BENTONVILLE, AR–Wal-Mart Stores Inc. plans to close 154 stores in the U.S. at the end of January, but none in the Garden State.
The retail giant said it will close all 102 of its smaller Walmart Express outlets, which were launched as part of a pilot program in 2011, and drop its vision to open more of these 12,000-15,000 square-foot stores.
The outlets offered customers the ability to get in and out quickly, like shopping at a convenience or dollar store. But there were never any Walmart Express stores in New Jersey.
In the U.S., 10,000 jobs will be slashed due to the closures – only a small portion of the total 1.4 million workforce.
Wal-Mart says that all but 5% of the U.S. stores closing are within 10 miles of another Walmart, and that it will work to ensure employees are transferred to nearby locations.
Wal-Mart’s largest store format is known as the roughly 180,000 square-foot “Supercenter.” New Jersey has 34 Supercenters, and 26 Walmart’s that are smaller than the Supercenters — referred to as “Neighborhood Markets.”
The Garden State is also home to 10 Sam’s Club “warehouse” or “wholesale” type stores, another banner owned by Wal-Mart Inc. In Edison, there is a Sam’s Club right next door to the Wal-Mart Supercenter.
No New Jersey stores will see job cuts according to a company spokesman.
But globally, up to 16,000 workers will be affected, said the world’s largest retailer by sales.
The move is “necessary to keep the company strong and positioned for the future,” said Wal-Mart Chief Executive Doug McMillon, whose company has more than 4,600 stores in the U.S. right now.
Although he said the company will open more than 300 stores around the world next year, it’s now slowing down expansion in the U.S.
“We are committed to growing, but we are being disciplined about it,” McMillon said.
Wal-Mart also says it will now focus on strengthening the Supercenters, optimizing Neighborhood Markets, growing its e-commerce business, as well as expanding pickup services for shoppers.
The move comes amid a challenging time for retailers with large brick-and-mortar stores. Wal-Mart is reportedly having difficulty competing with Amazon.com Inc., its largest online rival. In addition dollar stores are taking away sales.
But Wal-Mart said the closures represent less than 1 percent of its revenue, including stores outside the U.S.
Macy’s Inc., also announced store closings this month, as we reported.
While the Wall Street Journal described the move as “rare retreat on home turf,” others see it as a recognition of changes in the marketplace that have been taking place.
“This is not your father’s economy anymore – certainly not your mothers marketplace,” said Craig Johnson, President, Customer Growth Partners, LLC, adding that the world has changed and Wal-Mart is finally beginning to change with it.
Johnson explained that there are too many retail stores across the U.S.
“We are over square-footed,” in terms of the amount of shoppers supporting physical stores, he said.
“Wal-Mart is managing a fleet that is no longer suited to how people like to live and shop today.”
Plans to build two Walmart Supercenters – which for comparison would have been roughly the same size of the Walmart in Edison or East Brunswick – in the Washington D.C. district are being cancelled.
On January 15, the National Retail Federation (NRF) said sales for the holiday period increased 3% to $626 billion, compared to a year earlier, but not as much as the trade group had hoped for. However, e-commerce sales rose 9% to $105 billion – better than the NRF’s prediction of 6% to 8% growth for the period.
“It’s good to see that management is willing to close stores because in the past we haven’t had that,” said equity analyst Brian Yarbrough, adding that “it probably isn’t enough.”
Wal-Mart is reportedly merging two existing tech teams next month in efforts to advance its digital commerce platform and be competitive in e-commerce.
The company is combining an Arkansas-based division said to be responsible for programing computer systems in its stores with a technology unit in Silicon Valley, California. Wal-Mart is calling the new group, which will be made up of 8,000 people, “Walmart Technology.”
More customers are shopping online using computers or mobile phones, and they expect their experience to be effortless.
If people cannot shop effectively they will seek to make purchases from companies that offer faster delivery, or other service options such as pick-up at a local store. Retailers seek to offer the so-called “seamless experience,” and must improve internet offerings, part of the “Omni-Channel.”
But Walmart customers may not view one method for purchasing products as any different from another.
“Our customers don’t think of these as different experiences. To them, it’s just Walmart or Sam’s Club,” wrote Neil Ashe, head of Wal-Mart’s e-commerce division, in a recent memo to staff.
“Any good healthy retailer will always prune the fleet,” says Johnson. “This is going to be a good year [for retail].”
Wal-Mart’s stock was down nearly 2% on January 15 to $61.97. It has been down nearly 30% in the last 52 weeks.
Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.