Walmart, the world‘s largest retailer, has been making headlines recently with news of store closures across the United States and Canada. As a retail industry expert and consumer analyst, I‘ve been following these developments closely, and I believe there‘s more to the story than meets the eye. In this article, I‘ll provide an in-depth look at what‘s really happening with Walmart‘s store closures and what it means for the future of retail.
The Numbers: Walmart‘s Store Closures in Context
First, let‘s look at the raw numbers. In 2021, Walmart has announced the following store closures:
- 6 stores in Canada (out of 408 total)
- 3 tech hubs in the United States (in Arkansas, Texas, and California)
At first glance, these numbers may seem significant. However, it‘s important to put them in context. Walmart operates over 11,500 stores worldwide under 56 different banners, including:
- 4,743 Walmart stores in the United States
- 600 Sam‘s Club stores in the United States
- 406 Walmart stores in Canada
- 2,448 Walmart stores in Mexico
- 800 Walmart stores in Central America
- 373 Walmart stores in Chile
- 100 Walmart stores in Argentina
(Source: Walmart Annual Report 2021)
As you can see, the 9 total store closures announced so far in 2021 represent a tiny fraction of Walmart‘s overall footprint. In fact, Walmart has historically closed a small percentage of its stores each year as part of its normal business operations. Here‘s a look at Walmart‘s net store openings/closures over the past five years:
| Year | Net Openings (Closures) |
|---|---|
| 2020 | 69 |
| 2019 | (18) |
| 2018 | 123 |
| 2017 | 246 |
| 2016 | 230 |
(Source: Walmart Annual Reports)
As the data shows, Walmart has generally opened more stores than it has closed each year, with the exception of 2019. The company has stated that it plans to open around 300 new stores in fiscal 2022, suggesting that it remains bullish on the future of brick-and-mortar retail.
The Strategy: Walmart‘s Omnichannel Evolution
So if Walmart isn‘t abandoning physical stores, what‘s behind the recent closures? The answer lies in the company‘s evolving omnichannel strategy, which aims to seamlessly integrate online and offline shopping.
Over the past decade, Walmart has invested heavily in e-commerce, acquiring a string of online retailers and tech startups. Some of the most notable deals include:
- Jet.com ($3.3 billion in 2016)
- Flipkart ($16 billion for a 77% stake in 2018)
- Bonobos ($310 million in 2017)
- Eloquii ($100 million in 2018)
- Moosejaw ($51 million in 2017)
(Source: CNBC)
These acquisitions have helped Walmart build out its e-commerce capabilities and gain a foothold in new markets and demographics. However, the company has also recognized that its physical stores remain a key competitive advantage.
In recent years, Walmart has been leveraging its vast network of stores to support its e-commerce growth. Some of the ways it‘s doing this include:
- Using stores as distribution centers for online orders, allowing for faster and cheaper delivery
- Offering curbside pickup at thousands of locations, which has become increasingly popular during the COVID-19 pandemic
- Creating "omni-centers" that combine a Walmart store with an e-commerce fulfillment center, allowing for even faster delivery times
- Testing new technologies like automated pickup towers and drones for last-mile delivery
(Source: Harvard Business Review)
By integrating its online and offline operations, Walmart aims to offer customers a seamless and convenient shopping experience, whether they‘re browsing in-store or buying online. And the strategy appears to be paying off: in fiscal 2021, Walmart‘s U.S. e-commerce sales grew by 79%, and the company now ranks as the second-largest online retailer in the country behind Amazon.
Of course, executing an omnichannel strategy is easier said than done. Walmart faces a number of challenges as it seeks to transform its business model for the digital age.
One of the biggest challenges is intense competition from Amazon and other online pure-plays. Amazon has set the bar high for e-commerce with its vast selection, low prices, and fast shipping, and it continues to innovate with new offerings like Prime Video and Amazon Fresh. Walmart has made significant strides in catching up, but it still has work to do to match Amazon‘s customer loyalty and brand recognition.
Another challenge is changing consumer preferences. Today‘s shoppers are more discerning and demanding than ever, expecting personalized recommendations, sustainable and ethically-sourced products, and seamless experiences across channels. Walmart has invested in technology like artificial intelligence and machine learning to better understand and serve customers, but it must continue to evolve to stay ahead of the curve.
Finally, there are the logistical complexities of running an omnichannel operation at scale. Walmart must manage inventory across thousands of stores and distribution centers, coordinate deliveries from multiple vendors and carriers, and ensure a consistent brand experience across all touchpoints. This requires sophisticated supply chain management, real-time data analytics, and a highly skilled workforce.
Despite these challenges, Walmart remains optimistic about the future of retail. In a recent interview with CNBC, Walmart CEO Doug McMillon said, "We‘ve got a lot of confidence in our strategy. The customer is really responding to the omnichannel approach that we have, and I think we‘re uniquely positioned to serve them."
(Source: CNBC)
The Takeaway: Walmart‘s Store Closures Are Part of a Bigger Picture
In conclusion, while Walmart‘s recent store closures may grab headlines, they are just one piece of a much larger puzzle. Walmart is not abandoning brick-and-mortar retail, but rather evolving its business model to meet the needs of today‘s omnichannel shoppers.
By leveraging its vast network of physical stores and investing in e-commerce capabilities, Walmart aims to offer customers the best of both worlds: the convenience and selection of online shopping, combined with the immediacy and experiential benefits of in-store browsing and buying. It‘s a strategy that comes with challenges, but also enormous potential for growth and long-term success.
As a retail industry expert and consumer analyst, I believe that Walmart is well-positioned to thrive in the years ahead. With its scale, resources, and willingness to innovate, the company has the potential to redefine the future of retail and set a new standard for omnichannel excellence. While individual store closures may grab headlines, the bigger story is one of transformation and adaptation in a rapidly changing industry.
