Yes, Walmart has decided to close 269 stores worldwide but don’t panic, your Patty Pies are probably safe. Many of you will not even be effected by it. I have been monitoring people over the weekend being upset about this move saying things like “this is morally wrong” or “they never think about the little guy”. With that being said I felt compelled to explain why this happened and how long term consumers will be happy for it. Walmart is a business and they are really good at it which is why consumers enjoy the very low prices that they offer. As cliche as this is going to sound it has to be said: It’s not personal, it’s business. Walmart has an obligation to its shareholders to make the right moves and I assure you that they are very happy about this move.
First, lets explain why these stores are closing. For the past couple of years Walmart has been getting slammed by e-commerce giant Amazon in sales. Why, you ask? Amazon invested a long time ago in e-commerce from selling everything from books to Playstations. And if you lived in certain markets, you didn’t have to wait a few days for shipping because Amazon offered same day service by delivering your merchandise with a drone. Yes……a drone. It is starting to turn the retail industry on its head because almost anything you need can be delivered to your front step. Walmart, being reactive, a few months ago countered with announcing boosting its $1.2 billion e-commerce strategy. I wrote about this that same day.(Oct. 14 2015) Does Walmart have the cash on hand to afford this? Absolutely. However the smart business owner knows that you look for what you can cut first before you expend something as valuable as cash. That leads me to the 269 stores. 102 of them are the the Walmart Express stores. For those that don’t know these are small box stores that are more like ( and competes with) the Family Dollars and the Dollar Generals of the world. Another 115 stores are in in Brazil and other Latin American markets. However there is one common denominator, THEY WERE ALL LOSING MONEY. If you are a business owner or a CEO you know you cut what is not working before you start a new venture. Doug McMillon is a very smart CEO. Even though there will be 269 stores closing, those stores are all within a 10 mile radius of another Walmart. Let me also point out that there will be another 300 stores opening within the next two years.
Secondly, you will benefit from this as the consumer. Prices will not only continue to be low but you will have more options online than ever before with Walmart.com. Along with beefing up e-commerce, Walmart will begin investing heavily in drone technology to have similar services to Amazon. They will also run pilot programs of a new grocery pick up and delivery services. I can even see a way that your smart refrigerator (if you have one) could link up with a Walmart server to automatically make your grocery list and add it to the shopping cart of your online account for you.
WHATS THE BOTTOM LINE?
Business is business. As a business owner ( or in this case CEO), you often have to make the tough decisions even if it is an unpopular one. However, it is in the best interest of all stakeholders to make the tough calls. Longterm, all Walmart shoppers will benefit from this move and its investors will be even happier going forward. You may be upset now but later down the road when you forget to pick up that gallon of milk from the store on the way home from work…………… and that Walmart drone drops it off on your front porch………..with in an hour or less………..that will be the moment you go “ ohhhhhhh! I get it now! #AnOwlInYourCorner