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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