Neighborhood Markets format stores (XRT) are faster off the ground and the ROIs (return on investment) are high. Small formats also enable expansion in urban areas, where real estate costs can be prohibitively high for opening the typical big-box stores favored by Walmart and its competitors. Because most stores are open 24/7, they also provide convenience and drive higher customer traffic.
They also enable Walmart to explore omni-channel fulfillment options. This is an increasingly important consideration as the company expands grocery pickup in more locations and adds more stores to its fulfillment network.
Rival Target (TGT) is also exploring multiple store formats that the retailer terms flexible formats. These include the small-format Target Express.
Growth in smaller formats also enables Walmart to take on dollar store rivals like Dollar Tree (DLTR) and Dollar General (DG), which have mushroomed in recent years. These rivals have more than 12,000 stores in the US. Store growth for DLTR has been spurred by its merger with Family Dollar Stores last year.
View more information: https://marketrealist.com/2016/06/walmarts-neighborhood-markets-compelling-retail-proposition/