Walmart said Friday it plans to shutter 269 stores this year, including all 102 of its small-format Express stores. The move reflects a shift in tactics in which the retailing giant will focus more on building up its e-commerce firepower and improving its massive supercenters and grocery-centric Neighborhood Market stores.
As part of this strategy, the company said it will not move forward with plans to build two new supercenters in the District — one that was planned for Skyland Town Center in Southeast Washington and the other at Capitol Gateway Marketplace in Northeast Washington.
“Our experience over the last three years operating our current stores in DC has given us a fuller view on building and operating stores in the District,” the company said in a statement. “This decision will not affect our three existing stores and we look forward to continue serving these customers in the future.”
The store closures are to affect 16,000 jobs internationally, some 10,000 of those positions in the United States.
Even as Walmart plans to close hundreds of locations, it also intends to open more than 300 stores in the next year, including 50 to 60 supercenters in the United States and 85 to 95 Neighborhood Markets. The stores that are to be shuttered are ones that the retailer says account for less than 1 percent of global revenue.
Walmart had been testing the Express concept since 2011 as a way to reach a different kind of shopper and capture dollars from a different kind of shopping trip. Walmart Express stores were something of mashup between a dollar store and a small grocery, offering convenience-oriented food products but not a wide array of fresh produce or meats. The idea was that it could help Walmart win a greater share of so-called “fill-in trips,” when customers aren’t necessarily aiming to restock their pantry.
Plus, the store’s smaller footprint meant it could be a vehicle to allow Walmart to muscle its way into shopping centers and neighborhoods where a sprawling supercenter wouldn’t make sense. Back when they unveiled the Express format, executives said it would allow the chain to play “urban offense and rural defense.”
The retreat from this concept suggests the retailer did not see it getting the kind of traction in had initially hoped.
“We believe Walmart’s announcement of store closings this morning is just a ‘pruning’ of its voluminous network, with the continuation of Supercenter and Neighborhood Market expansions positives,” said Charlie O’Shea, lead retail analyst at Moody’s, in a statement.
Brian Yarbrough, a retail analyst at Edward Jones, says the move has left him wondering whether this is just the beginning of a years-long streamlining of Walmart’s fleet of 4,100 U.S. stores.
“It’s just the nature of the business,” Yarbrough said. “As things move to online, how many supercenters do you really need in the U.S.?”
Outside of the United States, Walmart’s store closure plan primary affects its Latin American market. Of the 115 stores it is shuttering abroad, 60 are money-losing stores in Brazil; Another 55 are located in other Latin American markets.
Walmart’s store closures come as the retail behemoth is making big investments to remake itself for the digital era. The company has said these efforts, along with the impact of a wage hike for its workers, will weigh on its profitability this year. Meanwhile, the chain has also been scrambling to spruce up its supercenters to be better stocked and offer friendlier service. There are early signs those moves are are helping: The retailer has seen five straight quarters of modest sales increases at its U.S. stores open more than a year.
The pullback on Walmart Express stores comes as a key rival, Target, is looking to expand its own fleet of small-format stores, which it recently has been opening in dense urban areas and college towns as a way to capture a different kind of shopper than the ones that frequent its suburban big boxes.
In abandoning the two long-planned stores in economically depressed areas of the District, the retailer walked away from projects that had been central to negotiations that first allowed it to begin opening stores in the city in 2013.
Walmart executives said that the decision was based on several factors, including the cost.
“These two projects were really, really expensive to do, much more expensive than a typical supercenter would be to build,” said Mike Moore, Walmart’s executive vice president of Walmart supercenter stores, in an interview.
Moore added that the existing District stores were not as healthy as they thought they’d be.
“We’ve got a lot of work to do with the three stores that we currently have open,”
Walmart contacted D.C. Mayor Muriel E. Bowser’s office Thursday with the news and met with her deputy mayor for economic development and two council members early Friday morning to explain the decision, administration officials said.
Talking to reporters shortly after the announcement was made, Bowser said she was fuming about the company’s decision, especially regarding Skyland, a major mixed-use development project to which D.C. had committed some $90 million in tax breaks, environmental remediation and other incentives.
“I’m blood mad about it, just like anybody would be for a project that has been promised to people … and is not happening,” Bowser said.
Bowser did try to temper the bad news. “They are not closing any stores in Washington, D.C., that is a good thing,” she said. But the mayor quickly turned back to the decision to pull out of Skyland. “We would have wanted them to do what they said they were going to do.”
Another city official, councilmember Yvette M. Alexander, also railed against Walmart’s move.
“I am angry and I take this personally as I advocated to bring them to Ward 7,” Alexander said in the statement.
Aaron C. Davis contributed to this report.