The Real Reason Walmart Is Closing Down Stores - YouTube

For a long time, Walmart seemed like the unstoppable juggernaut of the retail world, but things

haven't been looking so great for the retail giant.

In fact, they just announced another round of closures.

So what's going on with Walmart, and will it get better or worse?

In 2016, Walmart purchased Jet.com and began aggressively expanding their online presence.

Why?

Because Amazon, that's why.

The online retail giant was figuratively eating Walmart's lunch, so Walmart had to shift gears

from a brick-and-mortar retail word to a digital one.

CEO Doug McMillon told Business Insider that the resulting downturn in profits as they

refocused their business was, quote, "planned and expected."

But it hasn't been all sunshine and roses.

Industry experts say that Walmart has had issues figuring out how much to keep in stock

to satisfy both online and in-store orders, often resulting in physical locations being

either overstocked with unwanted merchandise or understocked on key goods.

And considering the whole point of going to Walmart is to get all the vital supplies in

one place, not having those items when customers need them is a big problem.

"Amazon is now worth more than the nation's biggest retailer."

"You know why?

'Cause they sell sex toys, and Walmart can't, or won't.

Nobody else will tell you this, but that's the reason!"

"Okay."

According to Forbes, Walmart's image has been a major problem for them.

Sure, they're known for low prices, but they're also known for leaning on small retailers,

dirty, messy, and disorganized stores, a complete lack of training for employees, management

that are out of touch, and some of the worst customer service this side of S-Mart.

"Lady, I'm afraid I'm going to have to ask you to leave the store."

"Who the hell are you?"

“Name's Ash.

Housewares."

In 2018, the U.S. government and President Donald Trump leveled a ton of tariffs on goods

coming into the country from China.

Hundreds of affected businesses appealed to the government for relief, but it's arguably

Walmart that has been affected the most, as they import a slew of goods from Asia.

According to the Washington Examiner, Walmart responded by absorbing as much of the cost

as possible in order to keep their prices relatively level.

That's good news for consumers, but bad news for Walmart's bottom line: with supply costs

up 3.2 percent, their profit margin had declined severely.

With so many of their brick-and-mortar locations struggling, Walmart has turned to rebranding

and reformatting in order to try to find a more profitable business model.

In 2011, for instance, they rolled out Walmart Express stores in urban markets across America.

By 2014, though, the experiment was over, and those locations had instead been replaced

by a new brand: Neighborhood Markets.

Designed to compete with chains like Trader Joe's, Neighborhood Markets primarily sell

groceries.

But while Walmart had close to 700 Neighborhood Markets locations by 2019, they had also already

closed more than 130 of them, with more closures announced.

Maybe it will work out in the long run, but considering the massive costs associated with

opening and closing store locations, trial and error seems like an expensive way to do

business.

Walmart isn't just closing down stores, though.

Another metric of how much they are struggling is the fact that they aren't opening many

new stores either.

According to Yahoo!

Finance, Walmart had more than 3,500 supercenters in the U.S. at the beginning of 2019.

Only 15 of those, though, opened in 2018, and only ten new stores were planned for 2019.

It seems that Walmart has reached market saturation, as every location that can support a store

seemingly has one already.

It's no wonder, then, that Walmart is reportedly focusing on overhauling, or simply closing,

their existing locations.

And they are also looking for different ways to expand.

According to CNBC, Walmart has been buying up brands like Flipkart, Bare Necessities,

and Eloquii as well as partnering with corporations like Advance Auto Parts, MGM, and Humana.

It's all part of a push to produce products in house to reduce costs, just like their

store closings.

It's a tough call, but you know what they say:

"The hardest choices require the strongest wills."

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