65 days

At just over two months, Walmart Canada’s conversion and opening of its first acquired store from the Zellers estate is pretty impressive.

It took just 65 days to get the Newmarket East store up and running, including an interior update and adding in a pharmacy.

The retailer has clearly put in significant effort to get this first store open in time for the key back-to-school trading period. But, beyond this, the opening is significant for a number of other reasons.

With a major program of works planned for this year, this opening demonstrates the commitment of the retailer to get all of the 39 acquired Zellers units up and running by the end of 2012.

While this in itself would be a significant undertaking, these conversions are not happening isolation, with 34 other projects underway, mainly expansions and relocations of its Supercentre format.

By the end of the year, Walmart will have completed 73 projects.

This will add around 4.6m sq. ft. of selling space, accounting for around 85 per cent of all new space in the sector this year.

The first opening is also interesting because at 69,000 sq. ft., it is around a half the 140,000 sq. ft. of the average Walmart store in Canada.

Despite the smaller format,  the retailer has managed to squeeze in 75,000 products.

This highlights how the retailer is now making the most of its properties, given the limited commercial real estate market in the country.

While the focus of the business in recent years has been to convert its discount stores to Supercentres, this new opening also reveals that discount stores remain an important part of the mix.

It also demonstrates they  can function effectively within a broader local network, which also features Supercentres with a full range of fresh food products.

However, Walmart has also developed a smaller format Supercentre proposition, opening a new 90,000 sq. ft. format for urban locations earlier this year.

It is likely that a number of learning opportunities from this store will be factored into some of the former Zellers sites.

By having all the stores open for the year end, Walmart will also be able to establish itself more strongly in existing trading areas and to build a new presence in others, ahead of Target’s first store openings.

These are anticipated for March 2013, and in a direct contrast to Walmart’s approach, Target’s conversions are scheduled to take between six and nine months for each store.

While the changes in these stores are likely to be more significant as Target aims to replicate its traditional U.S. layout and look and feel, the conversion period provides its competitors with an opportunity to attract and retain the former Zellers shoppers.

And if Walmart’s expansion this year represents a major shift in the grocery sector, it could be argued that Target’s 125 store openings next year will also have an even greater impact.

However, it will be general merchandise retailers, particularly apparel and homewares retailers, that are more likely to feel a new competitive threat.