It is without a doubt that one would be hard-pressed to find someone who has never heard of Walmart. Considering that they are currently the nations largest employer pretty much tells you how far reaching their brand is. That is why it was such a surprise, almost out of the blue, when news dropped that the retail chain is planning to shut down 17 stores in the US and in Canada.
If you are thinking that the decision to downsize may have something to do with the competition, then you would be thinking wrong. The reason that the shutdowns are being implemented is simply because of Walmart itself. With current operations totaling over 5,000 retail locations within the United States alone, you can see how these shutdowns may cause some worry.
Placer, a data analytics firm, gathered information and analytics on exactly where the various Walmart stores slated to be shuttered were located. Through these findings, it was determined that Walmart was actually not a victim of the latest trend of retail store closings, but the retailer was, in fact, cannibalizing its own consumer traffic base, which in turn is resulting in the downsizings and subsequent closings.
A perfect example of the problem is shown at a supercenter in Dallas, which was amongst the first round of closures to be announced. The location had excellent foot traffic in its first quarter the finding showed. However, it was in direct competition with two other nearby Walmart stores. According to Placer, it would be reasonable to see underperforming stores resulting from a drop in foot traffic. In this instance, this particular Dallas location was showing to be still operating at reasonably normal levels.
Another instance of the problem is shown in the data findings in Lousiana. A Supercenter in Lafayette that was subsequently shut down, in fact, saw its customer base actually overlapping with another Walmart Supercenter close by in Carenco. With Walmart's rapid store expansions nationwide, a problem resulted in the fact that the centers are ending up actually in direct competition with one another.
What this boils down to is that the announced closings of select Walmart locations has nothing to do with a reduction in brand value, customer loyalty, or even reported sales. In actuality, the closings are a result of the Walmart stores being in direct competition with one another, and when that happens, one location has to go.
So, what’s the verdict—you decide.
Are the Walmart closures proof that the retailer grew too large, too fast, and in a sense ended up causing the closures itself?