Wal-Mart to close stores, no need to panic

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Wal-Mart to close stores, no need to panic

Today’s alarmist top story at Drudge:

By month’s end, Wal-​Mart will close 259 stores, of which 154 are in the U.S. (empha­sis added),

Of the clo­sures announced Fri­day, 154 loca­tions will be in the U.S., includ­ing the company’s 102 smallest-​format stores called Wal-​Mart Express, which were opened as a test in 2011.Wal-Mart Express marked the retailer’s first entry into the con­ve­nience store arena. The stores are about 12,000 square feet and sell essen­tials like tooth­paste. But the con­cept never caught on as the stores served the same pur­pose as Wal-Mart’s larger Neigh­bor­hood Mar­kets: fill-​in trips and pre­scrip­tion pickups.

Also cov­ered in the clo­sures are 23 Neigh­bor­hood Mar­kets, 12 super­centers, seven stores in Puerto Rico, six dis­count stores and four Sam’s Clubs.

Wal-​Mart will now focus in the U.S. on super­centers, Neigh­bor­hood Mar­kets, the e-​commerce busi­ness and pickup ser­vices for shoppers.

Some may call it cre­ative destruc­tion,

Cre­ative destruc­tion refers to the inces­sant prod­uct and process inno­va­tion mech­a­nism by which new pro­duc­tion units replace out­dated ones. It was coined by Joseph Schum­peter (1942), who con­sid­ered it ‘the essen­tial fact about capitalism’.

Schum­peter derived the idea from Karl Marx, and the con­cept was brought up to exhaus­tion dur­ing the dot­com bub­ble, but Wal-​Mart is not engag­ing in cre­ative destruc­tion. It is sim­ply keep­ing its cur­rent busi­ness viable. The Wal-​Mart Express exper­i­ment failed, and it makes no sense to extend it.

Despite Drudge’s highly alarmist “RETAIL COL­LAPSE” head­line, Wal-​Mart is doing the right thing: by respond­ing to mar­ket con­di­tions, clos­ing non-​profitable stores, and focus­ing on the more viable “super­centers, Neigh­bor­hood Mar­kets, the e-​commerce busi­ness and pickup ser­vices for shop­pers” trend, it can remain in business.

What about the peo­ple laid off? The Wal-​Mart press release explains,

In total, approx­i­mately 16,000 asso­ciates will be impacted by the deci­sion, about 10,000 of them in the U.S. More than 95 per­cent of the closed stores in the U.S. are within 10 miles on aver­age of another Wal­mart, and the hope is that these asso­ciates will be placed in nearby loca­tions. Where that isn’t pos­si­ble, the com­pany will pro­vide 60 days of pay and, if eli­gi­ble, sev­er­ance, as well as resume and inter­view skills train­ing. Whether with Wal­mart or else­where, the company’s objec­tive is to help all asso­ciates find their next job opportunity.

Keep in mind also that (empha­sis added),

Even as Wal­mart plans to close hun­dreds of loca­tions, it also intends to open more than 300 stores in the next year, includ­ing 50 to 60 super­centers in the United States and 85 to 95 Neigh­bor­hood Mar­kets. The stores that are to be shut­tered are ones that the retailer says account for less than 1 per­cent of global revenue.

In brief: close 259 stores, open 300.

I real­ize that, when it comes to head­lines, “when it bleeds, it leads.” But call­ing this Wal-​Mart story a “RETAIL COL­LAPSE” would put Chicken Lit­tle to shame.

Fausta Rodriguez Wertz writes on U.S. and Latin Amer­i­can pol­i­tics, news, and cul­ture at Fausta’s Blog.

Today’s alarmist top story at Drudge:

By month’s end, Wal-Mart will close 259 stores, of which 154 are in the U.S. (emphasis added),

Of the closures announced Friday, 154 locations will be in the U.S., including the company’s 102 smallest-format stores called Wal-Mart Express, which were opened as a test in 2011.Wal-Mart Express marked the retailer’s first entry into the convenience store arena. The stores are about 12,000 square feet and sell essentials like toothpaste. But the concept never caught on as the stores served the same purpose as Wal-Mart’s larger Neighborhood Markets: fill-in trips and prescription pickups.

Also covered in the closures are 23 Neighborhood Markets, 12 supercenters, seven stores in Puerto Rico, six discount stores and four Sam’s Clubs.

Wal-Mart will now focus in the U.S. on supercenters, Neighborhood Markets, the e-commerce business and pickup services for shoppers.

Some may call it creative destruction,

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. It was coined by Joseph Schumpeter (1942), who considered it ‘the essential fact about capitalism’.

Schumpeter derived the idea from Karl Marx, and the concept was brought up to exhaustion during the dotcom bubble, but Wal-Mart is not engaging in creative destruction. It is simply keeping its current business viable. The Wal-Mart Express experiment failed, and it makes no sense to extend it.

Despite Drudge’s highly alarmist “RETAIL COLLAPSE” headline, Wal-Mart is doing the right thing: by responding to market conditions, closing non-profitable stores, and focusing on the more viable “supercenters, Neighborhood Markets, the e-commerce business and pickup services for shoppers” trend, it can remain in business.

What about the people laid off? The Wal-Mart press release explains,

In total, approximately 16,000 associates will be impacted by the decision, about 10,000 of them in the U.S. More than 95 percent of the closed stores in the U.S. are within 10 miles on average of another Walmart, and the hope is that these associates will be placed in nearby locations. Where that isn’t possible, the company will provide 60 days of pay and, if eligible, severance, as well as resume and interview skills training. Whether with Walmart or elsewhere, the company’s objective is to help all associates find their next job opportunity.

Keep in mind also that (emphasis added),

Even as Walmart plans to close hundreds of locations, it also intends to open more than 300 stores in the next year, including 50 to 60 supercenters in the United States and 85 to 95 Neighborhood Markets. The stores that are to be shuttered are ones that the retailer says account for less than 1 percent of global revenue.

In brief: close 259 stores, open 300.

I realize that, when it comes to headlines, “when it bleeds, it leads.” But calling this Wal-Mart story a “RETAIL COLLAPSE” would put Chicken Little to shame.

Fausta Rodriguez Wertz writes on U.S. and Latin American politics, news, and culture at Fausta’s Blog.