Walmart, the supermarket giant and possibly the top earner in the retail sector has recently announced that it will be closing down some more stores in the California area and it will be permanent. At the end of last year, the retailer confirmed that that it would be closing down eleven other locations around the country citing underperformance as the driving factor behind the decision. Now, it appears that another five stores in the California region will be closed for similar reasons.
Walmart closes more stores
Whilst an increased number of closures is often attributed to financial troubles due to underperformance or other external economic or political factors beyond the company’s control, this is not necessarily the case for Walmart. Despite ongoing tensions faced by the retailer due to tariff hikes and an escalating trade war — not to mention the week-long boycott that was recently organised against the supermarket giant — in terms of finances, the company is still more than stable and these closures are part of its latest transformation strategy, rather than a last resort effort.
In its attempt to keep up with evolving markets and consumer preferences, the retailer has shifted a significant portion of its focus towards its online platform that was launched in 2020 called Walmart+. This membership based service offers shoppers additional discounts and perks and is likely the company’s way of increasing competition with warehouse club giant, Costco.
As such, in pursuit of this, the retailer has been reevaluating its strategies and as a result, for the last three years, a policy to reduce the number of stores in lieu for a focus on e-commerce was implemented. The company as an astounding number of stores in operation around the country and this high concentration of supermarkets in too close proximity to each other can lead to underperformance being recorded for some stores.
Which stores will be closed in California?
It has now been confirmed that the Walmart stores in San Diego, El Cajon, West Covina, Fremont, and Granite Bay will be permanently closed during the course of this year. Spokespersons for the company have also shared that such an overconcentration of stores in any one area is hurting its overall profitability. In order to consolidate this issue, the retailer will be focusing on stores with high rates of foot traffic instead.
“We want to focus on where we can have the greatest impact and offer a more robust experience to our customers,” the company shared. It is quite obvious that this strategy on the company’s part is aimed at redirecting resources and labor towards more fruitful endeavors, rather than just having a high number of stores that do not bring in enough profit.
The company decided to close stores in Georgia and California for reasons beyond just an overconcentration in the area, however. It appears that economic factors such as rising cost of living expenses or inflation, and now the tariff related price hikes, have caused many customers to cut back on their spending, even at supermarkets.
Expansion plans for Walmart Mexico
According to Manolo Reynaud, the retailer’s Director of Corporate Affairs, the retailer has ambitious plans to accelerate its expansion plans in Mexico and Central America for this year and the plan is to “open an average of one store per day this year, which would represent double the number of openings compared to 2024.”
“We continue to have enormous confidence in Mexico as a country and as a market… We are accelerating investment, and we are opening more and more stores,” he recently explained at an event.
For 2024, the a total of 180 new stores were opened in the Mexico and Central America regions. For this year, the supermarket giant hopes to double that figure by opening 365 new units.