BENTONVILLE, AR - Wal-Mart has disclosed through an internal memo that it will be folding its Express store format under its Neighborhood Market banner. Going forward, its 21 Express store locations will be rebranded as Neighborhood Markets in what the Motley Fool believes is an effort to differentiate its line of smaller stores.

According to The Fool, Wal-Mart realized that there just wasn't enough separating the Wal-Mart Express format and the Neighborhood Market format to justify keeping both brands on the books. The retailer found that consumers were at large using the Express and Neighborhood Market stores for “fill-in trips” for last minute items or for filling prescriptions. By going with the larger 42,000 sq. ft. Neighborhood Market format over the 15,000 sq. ft. Express format, Wal-Mart will be able to offer a greater selection to this type of customer, especially in the fresh produce category, meaning more sales and a larger basket size due to impulse purchasing.

The fact that this decision comes now has struck some as perplexing. Less than a month ago, President and CEO Greg Foran had announced that Wal-Mart was enjoying excellent same-store sales growth with its Express stores and planned on opening 90 new locations this year with more coming in 2015. 

The Fool speculates that the reason behind this decision may come from a recent Nielsen poll which found that the "food, consumables, & OTC" category had gained 37 basis points of market share during the 13-week period ending in mid-July. The increasing importance of fresh options like produce, would doubtlessly increase the value of the Neighborhood Market format where these offerings are more easily incorporated. In this context, Wal-Mart's doubling down on its line of Neighborhood Markets makes much more sense.

There is also the argument that the Neighborhood Market format is Wal-Mart's best weapon against increasing competition from America's growing dollar stores, especially with Dollar General and Dollar Tree vying over the right to acquire the operations of Family Dollar. The Fool notes that none of these discounters offer fresh produce options, giving Wal-Mart's Neighborhood Markets a sizable advantage over its competition.

So far, Wal-Mart has not released an official statement commenting on this rebranding effort.

Stay tuned to AndNowUKnow for any updates on Wal-Mart going forward.

Wal-Mart