What happens when Walmart closes a store?

Photo: Walmart
Jan 27, 2016
George Anderson

One of the criticisms leveled at Walmart in its rise to become the world’s largest retailer is that every store the retailer opened forced others to close. In the end, supporters of the chain argued that the net result was a benefit as Walmart provided jobs and that its low prices helped many. But what happens when Walmart establishes a store in a town and later decides to close it?

According to a Bloomberg article, the consequences can be severe. Oriental, a town of about 900 in North Carolina, recently saw its local grocery store of 44 years close because it could not compete with its much larger rival. A few months after the grocery store closed, Walmart announced it was pulling out as well.

“I was devastated when I found out. We had a pharmacy and a perfectly satisfactory grocery store. Maybe Walmart sold apples for a nickel less,” Barb Venturi, mayor pro tem for Oriental, told Bloomberg. The mayor said the store closing may also hurt property values.

Walmart has just closed a supercenter in Winnsboro, SC and one commercial real estate broker thinks there may be some benefit. David Stuck, a broker in Columbia, told The Wall Street Journal, that Walmart’s presence in the town of 3,500 had kept other retailers from opening stores. “No one wanted to compete with it,” he said.

With Walmart gone, stores that have remained vacant, such as a former Food Lion and a Goody’s, may now find tenants.

While the Friedman Doctrine insists that the only social responsibility of business is to be profitable, Walmart said its representatives have spoken with community leaders in areas where the company is closing stores in an effort to be helpful. What form that help will take was not clear from reports.

Do you see Walmart’s decision to close stores, particularly in areas where it is shuttering its big boxes, as an opportunity or an impediment to growth for the communities the stores once served? What responsibility, if any, does a successful business such as Walmart have to communities when it decides to pull out?

"While a Walmart closing in a community will be an immediate hardship, it does present huge opportunity for growth and could give new life to a community."
"We cannot continue to deny the impact our corporations have on the environment and the people that live in it. Walmart should have a responsibility to those communities, but likely it won’t do much of anything."
"I’d like to propose a germ of a more creative solution: What if Walmart were to spin off some of these small-town store closures as re-development projects?"

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20 Comments on "What happens when Walmart closes a store?"

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Zel Bianco

While a Walmart closing in a community will be an immediate hardship, it does present huge opportunity for growth and could give new life to a community. Walmart could buy a lot of good will by ensuring that their former locations don’t stand empty for years and Walmart or other companies looking for outreach opportunities could try to help foster small businesses in the area.

And here is a free idea for anyone with a background in architecture: develop a cost effective and environmentally friendly way to transition former big box locations into community centers with space for retail, dining, performances, health facilities, etc.

Ken Lonyai

As far as responsibility to communities, ultimately I would agree with the Friedman Doctrine. However, a compassionate gesture and a sign of corporate responsibility would be to work with locals in the places that are affected by the closings.

On the other side of the coin, if there’s a vacuum there’s always an entrepreneur in the shadows waiting to fill the void.

Steve Montgomery

My first thought is would this be a topic if the stores that closed were named something other than Walmart? I suspect the answer is no. The reason it garners headlines is the perception of Walmart is that in smaller markets it wants to put other retailers out of business or it is a known consequence of its opening stores.

The customers in those markets freely elected to shop at the Walmart rather than the historic venues. The issue in Oriental was that there was not enough business to support both and as it turns out not enough to even support the Walmart location.

Social responsibly is a tough issue for any business. The first goal of a business has to be to survive and to do that it must be profitable. At the local level that means each store needs to contribute to the overall financial health of the company. If it does not the parent company’s obligation to its shareholders/owners requires it be closed. This does not make a happy ending to the story.

Ron Margulis

There is a lesson in what has happened to the Kmarts across the country 10 years ago. Some are now supermarkets and club stores, while others have been sub-divided and are now fitness and health centers. Still others have been demolished and the land developed for high-density residential. Very likely the same will happen with the closed Walmart stores.

Paula Rosenblum
I think the Friedman Doctrine (had no idea it had an author, I just knew it was B-school 101) is hopelessly near-sighted, out-of-date and counter-productive to our society as a whole. I’m much more bullish on the notion of conscious capitalism, which states that a corporation also has a responsibility to its employees and the communities within which it operates. We cannot continue to deny the impact our corporations have on the environment and the people that live in it. Walmart should have a responsibility to those communities, but likely it won’t do much of anything. That’s its recent history. My friend Walter Loeb thinks Sam Walton is rolling over in his grave over the actions his company now takes. But with regard to the subject at hand, in the long run, I do think towns will benefit from Walmart’s departure. Filling up those ugly big empty boxes may prove challenging, but it’s always nice to see smaller footprint stores, and truthfully, is more in-line with Millennials’ desires. In the short run there will indeed be pain felt — from out of work employees to people spending a lot of money on gas to go get food. One has to wonder,… Read more »
Ken Morris

I believe this is an opportunity for these communities. Perhaps the population will now be able to earn a living wage and take back the mantle of customer service that was the hallmark of stores that served these communities.

The number of highly compensated manufacturing jobs lost to China by Walmart procurement policies far outweighs the minimum wage jobs in their stores. I believe these communities need to be smarter up front and perhaps insist on some kind of closure bond or deposit as they will never get satisfaction when these businesses pull out.

Bob Phibbs

I realize I may be in the minority but as I wrote in my first book, “You Can Compete,” when Walmart comes to a community and effectively removes many of the small businesses and then leaves, it has officially crushed that local economy.

They became dependent on the big box and the the box moves to another town expecting those people to drive 30 to 40 miles out of their way. I’m not so naive as to think this wasn’t part of the plan from the start. The countryside is littered with local economies that gave tax benefits and more expecting a renewal, not a defeat.

Jonathan Marek

Stores open and stores close. The responsibility of the retailer is to operate them profitably and generate value for the shareholders. Of course that means having a great offering where consumers want to shop, but sometimes there aren’t enough sales or the cost of business is too high. Sometimes, in the the case of the Oakland, CA Walmart, the government is making the cost of business too high.

But as others have said, a Walmart closure presents a massive opportunity to others to develop stores in those areas that aren’t as big and expensive to run. I’m sure someone out there could make a lot of money following the closures and putting in the right smaller concept. That’s how the market works. Businesses die and others that are better suited grow in their place. It’s when we try to stop that process that the economy dies.

Kevin Graff

No offense to the consumers in communities who opted to spend a nickel less on an apple at Walmart and as a result put their local business out of business, but seriously, they kind of did this to themselves. Consumers vote with their wallets. Now, for the softer side of me, it would be socially responsible for Walmart to extend some added help to the employees displaced by their closing.

Ben Ball

People vote with their wallets. If they truly do not want a Walmart — then keep shopping at Fred’s or Judy’s or wherever you shopped before. People like to say “Walmart ran me out of business … ” But Walmart did not — your shoppers did.

Mark Heckman

As long as Walmart controls the leases on these closed stores you can bet that a competitor will not replace them in that location. Bring on the flea markets and fitness centers.

Walmart does have a decision to make in terms of how gracefully they leave a community or a location, particularly in their efforts to find jobs for those associates in those closed stores. In this regard, most retailers of size do their best to find opportunities for those employees. Beyond that, do not expect much.

On the consumer side of things, if there is not another “price” retailer in the trading area, shoppers could see prices in the remaining food and mass retailers go up, as Walmart’s pricing has actually served as a depressant on retail pricing in those areas they dominate.

James Tenser
Change often hurts. In smaller communities where the local Walmart had become the largest employer and primary source of consumer goods, a store closure is likely to have devastating effects in the near term. Lost jobs, lower tax revenue, and an ugly, vacant blight surrounded by a parking lot. Shuttering a non-productive asset may seem like a rational choice, but it is no better than abandoning a strip mine after the ore has been collected, leaving behind a ragged hole in the landscape. Walmart shareholders are unlikely to feel even a smidgen of these consequences. This is the opposite of heroic. It is precisely the type of disconnect that vexes critics of Friedman’s doctrine dismissing corporate social responsibility. Due to its unprecedented scale and economic impact, Walmart is a unique instance in the annals of American business. It’s not appropriate to evaluate its tactics in the light of some economic theory. What matters is the impact on the ground. I’d like to propose a germ of a more creative solution: What if Walmart were to spin off some of these small-town store closures as re-development projects? Re-deploy local talent and hire local contractors to make the necessary physical changes to… Read more »
Peter Charness

Retail follows the “Darwin” principle. The challenge is that Walmart aggressively goes after competition when they open up a store through strong pricing, and then after they have taken out the competition prices may go up from the intro levels. Having taken out the competition, closing a store leaves that town in a bit of a lurch. But I don’t see any responsibility of Walmart to do much about it, other than perhaps cooperate on turning over the real estate in some fashion for repurposing by others. Are they abandoning the stores, or continuing to own and pay taxes on them?

Jack Pansegrau
Jack Pansegrau
8 months 29 days ago
This was among Walmart’s smallest SuperCenter formats at ~110,000 sq. ft., indicating this was always seen as a small satellite market. And there is a 40,000 sq. ft. BI-LO store [200-store chain] just a mile to the south. And all major retailers just 20 miles to the south in Columbia. So this is not as dire a situation as the WSJ article initially lead me to believe. Yes, sales taxes collected by Walmart will drop, but I would bet BI-LO will see a huge increase in sales, offsetting a good portion of the losses in tax revenues. This was never a viable market for Target, so in my opinion, Winnsboro was “lucky” to have had the convenience of the “Baby SuperCenter” for the time it did. That stated, I do believe it will be a potential opportunity for redevelopment and one that Walmart would do well in assisting where it can. It is unlikely to have much retail appeal due to the small size of the trade area but potentially a community center, college, business location, etc. As for stricter regulation of full life-cycle costs for real estate development — it is a great concept, but unless carried out statewide or… Read more »
Shep Hyken

I don’t think we can control if a business keeps its doors open or not. It’s their choice. Walmart is a disrupter to smaller towns (and even bigger towns). At one point they even had a program to help businesses adapt to them coming into their towns. Bottom line is that this is business. I know it sounds callous, but it is driven by the bottom line.

The example of the grocery store closing just before Walmart closed their doors is disappointing. I highly doubt (would even bet on it) that Walmart didn’t plan for that scenario.

When a box store like Walmart closes, it opens opportunities for others. I like that Walmart is trying to be a good corporate citizen and work with the community leaders in the areas they are closing.

Craig Sundstrom

The second question is easy to answer: none; the Friedman Doctrine actually requires more than “profit,” it also requires a business to observe laws and regulations, but as I don’t think they’re violating any laws, that’s not applicable.

As for the first question, that depends on why they’re closing. If, as one of the posters above indicated, the market is just too small for their format, then it may not be a negative reflection on the community — other than “smallness” — and it may present an opportunity. On the other hand, if the closing was due to poor performance —shrinkage, falling income and/or population in the area, etc. — then the future probably looks bleak…whether Walmart stays open or not.

Kai Clarke

Walmart’s decision to leave always has tremendous consequences for the local community and local businesses. Walmart doesn’t have any actual responsibility, but the local community should be prepared for the loss of different types of business (including loss of strong service business to support all of the individuals which the store used to draw). How it defines itself post disembarkation of the Walmart should reflect on the local community that is still in-place, not the one which existed prior to the Walmart.

Tony Orlando
Okay, I will chime in, as I need to address this. Walmart is in business to make money, and also to make sure they use their leverage to stamp out the independent grocers in small towns, plain and simple. I could tell stories about them (all true) that would make you think (but I won’t, since it seems like whining), but loyalty goes out the window when they show up in town, and Aldi’s as well. Price is the motivating factor for the great majority of consumers, especially in rural poor towns, like where my store resides, and the folks pack these stores and tend to forget the independents pretty quickly. I had to rethink how I would run my store by studying their weaknesses and promoting what we do better in order to attract any attention, and it has worked to some extent. No one is going to feel sorry for smaller stores, and when they all close, as long as WM is still open, the customers will hardly notice. When a WM shuts down, than the calls go out for someone to step in, and serve their needs, but for the most part, it is too late, and… Read more »
Ed Rosenbaum

Irony prevails. Walmart comes in to a small town and businesses that have been open serving the community for years is forced to close. Why? Because those customers patronizing the local merchants now want more for less. Where was their loyalty?

Now Walmart is not making enough profit and decides to pull out leaving a void. Not only a void in the business community serving the public, but now empty space and less taxes being received. How many businesses will it take to fill that?

I was never a fan of Walmart’s opening and crushing local businesses. But it seems those local community leaders were more interested in the tax revenues received than what it would do to the residents who used to earn a living there.

Be careful what you wish for.

Bob Amster

The fact that a store that employs that many people closes, appears to me as an impediment to growth. Sadly, I don’t think that the company has any responsibility to the community in which it closes a store after employing tens, if not hundreds of people. If the community in question cannot support a business, the business will close, with all the natural repercussions to follow. Not unlike what happens to manufacturers who sell to Walmart. When the retail giant lowers their profit margins to almost nothing, or sequesters most of the production capacity and then drops them, everyone who does business with Walmart is exposed to the same high risks.Walmart is too big (I hope, not too big) to fail and not so nice a company as it would like us to believe.

"While a Walmart closing in a community will be an immediate hardship, it does present huge opportunity for growth and could give new life to a community."
"We cannot continue to deny the impact our corporations have on the environment and the people that live in it. Walmart should have a responsibility to those communities, but likely it won’t do much of anything."
"I’d like to propose a germ of a more creative solution: What if Walmart were to spin off some of these small-town store closures as re-development projects?"

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