Citing ‘tens of millions of dollars a year’ in losses, Walmart to close 4 Chicago stores

Dive Brief:

Walmart will close four stores in Chicago, one supercenter and three smaller format stores, the retail giant said on Tuesday. The stores all opened around the same time, between 2012 and 2014.
Walmart’s Chicago fleet has been unprofitable since the first store opened there 17 years ago, and the four slated for closure “lose tens of millions of dollars a year,” with annual losses nearly doubling in the last five years, according to a company press release.
Affected associates are eligible to transfer to another Walmart or Sam’s Club facility. They will be paid until Aug. 11, unless they transfer to another location. If they don’t transfer they will receive severance benefits, per the release.

Dive Insight:

Walmart has touted its building presence in Chicago in recent years, even after stores were damaged in 2020 during weeks of unrest following demonstrations against police violence. Retail chains in several cities sustained damage when protests around the murder of George Floyd and other police killings of Black Americans, mostly peaceful, at times turned violent.

However, even in the most tranquil of times, Walmart has generally refrained from operating in large cities.

The company runs no stores in any of New York City’s five boroughs, for example. Walmart in 2019 also began scaling back its plans for its smaller Neighborhood Market stores, which are usually in more densely populated areas. Throughout its 60 years in business, the retailer, which often notes (as it did just last week) that 90% of the American population lives within 10 miles of a Walmart store, has largely been found in rural and suburban parts of the country.

In 2020, still the height of the pandemic, Walmart CEO Doug McMillon pledged to repair the damage to its stores and “not just stay” in Chicago but actually expand its investment there, though he also left open the possibility of retreating.

“We could raise prices to offset some of those costs, but that’s not what we normally do,” he said in a corporate blog post. “So, we’ll work towards reducing these losses without raising prices or impacting associate wages and hours. After a few years, if it’s not working, we may have to revisit these decisions again, but that’s not what we hope for or plan on. We want to serve you and build a successful business in Chicago.”

Now, however, Walmart is giving up on at least some of the stores in the area. The company on Tuesday said it hopes the closures will allow the remaining stores in the city to operate with more strength.

“It was hoped that these investments would help improve our stores’ performance,” the company said. “Unfortunately, these efforts have not materially improved the fundamental business challenges our stores are facing.”

The Chicago closures are just the latest in a string of stores and e-commerce facilities that Walmart is shuttering or downsizing, resulting in thousands of layoffs.