Why Walmart is Closing Half its Stores in Chicago
Walmart plans to close half its stores in Chicago, a reversal of the retail giant’s high-profile commitment in 2020 to expand in the city as part of its corporate racial justice initiative in the wake of George Floyd’s murder by police.
Walmart announced that next week it will close four poor-performing stores out of the eight it operates in Chicago. The locations are in Chicago’s South and West Side neighborhoods, which are predominantly minority and have long struggled with grocery and retail access.
The announcement comes after Walmart highlighted its efforts in Chicago as a “critical part” of its broader $100 million pledge to advancing racial equity in 2020.
“Chicago will be an example of what’s possible when we leverage business, government and community organizations for the good of all,” Walmart CEO Doug McMillon said in 2021.
It also follows more than a decade of intense efforts by Chicago political leaders to draw Walmart and other chains to underserved areas to spur economic development.
But Walmart has said that these four stores lose tens of millions of dollars a year and that annual losses have nearly doubled in the last five years. The company said it tried several strategies to improve the stores and invested hundreds of millions of dollars in the city. “Unfortunately, these efforts have not materially improved the fundamental business challenges our stores are facing,” Walmart said in a blog post.
The company said workers in these stores will be eligible to switch to other Walmart stores and it will work with local leaders to help find reuse options for the buildings.
Walmart said its remaining four Chicago stores “continue to face the same business difficulties,” but it believes closing these four will give the others the best chance of staying open.
The closures call attention to the recent pullback in major US cities by Walmart and other national chains. They also raise questions about the effectiveness of government strategies that closely rely on national chains to improve food and retail access in underserved areas.
David Merriman, a professor of public policy, management and analytics at the University of Illinois Chicago, found in a 2012 study of Walmart’s impact in Chicago that businesses closer to Walmart were significantly more likely to close than similar businesses farther away. The study also found that the number of jobs lost by nearby retail competitors essentially offset the number of jobs created at the new Walmart stores.
“Communities around the city shouldn’t see Walmart or other big-box retailers as a panacea for local economic problems,” he said.
Source: CNN
