Wal-Mart has announced plans to shutter 269 stores globally, including 154 US locations. Among those slated for closure are all 102 Walmart Express stores, a small-format pilot project begun in 2011, and a dozen massive supercenters. Internationally, the retailer will close 115 stores, including 60 in Brazil where it’s been struggling.
While the closings represent less than 1% of Wal-Mart’s global square footage and revenue, the move is hardly trivial. By comparison, over the past five years Wal-Mart has closed just 16 stores in the US.
The unprecedented rash of closings reflects a change in strategy in which the company will focus more on building its e-commerce arm and growing and improving its giant supercenters and grocery-focused Neighborhood Market chain. (Domestically, Wal-Mart plans to open 50-60 supercenters and 85-95 Neighborhood Markets in fiscal 2017, which begins Feb. 1.)
With online sales, especially mobile-commerce, capturing a rapidly growing share of overall US retail sales, operators of physical stores (Wal-Mart has 11,600 globally) are becoming increasingly cost-conscious as they pour money into their online operations to compete with Amazon and other online-only merchants.
Wal-Mart, whose share price has tumbled almost 30% in the past year, spooked investors last fall when it announced its profits would shrink due to a $2 billion investment in its e-commerce arm and a pledge to raise wages for its lowest-paid workers. Tepid sales growth has failed to make up for those investments.
The closing of hundreds of stores signals a retreat from business as usual at Wal-Mart and underscores the changing retail landscape. With just $10 billion in online sales in 2013, according to Internet Retailer, Wal-Mart is under intense pressure from consumers and investors to make a bigger mark in online retail and fast!
Alexandra Biesada shops everyday, whether she wants to or not, and pines for the days when it was strictly a recreational activity. She has covered the retail beat for Hoover’s since 2001. Follow her on Twitter.