Walmart to close Health Care Clinics

[Alpha8472]

My local San Francisco Bay Area Walmart changed their mind on closing self checkout. Lines were too long with no self checkout.

Now self checkout is back open, but with a cashier at each self checkout ringing up your merchandise for you and apparently no limit on the number of items.

Price scanners encourage customers to dump their merchandise. Once customers see the price on the scanner, they dump it right next the price scanner. If there are no price scanners, customers go to the checkout and everything gets rung up. At the checkout, customers are less likely to pay attention to prices. You don't even get to see the prices until they show up on your receipt. Customers are not going to go to wait in the return line to return their items.

Sales are down at Walmart. Prices have gone up and there have been cuts to Snap (formerly food stamps). Aisles used to be packed with customers, but now people are buying less. Everyone is reducing their spending. It is the high prices on everything from food to gas, etc.

The Walmart clinics had long wait lists. People wanted appointments. Yes, there is a demand for appointments, but this was due to so many outside doctors refusing to take money losing Medicaid. Walmart took Medicaid and it made it seem like customers were coming from all over demanding to use these clinics.

So Walmart started building tons of clinics. It wasn't until they looked at the reimbursement rates and realized that these were customers who had money losing insurances that nobody else wanted. Now Walmart is freaking out and can't even close these clinics fast enough.

It isn't like these people would visit the clinic and then shop at Walmart for groceries afterwards. These sick people use the clinic, make Walmart lose a ton of money and then they might skip shopping at the store.

With a pharmacy it is different. On some medications you make money. For example, blood pressure medications, antibiotics, creams, shampoos, eye drops, vaccines, etc. make money. A few expensive medications lose money, but the other 3 or 4 profitable medications of an average customer makes up for the few loss leaders.

So pharmacies bring in customers to shop while prescriptions are being filled. The customers fill up a shopping cart with merchandise, and you more than make up for the few loss leader medications. Pharmacies bring in customers and make money overall, while doctor clinics are money losers.

[buckguy]

Only thing I find odd is that this is a very, very rapid "about face" from Walmart. Here is an announcement from just last month about a massive expansion underway for the program. So a hair less than two months from announcing the doubling in size of the program they pull the plug?

https://corporate.walmart.com/news/2023 ... es-in-2024

Makes me wonder if Walmart is doing much worse than expected financially right now and decided to make some urgent changes to cut costs. I wonder if they will also halt the program to expand the "flagship" store program to 1,000+ major remodels this year (and renamed "Store of the Future"). Those are long, painful remodels that have been taking half a year and severely disrupting the affected stores. Not to mention they appear to be the most thorough and expensive remodels Walmart has ever done. I saw lots of little detail work occurring on these remodels, and as we know Walmart has never spent money on little details before.

Things in retail don't change that quickly. Their underlying problem is that their core business has been sluggish for a long time. My guess is that one motivation for becoming more truly multi-channel was that it would get people into stores, including people who normally wouldn't go to Walmart and it hasn't worked out that way. There pattern seems to be quietly closing individual stores---they usually seem to be in locations where there is plenty of competition and that likely makes it difficult to increase volume. The leases probably have value as a way to bring in cash. Their other pattern has been to low ball their quarterly estimates and then miraculously do a little better. They can only do so much of that.

I was dubious about the big remodel rollout. They have done big remodel operations in the past, but they were much simpler. The ultimate problem for them is that the Waltons and their many institutional investors want them to continually increase earnings and they don't have many ways to do that. They've sold off or reduced their interests in money losing operations, they've gone back into financial services (and gotten a lot of bad pr for the way they've run it), and pared labor intensive parts of their grocery operations. There isn't much more for them to do. Now that Sam's is, in the short run anyway, a going concern, I wonder if they'll sell it. They have been buying back increasing amounts of stock which inflates dividends, but that uses up cash that could go into operations.

[mbz321]

Pure speculation here but Walmart has been very slow last couple of months. In fact I find myself buying very little there right now with their sky high food prices that are in desperate need of a rollback. I've never seen so many piles of merchandise next to price scanners before... So many people think magically they're going to scan the items and find a magical deal that isn't on the shelf.

Your stores still have price scanners? I haven't seen them in any of my nearest locations in years!

[ClownLoach]

I wonder if they are going to drop more store closures as well? Seems like California oddball stores that were shoehorned into difficult sites are paying the price so far this year.

Encinitas would be an example, it is a former Home Depot Expo design center. Demographics in the area are anathema to Walmart.

Not sure why everyone is obsessed with that Encinitas Walmart, it probably has the highest sales per square foot in all of San Diego. Logistics are fine for the site too. It is busy every single day. Also the discounters on the same street have their #1 or #2 performing stores in all of San Diego, including TJMaxx, HomeGoods, and Kohl's. In fact every store I've been in on that stretch of El Camino Real is insanely busy, the only one that failed was Big Lots and it was one that was built to be the grocery store concept inside with extra coolers and such they couldn't sustain. The Michaels next door was so busy it took all their parking and they had to open a second store 3 miles away because they were over capacity, probably was the busiest one in San Diego County too until they opened the second one on Rancho Santa Fe. Now the Big Lots is an Aldi with expanded wine dept.

The oddball problem Walmarts are the ones where they shoved them into a building they don't work well in, bad logistics like freight elevators or flat docks that require fixed conveyor hand unloads. Nonstandard stock rooms. Two stories. Those are the ones that add cost to the operation.

[ClownLoach]

Pure speculation here but Walmart has been very slow last couple of months. In fact I find myself buying very little there right now with their sky high food prices that are in desperate need of a rollback. I've never seen so many piles of merchandise next to price scanners before... So many people think magically they're going to scan the items and find a magical deal that isn't on the shelf.

Your stores still have price scanners? I haven't seen them in any of my nearest locations in years!

They put like 3 of them and they keep getting broken. I don't think the customers are breaking them, I think the Walmart employees hit them with their tall metal stocking carts and break the screens. One in grocery, one by toys, one in apparel. If they're going to do it they need to do it right and install at least a couple dozen, but I think the employees would hate it since the customers are convinced they are going to find magical sales that aren't posted. I've seen some stores where they're mounted on the columns that hold up the store and are on the racetrack but same issue they're either broken or completely blocked by merchandise. I think the employees break, block, or remove them intentionally as they know there is going to be a mountain of go backs within a 8 foot radius that has to constantly be cleaned up. That's why they're very hard to find.

Walmart is trying to educate customers to use their app as a price scanner, but they have too many customers who don't have current smartphones, unlimited data etc. I see customers trying to get the electronics people to help them understand why the app doesn't work when they've turned off mobile data and Wi-Fi, then don't want to turn either on because of the limits of their prepaid plan and paranoia about Wi-Fi. I think their efforts to push the app for everything aren't working out.

[BreakingThrough]

Only thing I find odd is that this is a very, very rapid "about face" from Walmart. Here is an announcement from just last month about a massive expansion underway for the program. So a hair less than two months from announcing the doubling in size of the program they pull the plug?

https://corporate.walmart.com/news/2023 ... es-in-2024

Just pointing out that the linked press release was published in March of 2023, not last month. I can't get into details, but I worked with some Walmart folks on some surrounding health initiatives (not directly related to the retail outlets but projects supporting the roll-out), and they seemed very much not into it. Constant last-minute rescheduling, ghosting, lots of turnover on the health team.

Not sure why everyone is obsessed with that Encinitas Walmart, it probably has the highest sales per square foot in all of San Diego. Logistics are fine for the site too. It is busy every single day. Also the discounters on the same street have their #1 or #2 performing stores in all of San Diego, including TJMaxx, HomeGoods, and Kohl's. In fact every store I've been in on that stretch of El Camino Real is insanely busy, the only one that failed was Big Lots and it was one that was built to be the grocery store concept inside with extra coolers and such they couldn't sustain. The Michaels next door was so busy it took all their parking and they had to open a second store 3 miles away because they were over capacity, probably was the busiest one in San Diego County too until they opened the second one on Rancho Santa Fe. Now the Big Lots is an Aldi with expanded wine dept.

I grew up in the area and my mother shops the Encinitas Walmart. She says she has heard from others in town (mostly other elderly women) that it is the "nicest Walmart in the country." I highly doubt that, but maybe makes people "feel better" about shopping there. That area fought like mad to prevent a Walmart going in at Rancho Santa Fe and Melrose. Walmart certainly won that war by slipping into that Expo space during the great recession.

Off Topic

Surprised the Encinitas Kohls is such a high performer, but the surrounding demographics probably explain that. I find that location small and limited in selection. I remember when that space was a Lucky during peak "When the going gets tough, the tough go shopping at Lucky" days in the '90s. I remember snobs in the area "looking down" at shopping at that Lucky. Speaking of, any idea how the new Aldi on that stretch is doing? I still remember when it was Circuit City and the whoel center was called "Circuit City Center"

[ClownLoach]

Only thing I find odd is that this is a very, very rapid "about face" from Walmart. Here is an announcement from just last month about a massive expansion underway for the program. So a hair less than two months from announcing the doubling in size of the program they pull the plug?

https://corporate.walmart.com/news/2023 ... es-in-2024

Just pointing out that the linked press release was published in March of 2023, not last month. I can't get into details, but I worked with some Walmart folks on some surrounding health initiatives (not directly related to the retail outlets but projects supporting the roll-out), and they seemed very much not into it. Constant last-minute rescheduling, ghosting, lots of turnover on the health team.

Not sure why everyone is obsessed with that Encinitas Walmart, it probably has the highest sales per square foot in all of San Diego. Logistics are fine for the site too. It is busy every single day. Also the discounters on the same street have their #1 or #2 performing stores in all of San Diego, including TJMaxx, HomeGoods, and Kohl's. In fact every store I've been in on that stretch of El Camino Real is insanely busy, the only one that failed was Big Lots and it was one that was built to be the grocery store concept inside with extra coolers and such they couldn't sustain. The Michaels next door was so busy it took all their parking and they had to open a second store 3 miles away because they were over capacity, probably was the busiest one in San Diego County too until they opened the second one on Rancho Santa Fe. Now the Big Lots is an Aldi with expanded wine dept.

I grew up in the area and my mother shops the Encinitas Walmart. She says she has heard from others in town (mostly other elderly women) that it is the "nicest Walmart in the country." I highly doubt that, but maybe makes people "feel better" about shopping there. That area fought like mad to prevent a Walmart going in at Rancho Santa Fe and Melrose. Walmart certainly won that war by slipping into that Expo space during the great recession.

Off Topic

Surprised the Encinitas Kohls is such a high performer, but the surrounding demographics probably explain that. I find that location small and limited in selection. I remember when that space was a Lucky during peak "When the going gets tough, the tough go shopping at Lucky" days in the '90s. I remember snobs in the area "looking down" at shopping at that Lucky. Speaking of, any idea how the new Aldi on that stretch is doing? I still remember when it was Circuit City and the whoel center was called "Circuit City Center"

That entire strip of El Camino Real is still one of the best performing in all of San Diego, probably only second to Mission Valley area.

What is unusual is that it is a heavy, heavy daytime and weekday business on that strip. So if you're comparing foot traffic during "normal" peak hours of nights and weekends it may seem to just be average. There is a ton of old money in the area and generational wealth. There was always very little business after 7pm in that area.

I was surprised at how nice the Walmart by the 5/78 interchange is too. Not the newest format but still very clean and well kept with a more upscale feel. The next Walmart over on the 78 still in Oceanside closer to Vista is also decent but it's been a few years since I've been there. They seem to be focused on running a good operation in that north coastal pocket of San Diego County. They start to deteriorate as they get into Vista and San Marcos, and I have not set foot in Escondido but I imagine it is rough.

Good catch on the press release, but they were still talking expansion last month. Here's the correct story. So it is still a very rapid change.

https://www.forbes.com/sites/brucejapse ... 0581a24e4b

[Alpha8472]

Amazon bought an entire chain of doctor's offices called One Medical. Wall Street wanted Walmart to copy Amazon since Amazon seems to be all into the idea of opening doctor's offices.

Amazon is losing money on those clinics and is too afraid to admit it. The company is still pushing the subscription plan of adding $9 onto your Prime Membership.

I work in a pharmacy and have to deal with One Medical. It is a hodgepodge of clinics all over the country with a bunch of inexperienced doctors who can't seem to run their own doctor's office. It is the huge inconsistencies that come from a huge chain spread all over. They recruit young doctors who can't find work at other places and market themselves as internet savvy or with fancy looking offices. It is all very superficial and appeals to Gen Z or Millennials. In reality, contacting One Medical is like dealing with an outsourced call center somewhere.

I think Amazon thinks they can use this as a loss leader to make people keep paying a fee on top of their Prime Memberships.

[ClownLoach]

Amazon bought an entire chain of doctor's offices called One Medical. Wall Street wanted Walmart to copy Amazon since Amazon seems to be all into the idea of opening doctor's offices.

Amazon is losing money on those clinics and is too afraid to admit it. The company is still pushing the subscription plan of adding $9 onto your Prime Membership.

I work in a pharmacy and have to deal with One Medical. It is a hodgepodge of clinics all over the country with a bunch of inexperienced doctors who can't seem to run their own doctor's office. It is the huge inconsistencies that come from a huge chain spread all over. They recruit young doctors who can't find work at other places and market themselves as internet savvy or with fancy looking offices. It is all very superficial and appeals to Gen Z or Millennials. In reality, contacting One Medical is like dealing with an outsourced call center somewhere.

I think Amazon thinks they can use this as a loss leader to make people keep paying a fee on top of their Prime Memberships.

I don't think One Medical is going to survive the next inevitable round of Amazon cost cutting and all the clinics will be closed. They have spent way too much on high rent, high cost offices in the most expensive shopping centers when there are ample vacancies at cheaper medical plazas everywhere. Many complaints about surprise bills for hundreds/thousands because at the last minute the provider was changed and the new one is not under the patient's insurance but nobody checked prior to initiating the visit. I don't think Amazon is losing anything based on the countless Yelp reviews where the high 3 digits/low 4 digits surprise bills are widespread. I don't think they're making any money either though and the rapid turnover of providers, many of whom are not MD but rather NP level, will lead patients to not renew. The good reviews are really good but also few and far between. The bad reviews are very bad and seem to align with all the same problems of Amazon; when you have a problem it's impossible to reach anyone who knows how to solve it.

[wnetmacman]

Everyone -

We've moved badly off the topic of the Walmart Health Care Clinics here by talking about Bettergoods, so I've split that into its own topic and moved all the posts related. Any discussion of that should take place over there.