Walmart Store Closures
Just this morning, Wal-Mart Stores, Inc. announced that it plans to close 269 stores in the U.S. and abroad in 2016, beginning at the end of this month. The announcement, which comes following a massive internal review of the company and its goals, includes a complete shutdown of all of its 102 Walmart Express storefronts along with another 52 stores throughout the United States. This move will impact about 10,000 domestic and 6,000 international Walmart associates.
According to industry analysts as well as the company itself, these changes signal a massive shift in Walmart’s approach to retail. It claims that closing these stores will allow the company to focus more on “strengthening Supercenters, optimizing Neighborhood Markets, growing the e-commerce business and expanding Pickup services for customers.”
In other words, this isn’t a sign of weakness, nor defeat.
In fact, all told, the stores Walmart plans to close represent a mere 1 percent of its global square footage and profits. In addition, many of the domestic stores that the company plans to close are located within 10 miles of another Walmart store. This is a double boon since thee company will strive to relocate many associates upon their store’s closure. Here’s a breakdown of the stores that Walmart intends to close.
In the United States – 154 total
- 102 Walmart Express stores
- 23 Neighborhood Markets
- 12 Supercenters
- 7 stores in Puerto Rico
- 6 discount centers
- 4 Sam’s Clubs
Outside the United States – 115 total
- 60 already-closed stores in Brazil
- 55 small format, loss-making stores in Latin America
While the closure of these 269 stores is news, especially given recent announcements by Macy’s, Sears, and Finish Line, all of which also intend to close stores this year, the real story is the shift in Walmart’s global earnings strategy.
Let’s be clear, the company is by no means contracting.
In fact, it still plans to roll forward with the opening of 50-60 Supercenters in the U.S. and 90-95 Neighborhood Markets. It also has plans to open an additional 200-240 stores internationally in fiscal year 2017 (which begins February 1st). However, it is shifting away from quantity and more towards quality and backing off from less-profitable markets. This is evidenced by the failure of the Walmart Express line, which was designed more as a convenience store with a more “local shopping” feel. It lost most of its market share thanks to the rising popularity of dollar stores. So now, the company will refocus on the “whole” experience of its supercenter format as well as invest heavily into online retail, where it continues to lose out market share to Amazon.
For the Walmart shopper, then, this news is minimal. While your local supercenter may be closing, chances are there is another one less than 10 miles away. And, in fact, you may even be getting another one in the coming year. At any rate, the reign of Walmart as the world’s largest retailer is far from over as the company continues to evolve and redefine itself for its market in the 21st century.