I actually don't think Walmart has really gone off the rails. In the current retail environment closing less than 20 - 30 stores a year (with their massive store fleet) is perfectly normal and acceptable. I also think that only opening up 10 new stores this year is also acceptable as they're probably prudent to wait for the dust to settle in the Sears/Kmart, JCPenney, Shopko, etc. "retail apocalypse". In addition, they have been using a much larger percentage of their capital budget in recent yearsAlpha8472 wrote: ↑March 24th, 2019, 5:01 amWalmart is closing 9 stores including 1 Supercenter and 7 Neighborhood Markets. The Supercenter is in Lafayette, Louisiana.
I would suspect that the Louisiana store is closing due to shoplifting. I have friends who work for Walmart and the propaganda that Walmart tells them makes it seem like the situation is dire. All employees must combat shoplifting or else your store is next to close. This has led to fear and panic for the sake of keeping their jobs. If losses from shoplifting are too high your store will close, even if the store is packed with customers day and night.
Walmart is planning to open less than 10 new stores in the next year. This insane obsession about closing stores even if busy is illogical.
Walmart has a metric. If the store has too much loss due to shoplifting, the store will close. They don't care if it is a high volume store or if the store is the only discount store for 100 miles around.
The company needs to combat shoplifting of course, but closing down a store with no competition is stupid. Just because a store is less profitable than the company prefers makes no sense. The business will lose money from the loss of potential sales and customers will be very upset. For example, even years later Oakland, California residents still talk about their Walmart closing. That was the closest store to San Francisco. There is no Walmart in San Francisco. People have to drive 40 minutes away to find another Walmart. This is insane.
Walmart needs to stop focusing on closing down stores and start opening new stores in profitable middle class areas. There are plenty of cities that do not have any large discount stores.
towards their online / digital business, which can probably pay dividends for them later on.
I'm not convinced that the Neighborhood Market concept was ever really a winner for Walmart (and in many cases it makes little to no sense). In many cases the Neighborhood Markets simply divert traffic that was intended for a Walmart supercenter anyways (and Walmart loses out on the general merchandise impulse shopping of those customers). The 2 Arizona stores that are slated to close are both within 2 to 3 miles of Walmart supercenters and are located in former supermarkets that had been vacant for years prior to Walmart moving in (the Marana location is 2 to 3 miles from two different supercenters and is across the street from a Target and a Fry's, the Chandler location is a former Bashas' that is a stones throw from the Bashas' distribution center and is in an area otherwise devoid of any retail). Walmart would've been better off creating a "flexible format" store like the smaller Targets which have a curated selection of their entire merchandise assortment as opposed to opening up small, unimpressive supermarkets which don't even have the same selection or service departments of their supercenter stores.
I do find 2 actions of Walmart to be quite curious though (although it has nothing to do with the closures):
1.) Free grocery pickup.
2.) Returns at the doors of the store.
The way that the grocery pickup is being pushed it appears that it has the potential to divert customers from the store (thus incurring the expense of the "personal shopper" while at the same time removing potential impulse purchases). Walmart built its success on having a "full" supermarket that drew shoppers to their general merchandise. Grocery pickup seems to be the new Neighborhood Market in the sense that it creates a disconnect between grocery shoppers and Walmart's general merchandise departments. It seems that if it is only attracting Walmart's current core customers it's a money losing proposition. The only way I figure that Walmart's plan for free grocery pickup is supposed to work is that Walmart is hoping to target a higher demographic of shopper who would shop elsewhere (and thus isn't going to purchase anything from the GM side of the house at Walmart anyway). I'm just not sure that these customers are being drawn to Walmart over competing services at conventional supermarkets or Amazon Prime Now.
Returns at the door of the store also seems like a befuddling plan to me. Customers making returns may never end up making it into the stores, eliminating potential purchases of "impulse" buys.
If/when Walmart receives some return on investment from its recent digital investments, I think we could see store construction resume. It won't ever be more than 20-30 supercenters a year (and may be coupled with 20-30 supercenter closures a year) and the newer stores will probably not be much over 130,000 square feet but it is likely to happen at some point. Walmart really doesn't need any more stores. It may simply need different locations (and possibly to prune most of its Neighborhood Markets).