Walmart Debates Continued Tobacco Sales

NEW YORK At its annual shareholders meeting, Walmart reveled in its strong performance during the recession and promised further improvements in store merchandise and store aesthetics.

Of most interest to convenience store operators were two comments by Eduardo Castro-Wright, vice chairman, concerning the retailer’s sale of tobacco products and its Marketside convenience/grocery hybrid concept, currently being tested in the Southwestern U.S.

Castro-Wright said the world’s largest retailer has considered — and would continue to consider — eliminating tobacco products from its stores. The retailer, which in recent years has become more sensitive about its public image, acknowledges selling tobacco conflicts with Walmart’s increased emphasis on health. However, Castro-Wright also emphasized that at Walmart, “first and foremost, we service customers,” which means selling them what they want to buy. “It is an issue we debate constantly,” he said.

If Walmart, like many other grocery retailers, were to abandon tobacco sales, convenience stores would stand to pick up a significant amount of that volume — a welcome boost to a category that is critically important, but declining, at c-stores.

Castro-Wright also said the company has no plans to expand its Marketside concept at this point. After testing the concept in the Phoenix market, the Walmart executive admitted consumer demand for the convenience/grocery hybrid is not as great as expected and that the company would not be “accelerating the effort until we are in a better position to make a decision.”

The news follows the recent announcement by British supermarket powerhouse Tesco that it would postpone expansion of its similar convenience/grocery hybrid, which debuted about a year before Walmart’s.

Walmart had plenty to cheer about as sales, profits and market share are up amid a national and worldwide recession. The retailer’s “Save money. Live better” tagline was cheered every time executives at the annual meeting in Fayetteville, Ark., June 5, mentioned it.

Most analysts agree Walmart’s emphasis on low prices has helped it distance itself from its competition. The company also stressed it is making improvements in its merchandise, such as the new Miley Cyrus collection, as well as remodeling stores so it can hold on to its new customers when the recession ends.