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Wal-Mart CEO: E-Commerce Eclipses Express

McMillon defends small-format, other store closings, talks “sharpened focus”

BENTONVILLE, Ark. -- Following the announcement last week that after a thorough review, Wal-Mart Stores Inc. would close 269 stores and club stores, including the company’s 102 small-format stores, Walmart Express, Doug McMillon, president and CEO shared more details about the factors that led to this decision, as well as the direction of its growth plans.

Doug McMillon

Wal-Mart began testing the 12,000-square-foot Walmart Express stores, similar in format to convenience stores, in 2011. The stores featured a pharmacy and offered groceries and general merchandise, including an assortment of fresh produce, dairy and meats, dry goods, consumables, health and beauty aids, over-the-counter medicines and more.

By 2014, the company began to pull back on the Express concept, announcing that it would begin rebranding them to the mostly larger Neighborhood Markets.

This month, it said that it was ending the Express pilot to focus on the Neighborhood Markets and Supercenters. (It may, however, open additional Walmart To Go convenience-stores with gasoline, a spokesperson hinted, and has not closed any of its Walmart on Campus pilot stores.)

There is more than one kind of convenience. So while the retail giant still plans to focus on convenient commerce, it has decided to concentrate on the digital rather than the brick and mortar.

McMillon offered some details in this Q&A:

Q: Why is Walmart closing these stores and clubs?

A: We said in October at our analyst meeting that it's more important now than ever to review our portfolio and close the stores and clubs that should be closed.

Managing our portfolio is essential to maintaining a healthy business. This allows us to create an even stronger Walmart by winning with our proven store formats and deepening our relationships with customers. Ultimately, this is in the best interest of our company and reflects the priorities of our growth plan. That plan is focused on winning with stores, deepening our digital relationships with customers and enhancing critical capabilities through technology and data, a next generation supply chain and talent.

Q: How were the stores and clubs selected?

A: We conducted a thorough review of our stores and clubs worldwide that took into account a number of factors, including financial performance as well as strategic alignment with long-term plans. In total, the impacted stores represent less than 1% of both global square footage and revenue.

The large majority of U.S. stores closing are Walmart Express stores. While we have learned a lot from this pilot, including a deeper understanding of the everyday needs of our customers, we have decided not to proceed with this offering. We feel we can better serve our customers by focusing on Supercenters and Neighborhood Markets and by investing in e-commerce and services like Pickup.

Q: How do these closings fit into your vision for where the company is going?

A: We are continuing to grow, and we’re making smart choices in managing our portfolio. Even with today’s actions, Walmart will continue to invest in its future, with plans to open more than 300 new stores worldwide over the coming year—in the U.S. Walmart intends to open 50 to 60 Supercenters, 85 to 95 Neighborhood Markets and seven to 10 Sam’s Clubs. We will also open 200 to 240 stores internationally.

We’ve said that it's more important now than ever that we evaluate our portfolio, and doing so will allow us to build an even stronger Walmart.

We intend to win in our stores in the U.S. by strengthening the Supercenter format and optimizing Neighborhood Markets. We'll focus on adding capabilities to our supply chain by building out a fulfillment network to create a seamless customer experience. What Walmart can do that no one else can is marry e-commerce with our existing assets to deliver a seamless shopping experience at scale. That is our vision and our mission, and managing our portfolio is essential to accomplishing our goals.

Click here to read the full Q&A.

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