Walmart is an American multinational corporation that sells a myriad of products. It is known for being affordable and is a one-stop-shop of sorts. It is one of the world’s largest companies, a family-owned business that is one of the world’s largest employers. Recently, a lot of Walmart stores have been closing and the reasons are open to speculation.
In 2016, Walmart closed 269 stores across the world. Usually, stores close due to losses, and though that holds true even for Walmart, it is not the only reason. Since then, they have closed other stores, most of them in the US. Factoring in the recent pandemic, which has affected every business, Walmart has had a lot on its plate. They are trying hard to make it big in the online market, which is already dominated by e-commerce giants like Amazon. Walmart has also been facing a lot of competition recently. They were popular for being cost-effective, and have caused a lot of small businesses, small stores to shut down since their inception in 1962.
However, now there are a lot of other stores like the Dollar Store that provide the same service. Another reason that Walmart has been shutting some stores is that there are many stores in close proximity to each other. Their customers often overlap, and they have to end up competing with each other even though they are from the same chain. So they have been shutting down stores in over-saturated markets and trying to enter other markets where investments will be worthwhile. Apart from this, they also closed stores for cleaning purposes.
Walmart has been constantly changing from what it was. Walmart tries to innovate, experiment around to gauge what consumers want, but if it does not work out, they move on. They did this with their ‘’Express’’ format of stores, which was created to compete with dollar stores. This format was introduced in 2011 and ended around 2016. They are a retail giant trying to evolve and keep in touch with the market.
Inside Competition
Walmart has stores everywhere. Some stores are just miles apart. These stores are in inevitable competition with each other. They have to one-up each other to stay open. Consumers have to ask themselves which Walmart do they go to, instead of asking if they should go to Walmart. It is ultimately not good for the company to face this very odd situation. There is also the fact that if there are many stores in one area, they should have the population to sustain all those stores. Walmart will face unnecessary losses if there simply aren’t enough people to buy from all their stores. At this point, growth has outpaced demand and the rational decision is to cut back on parts of the business that are not profitable. Closing stores has been the solution for them to get out of this.
Online Markets
Walmart has been trying hard to enter the online market. After the pandemic, there has been an increased necessity for businesses to expand their online presence. Closing physical stores will allow Walmart to focus on its digital services. They have been reconsidering their physical store footprint in a world that is turning towards the Web for everything. Their efforts are slowly paying off as the pandemic boosted online sales by a large margin. In 20202, Walmart’s e-commerce sales increased by almost 97%. This has since slowed down as the enormity of the virus has decreased, but it looks like the online market is here to stay.
Employee Consideration
Closing stores will impact the livelihoods of thousands, and Walmart is one of the largest employers in the world. They are given benefits, such as sixty days salary and severance pay, but it does not change the fact that they are losing their jobs. If there are other stores nearby, they are being relocated to those stores. Walmart is also reducing the number of employees by using robots to fulfill jobs humans previously did, like cashiers. On a whole, though, worker unions are not very happy with Walmart.
Conclusion
Closing these stores will not impact Walmart negatively. In fact, after they announced the closure of stores in 2016, stock prices went up. They pull out of nonprofitable fields and venture out into different but profitable fields, restructuring their operations. Walmart has acquired many other brands like Flipkart and Jet.com, experimenting with each one. They want to offer users a wide variety of goods and services online as well as offline. They need to change up their business model if they plan to stay relevant, something that they seem to know quite well. Walmart will continue to open physical stores in locations that are beneficial to them. They are expanding in many countries and will keep growing as one of the biggest retail companies in the world.