Walmart, the world’s largest retail chain, will close 269 of its stores around the globe,154 of which are in the United States. This is a strategic move aimed at focusing on its super centers and e-commerce business.
The 154 stores to be closed in the United States consists of all Walmart’s 102 “Express” format stores.Others are 23 Neighborhood Markets,12 super centers, and several discount stores,Sam’s Clubs, and other outposts in Puerto Rico.115 stores in Latin America are also expected to close.Greg Hitt, a company spokesman, said that the closures were decided based on the financial performance of a particular store and how well the location fits with Walmart’s broader strategy.
The announcement comes after the retailer reviewed the company’s 11,000 stores worldwide. This sees 16,000 employees affected,10,000 of which are from the USA.Workers’ groups have begun to raise some concerns.Walmart assured that it would do its best to place the employees affected in other company stores. The retail giant would give a 60-day severance package together with resume and interview training for qualifying employees who were not rehired.
Company CEO Doug McMillon stated that Walmart had invested considerable time in accessing the stores and clubs and did not take the matter lightly.
“We will take all appropriate steps to ensure [employees] are treated well,” he added.
Despite it’s reassurances, workers’ groups and unions are not convinced. Some pointed out the fact that Walmart was untrustworthy in keeping its promises and that public relations mattered more to the company than their customers,the community, or their employees.
The company’s scale ensures that the closure of the stores will not have a significant impact on the business. The stores closed represent less than one percent of global revenue from Walmart’s nearly 11,600 stores worldwide. Hitt added that this move would help the retail giant to step up its digital and in-store initiative. Moreover, the move would open up the opportunity for Dollar Stores to reclaim the market share, since they will no longer have to compete against the “Express” stores.
“In the grand scheme of things and as far as being material to the financial results, this means nothing,” said consumer staples analyst with Edward Jones, Brian Yarbrough.
Walmart has been working hard to expand its e-commerce business and digital services in addition to upgrading its stores and providing its customers with better services and a more pleasant experience. McMillon said that the company was committed to growing but that it was disciplined about it. Reports say that Walmart plans to open around 300 stores in the coming year.
Walmart is not the first retailer to announce store closures to stay competitive in the ever-changing market.Finish Line and Macy have all closed some of their stores and laid off thousands of workers.
All eyes will be keen to see how Walmart handles the affected employees and if it would indeed keep its word to place some of them in other stores and generously compensate the rest.There is a lot of skepticism concerning Walmart’s promises in light of the company’s record of not keeping promises.