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Wal-Mart Set To Counter No-Frills Grocers With Smaller Stores

Wal-Mart's near-term expansion will center less on its Supercenters and more on far smaller, urban stores and locations where consumers can pick up merchandise they order online, Miguel Bustillo and Timothy W. Martin report. Among other competitive pressures, it is feeling the impact of no-frills grocery chains opening in cities.

The discount grocers include Supervalue's Save-A-Lot and U.S. stores of Germany's Aldi chain, which have lured customers to relatively small locations that offer selections of staples such as milk and canned vegetables at cut-rate prices. "A typical grocer carries 100 types of mustard," says Save-A-Lot President Bill Shaner. "We have just brown and yellow."

Retail experts disagree about whether the discounters pose a substantial threat to Wal-Mart, but Supervalu CEO Craig Herkert, a former Wal-Mart executive, plans to double the number of Save-A-Lots to 2,400 from 1,197 in the next five years.

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