Dive Brief:

• Walmart plans to remodel 500 stores and open 20 new locations across more than two dozen states, a move that's part of its $11 billion capital expenditure program, according to a company release.
• The majority of the store remodels will be in Texas and Florida, where the retailer will spend $477 million to revamp 82 locations and open 14 new ones. 
• As part of its push in The Sunshine and The Lone Star states, the retailer will also expand online grocery pickup, Mobile Express Scan & Go and Walmart Pickup Towers for online orders. Store changes may include wider aisles, additional self-checkouts and revamped produce departments. 

Dive Insight:

As the grocery wars continue to sizzle under the Florida and Texas sun, Walmart is looking to raise the stakes and crowd out smaller competitors. The Sunshine State in particular is seeing strong growth — Florida grocery square footage jumped 6% last year, up from a 5% growth clip in 2016, according to real estate research firm JLL. The rest of the country, meanwhile, experienced a dip of nearly 29% in store openings last year.  

This grocery boom is being driven by Florida's rising population — as many as 1,000 new people are reported to move to the state each day — but that doesn't mean the market has been easy to thrive in. Southeastern Grocers, which recently filed for bankruptcy, is shuttering underperforming stores in the state and repositioning some to its Hispanic Fresco Y Mas banner. The success of these stores reflect a changing consumer landscape and evolving shopper interests, tensions that Walmart will need to be attuned to in order to make the most of its remodels. 

Walmart isn't the only retail giant looking to double down in the Southeastern market. Publix, the market share leader in Florida, plans to spend $1.5 billion this year to build new stores, remodel existing locations and buy shopping centers anchored by company stores. And while Publix's premium products attract a different consumer than price-focused Walmart does, the supermarket could still pose a threat to Walmart's Florida expansion. Publix posted a profit margin of 6.6% in 2017, a strong figure in the low-margin grocery game, and is beloved for its sterling customer service and in-store experience.  

Walmart's expansion of its store pickup program gives it a leg up over many small and mid-size competitors. As consumer demand for convenience intensifies, this value-add could lure shoppers from more traditional supermarkets, especially if its revamped produce departments are competitive with the selections of more premium players. 

Texas is also buzzing with grocery activity, especially in the e-commerce space. Earlier this year Amazon launched Prime Now delivery from stores in the Dallas area, and Target launched same-day delivery from its stores through its Shipt service. H-E-B, which also offers delivery through Shipt, is also expanding its store pickup service throughout the state.

Walmart sees several hundred click-and-collect orders every week from each of its Dallas-Fort Worth stores, according to a recent report by The Dallas Morning-News. The mega retailer will look to continue building that business, and will also likely bring home delivery to key Texas markets. Giving shoppers a choice between two services, not to mention its capital and technology prowess, should give Walmart a significant advantage in crowded regions throughout Texas as well as the rest of the country.