Walmart shuts down half of its Chicago locations, highlighting urban challenges
Walmart has recently announced plans to close half of its stores in Chicago, a move that stands in stark contrast to the retail giant’s previously publicized commitment to expand its presence in the city as part of its corporate racial justice initiative in the wake of George Floyd’s murder by police in 2020.
Walmart revealed on Tuesday that it would be closing four out of its eight underperforming stores in Chicago next week. These stores are located in the predominantly minority neighborhoods of Chicago’s South and West Sides, which have long grappled with a lack of access to grocery stores and other retail establishments.
The decision to close these stores comes after Walmart had touted its efforts in Chicago as a “critical part” of its broader $100 million pledge to promote racial equity in 2020. In fact, Walmart CEO Doug McMillon had previously stated that “Chicago will be an example of what’s possible when we leverage business, government, and community organizations for the good of all.”
The move also follows more than a decade of intense efforts by Chicago’s political leaders to attract national chains like Walmart to underserved areas in order to promote economic development.
However, Walmart asserted that these four stores have been losing tens of millions of dollars each year and that their annual losses have nearly doubled over the past five years. The company stated that it had attempted numerous strategies to improve the stores’ performance and had invested hundreds of millions of dollars in the city, but ultimately, these efforts failed to address the underlying business challenges facing the stores.
According to Walmart, employees at these stores will have the opportunity to transfer to other Walmart locations, and the company will collaborate with local officials to identify potential reuse options for the buildings.
While Walmart’s remaining four stores in Chicago “continue to face the same business difficulties,” the company believes that shuttering these four stores will improve the prospects for the others to remain open.
The closures draw attention to the trend of national chains, including Walmart, scaling back their presence in major US cities. The move also raises questions about the efficacy of government initiatives that rely heavily on national chains to address food and retail access disparities in underserved communities.
David Merriman, a professor of public policy, management, and analytics at the University of Illinois Chicago, had conducted a study in 2012 on Walmart’s impact in the city, which found that businesses located closer to Walmart were more likely to close than similar businesses located farther away. Additionally, the study determined that the number of jobs lost by nearby retail competitors essentially offset the number of jobs created by the new Walmart stores.
“Communities around the city shouldn’t see Walmart or other big-box retailers as a panacea for local economic problems,” Merriman warned.
In 2020, Walmart temporarily closed all eight of its stores in Chicago during the protests that followed Floyd’s killing. Although there were concerns that Walmart and other businesses might leave Chicago, the company pledged to stay and invest in the city.
Chicago Mayor Lori Lightfoot and Walmart’s McMillon had announced in June 2020 that Walmart would reopen its stores and construct two health centers and a training academy for employees in the city.
“Walmart’s commitment to Chicago remains strong. We are not going anywhere,” McMillon had stated at the time.
He had also acknowledged that Walmart’s stores in Chicago collectively operated at a loss due to a “combination of our sales, product margin, and expenses.” McMillon had vowed to try and reduce the losses without cutting workers’ hours or wages or raising prices. However, he had cautioned that Walmart might have to reassess these decisions if they didn’t prove effective after a few years.
A year later, McMillon reaffirmed that “Walmart wants to serve the people of this great city, build a successful business, and work with those who are determined.
