Wal-Mart spokesman Steven Restivo said Monday that "while we have not shared an exact size of the small format ... we continue to evaluate a wide range of stores sizes across the country and will consider any format that puts us closer to our customers."

Bill Simon, the new president and CEO of Wal-Mart's U.S. business, told investors last week at a Goldman Sachs retail conference, said that "we will have a healthy mix of supercenters and small formats, including our grocery format, Neighborhood Market and smaller formats," he continued. He added that in particular, Wal-Mart is looking to open stores that are similar to the formats in Mexico, Central America, and Latin America.

"We are going to beg, borrow, steal and learn from them as quickly as we can, because it is important for our urban strategy," he added.

Wal-Mart, which now has more than 4,000 stores in the U.S. has hit a wall in the U.S. The company just reported its fifth straight quarterly decline in revenue at stores opened at least a year, considered a key indicator of a retailer's health.

Wal-Mart benefited during the recession as affluent shoppers traded down to cheaper stores. But stubbornly high unemployment and tight credit are still squeezing its main U.S. customers, lower-income workers who are having even more trouble stretching dollars to the next payday because of tight credit and an unemployment rate stuck at almost 10 percent. The discounter's own merchandising gaffes have also contributed to the company's revenue figure's decline.

Wal-Mart's rival Target Corp. is set to spell out more details of its urban strategy on Friday to the media at its headquarters in Minneapolis. Target had told analysts in January that it plans to open in the next few years smaller stores of 60,000 to 100,000 square feet. That compares with its current average of 125,000 square feet. But real estate executives including John Bemis, head of Jones Lang LaSalle Inc.'s retail leasing team, say Target also is looking at 20,000-square-foot locations.

"I think 20,000 makes more sense than 80,000 square feet," Sozzi said.