmart stores and other locations.
They will also making use of one of Walmart's increasingly valuable but underutilized assets--the huge real estate parcels it owns that are mostly taken up with parking lots. In some cases, the towns around them have "urbanized" and the land Walmart owns is worth much more than when the company bought it. Creating spaces for rent-paying restaurants, fitness centers, movie theaters, and so on, is a great way to turn a portion of these parking lots into revenue-producing entities. (Since the Town Centers only take up a small portion of the space, there will still be plenty of parking.)
Beyond that, these new Town Centers will address the question of why shoppers in 2018 should visit a Walmart store at all. The chain was conceived to take advantage of its super-efficient distribution system and economies of scale to offer a wider selection and better prices than other retailers could--not to provide an inviting location or pleasurable shopping experience. That strategy worked well in the days of bricks and mortar. Today, Amazon and other online retailers offer an even wider selection with competitive prices and the added feature that you can shop in your pajamas. Walmart CEO Doug McMillon has been concerned about competition from Amazon ever since he came into the job in 2014 and he's focused a lot of his attention on e-commerce. It's worked--Walmart's e-commerce business is up dramatically.
But that still leaves the question of why anyone should visit a physical store, other than to grab a package out of a locker. So Walmart is making its Supercenters more like open-air shopping malls--places people go to have a drink or a meal, see a movie or go bowling, or keep the kids entertained, as well as to buy stuff. If it works--if people really do find these new Town Centers appealing--then they'll have a whole new reason to go to Walmart instead.