Walmart, the world’s largest retailer, is taking bold steps to reshape its U.S. footprint. While the company is planning to open over 159 new locations, it is also permanently closing underperforming stores across several states. This may seem contradictory, but according to Walmart’s leadership, it’s all part of a larger, calculated strategy to grow more profitably and better serve evolving customer needs.
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Why Major Retailers Like Walmart Shut Down Stores
Most large retailers regularly evaluate their store performance and don’t hesitate to shut down locations that fall below expectations. Reasons for closure can vary widely—from shifting population trends and changing neighborhood demographics to operational inefficiencies and, in some cases, high theft rates.
Walmart is no different. In recent months, the company closed stores in Georgia, Maryland, Ohio, Wisconsin, Colorado, and is set to shut down more in California by 2025. These aren’t temporary closures—they’re permanent. However, executives maintain this doesn’t indicate trouble. Quite the opposite.
“These closures are part of an effort to optimize store performance, focusing on locations with stronger customer traffic and profitability,” the company stated.
Walmart CEO Doug McMillon Says the Company Is Thriving
During the company’s fourth-quarter earnings call, Walmart CEO Doug McMillon painted a very different picture from what store closures might suggest: one of robust growth and market leadership.
“We’re strengthening our ability to serve people how they want to be served in the moment. That’s what’s driving our growth,” McMillon said.
He emphasized that inflation has actually played into Walmart’s strengths, drawing cost-conscious customers looking for everyday low prices and value on general merchandise.
Walmart Customers Are Buying More—But There’s a Catch
Walmart isn’t just increasing sales; it’s also growing profits even faster. This growth isn’t only from traditional grocery and retail—it’s coming from expanding high-margin areas like:
- Membership programs
- Third-party marketplace sellers
- Advertising services
“We’re growing profit faster than sales, and we have runway to scale our higher-margin businesses,” McMillon noted.
That said, some customers might feel the pinch. Walmart, unlike some competitors like Costco, is less focused on sacrificing margin to protect prices. Instead, the retailer is carefully balancing price investment with profit maximization.
Delivering More Than Just Low Prices
Walmart is also making a push to improve product variety and delivery speed. This includes expanding online offerings and investing in supply chain enhancements.
“The work we’re doing to expand our assortment is another reason for our growth,” McMillon said. “In addition to low prices and a growing assortment to choose from, we’re focused on delivery speed and accuracy.”
He believes the company still has room to improve how customers perceive Walmart’s digital capabilities.
“If I could change anything about how we’re perceived today, it’d be that more people know about our breadth of assortment online and our increasing delivery speed,” he added.
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CFO: Closures Are Strategic, Not a Sign of Trouble
Chief Financial Officer John David Rainey reassured investors that the store closures are not due to poor financial performance.
“Walmart delivered another strong quarter, exceeding our sales, profit, and earnings expectations,” he said. “This performance reflects the strength of our business model.”
Rainey emphasized that the closures reflect Walmart’s commitment to long-term efficiency and growth, not financial distress.
The Bigger Picture: Walmart’s Retail Strategy for the Future
Walmart’s dual moves—shutting underperforming stores while aggressively expanding in high-growth areas—highlight a common but often misunderstood strategy among major retailers. The goal is simple: operate in the right places, serve customers how and where they shop, and grow profits sustainably.
In today’s shifting retail landscape, Walmart’s approach reflects an adaptive business model that embraces both physical and digital retail. It may be closing some doors—but it’s opening a lot more.