Amidst continuing store closures, fears are growing surrounding the future of retail giant Walmart. With over 5,000 stores across the U.S. and Canada, Walmart is undoubtedly a household name.
So, is Walmart Closing Stores?
Well, in recent years, a considerable number of Walmart’s stores have closed, with more scheduled to follow suit.
- But Why Are Stores Closing? Walmart’s Woes
- Supply Chain Problems
- Inflation and Tariff Increases
- “Can Walmart really continue marketing itself as a ‘discount superstore’”?
- But What is Walmart’s Biggest and Most Surprising Woe?
- Interested in Working at the Superstore?
- So, is Walmart Closing Stores? And is it Really Shutting Down?
Recent Walmart store closures include the following locations:
1 Chandler, Arizona
2 Tucson, Arizona
3 Norwalk, California
4 San Jose, California
5 Guildford, Connecticut
6 Indianapolis, Indiana
7 Liberal, Kansas
8 Louisville, Kentucky
9 Lafayette, Louisiana
10 Hanover, Massachusetts
11 Saint Paul, Minnesota
12 Bedford, New Hampshire
13 Cincinnati, Ohio
14 Cleveland, Ohio
15 Sault Ste. Marie, Ontario
16 Norristown, Pennsylvania
17 Pincourt, Quebec
18 Columbia, South Carolina
19 Knoxville, Tennessee
20 Morristown, Tennessee
21 Cypress, Texas
22 Dallas, Texas
23 Big Stone Gap, Virginia
24 North Chesterfield, Virginia
25 Virginia Beach, Virginia
26 Bellevue, Washington
27 Vancouver, Washington
But Why Are Stores Closing? Walmart’s Woes
Since the onset of the Covid-19 pandemic, businesses large and small have been forced to shut up shop under these unprecedented circumstances.
Bearing that in mind, and their swift switch to closing stores down across the country almost as quickly as they are opening, you could be forgiven for questioning…
‘is this really the beginning of the end for Walmart?’
Despite boasting a healthy financial position and rising revenues, Walmart’s narrow profit margins have been dwindling for years.
Of late, Walmart has reported a host of problems, including supply chain shortages, recession concerns, rising inflation costs, tariff increases, delivery options, and poor store performance, as the key reasons behind the closing of its stores.
For the purpose of this article, emphasis will be placed on the triple-edged sword of supply chain issues, inflation, and tariffs, as well as one more unforeseen drain on Walmart’s profits.
With global supply chain disruptions, rising inflation, and subsequent merchandise and energy price increases, Walmart’s current healthy financial situation could be subject to change in the coming years.
So, let’s find out the surprising thorn in the side of Walmart’s revenues…
Supply Chain Problems
Walmart’s shelves have been noticeably empty… but why?
Currently, Walmart is suffering from an overstock crisis, with the company holding $32 billion worth of inventory. John David, Walmart’s chief financial officer, said:
‘there is around $1.5 billion in stock that we wish we didn’t have; billions of dollars worth of orders have been canceled.’
The mass of overstock stems from the double-digit inflation problem – more on that later in my look at is Walmart Closing Stores?
‘The pandemic influenced major digressions in shopping habits, with online shopping preferred and inflation influencing further changes in customer consumption patterns.’
Mr. Rainey, Walmart’s spokesperson.
During the lockdown, homeware, exercise equipment, office supplies, and clothing/apparel were in high demand, and thus, production of those products ramped up. (ABC News).
Since the announcement of inflation, however, shopping habits have dramatically changed, with people only purchasing daily necessities and leaving ‘luxury’ items, such as the backlog of exercise equipment, to stagnate on the shelves. (Business Insider).
Not only is this build-up of merchandise difficult to sell in the current climate, but it is also incurring costs associated with the transportation and storage of all the excess inventory.
Inflation and Tariff Increases
‘Bottom-line results were unexpected and reflect the unusual environment; inflation levels, particularly in food and fuel, created more pressure than predicted.’
Doug McMillon, CEO.
Rising inflation is expected to persist further due to ongoing geopolitical tensions, causing more global supply chain disruptions, trade problems, and subsequent supply deficits, and rising fees. (CNBC).
Oil and energy prices are increasing globally, including in China, where Walmart acquires the majority of its products, which will ultimately add to ever-increasing merchandise, utility, and general operational costs.
On top of all this, new tariffs will also have a significant impact on the profitability of Walmart, as it is now necessary to pay 25% duties on goods received from China.
“Can Walmart really continue marketing itself as a ‘discount superstore’”?
With expenditures for Walmart on the rise, it’s difficult to imagine that in-store prices will remain unaffected.
Walmart’s customer base consists primarily of low-income, price-sensitive demographics who are generally more resistant to price hikes. In the current financial climate, this resistance will no doubt be further exacerbated as this demographic will be more susceptible to the consequences of increasing gas and utility bills and be more reluctant to sacrifice even more of their limited disposable income.
Therefore, amidst this perfect financial storm, Walmart may have a job on its hands increasing in-store prices in order to remain profitable in comparison to its competitors.
But What is Walmart’s Biggest and Most Surprising Woe?
Finally, according to Walmart’s CEO, Doug McMillon:
“Shoplifting has significantly increased, if it isn’t corrected over time, prices will increase and/or more stores will be forced to close.”
Further fueling the fire that Walmart may cease to exist in years to come and leading customers and employees alike to argue for old-fashioned cashiers to be reinstated, as opposed to continuing the installation of self-service checkouts. (Business Insider).
One anonymous Walmart employee said:
‘Corporate prefer self-checkouts because they supposedly reduce customer waiting time and business costs, but they are where most of the shoplifting occurs!’
With that being said, have your say! Should Walmart continue rolling out self-service checkout machines or revert back to good old-fashioned human cashiers? Let us know what you think in the comments section below.
Interested in Working at the Superstore?
If so, check out our Walmart Vision And Mission Statement Analysis to find out more about the company. Then take a look at our in-depth guide to the Walmart Application and the most common Walmart Interview Questions and Walmart Cashier Interview Questions, as well as our Walmart Stocker Job Description and Walmart Personal Shopper description for 2023.
You may also be interested in our guides on How to Pass the Walmart Assessment, the Walmart Dress Code, and the Walmart Firing and Termination Policy, plus, Does Walmart Pay Weekly, What Happens if you Fail the Walmart Assessment Test, Does Walmart Give Bonuses, or How To Call In Sick At Walmart?
So, is Walmart Closing Stores? And is it Really Shutting Down?
‘These are never easy decisions, but actively managing our portfolio on a case-by-case basis is essential to maintaining a healthy business.’
Brian Little, Walmart spokesperson.
Despite the potentially negative image portrayed by the number of store closures and the annual figures presented in the media and recent earnings reports, all may not be as it seems.
‘Operating over ten thousand stores worldwide and employing more than one and a half million associates in the US alone,’ Walmart is the primary private employer and the third biggest publicly owned company in the world, while earning the most revenue among its competitors in the country. (Corporate.Walmart.com).
‘Growth is improving on Walmart.com.’ Mr. McMillon explains
In recent years, Walmart has overseen a drastic change in customer trends, with the majority now preferring to shop online. Last year alone, between the first and second fiscal quarter, Walmart experienced a personal record-breaking e-commerce increase of just under 100%.
To support this rotation to e-commerce, McMillon states that: ‘the team is also working on improving the speed and cost of logistics, both between stores and warehouses, and for our customers.’
So, in short, no, Walmart is not shutting up shop; it is merely adapting and modernizing its portfolio to meet the supply and demand of current shopping trends and habits.
The closing of physical Walmart stores will facilitate further investment in Walmart’s online domain, such as its website, app, and text-to-shop service.
Happy shopping at Walmart.