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A market analyst is out with a report saying that Walmart's Neighborhood Market stores "ave lost market share in about a third of their top 20 market locations in the past several years," according to a story in Investors Business Daily.

Indeed, the report from Kelly Bania, an analyst at BMO Capital Markets, suggests that Kroger is likely to be the major beneficiary from Walmart's "changing product mix" and diminishing competitive edge.

"We believe that Kroger is benefitting from an accelerating positive mix shift toward higher-margin natural, organics and fresh categories due to growing consumer demand for the categories, coupled with strong execution across these categories by Kroger," Bania says, adding that Kroger is likely to "benefit from consumers who are increasingly less cautious with prices as the economy improves."
KC's View:
I'm not really surprised by the problems that Walmart may be having in its Neighborhood Market stores, mostly because when I've gone into them, I've found them to be generally uninspired. It is like they're trying to jam 20 pound of sugar into a 10 pound bag … trying to simply create a smaller version of a supercenter and cram as much merchandise in as possible, rather than having a specific vision of what a small store should be.

I recognize that I haven't been to every Neighborhood Market, so maybe I've just caught the wrong ones. But I just don't think that Walmart has cracked the code on small stores yet.