Please enable JavaScript to view this website.

Walmart Closes Stores; Hopes to Compete in E-Commerce

In January, Walmart announced that it will be closing 269 stores worldwide, including 154 stores in the United States.1 These closings will have the effect of displacing 16,000 employees (10,000 in the U.S.), some of whom will be absorbed by neighboring stores, and others laid-off.2

Although Walmart is aiming at opening 300 new stores in 2016 and 2017,3 the announced closings may reflect the problem posed to large retailers by the growing popularity of online shopping.4 Walmart’s profit fell by 8% in the fourth quarter of 2015, and the retailer is projecting uncharacteristically flat sales growth for 2016.5 This stagnation may be due in part to massive spending on projects designed to bolster the company’s e-commerce sales.6

The company has invested $2.7 billion towards improving e-commerce over the last three years, with $700 million of this spending occurring in 2015.7 These investments include the building of an e-commerce distribution network,8, an expanded pickup service for online grocery orders9, and the launch of a proprietary mobile-payment system.10

In spite of these recent e-commerce investments, Walmart’s e-commerce sales growth declined steadily throughout 2015.11 In contrast, Amazon saw an increase in sales growth for 2015,12 and surpassed Walmart’s market capitalization mid-way through the year.13

A similar struggle to compete with online-shopping has been borne by other retailers in the face of Amazon’s heightened popularity,14 perhaps most so for book and music retailers like Barnes and Noble.15

While it remains possible that Walmart’s e-commerce investments could payoff in allowing the company to compete for online sales, it appears to be fighting an uphill battle.

  1. Krystina Gustafson & Courtney Reagan, Wal-Mart to Close 259 Stores as it Retools Fleet, CNBC (Jan. 15, 2016), 

  2. David Goldman, Walmart Will Close 269 Stores This Year, Affecting 16,000 workers, CNN Money (Jan. 15, 2016), 

  3. Id. 

  4. Liz Moyer, Walmart Profit Fell 8% in 4th Quarter, The New York Times (Jan. 18, 2016), 

  5. Id. 

  6. See Nathan Layne & Sruthi Ramakrishnan, Wal-Mart Warns on Profit, Stock has Deepest Decline in 25 Years, Reuters (Oct. 14, 2015), 

  7. Mark Brohan, Wal-Mart Will Spend Nearly 2 Billion in Web Improvements Over Two Years, Internet Retailer (Oct. 14, 2015), 

  8. Id. 

  9. Id. 

  10. Phil Wahba, Walmart Launches its own Mobile Payment System, Fortune (Dec. 10, 2015), 

  11. See Moyer, supra note 3 

  12. Id. 

  13. Jacob Pramuk, Amazon Shares Surge 20 Percent, Market Cap Surpasses Wal-Mart, CNBC (July 24, 2015), 

  14. Phil Wahba, In 2015, Amazon Ate Even More of Walmart’s Lunch, Fortune (Dec. 22, 2015), 

  15. Paul R. LaMonica, Barnes & Noble Has Been Destroyed by Amazon, CNN Money (Dec. 4, 2015), 

The following two tabs change content below.