Wal-Mart Stores Inc. said Friday that it will close 269 of its 11,600 stores, including 154 in the U.S. — nine in California — as the company tries to find its footing in a difficult retail climate.
The retailer also said that in the next year it plans to open more than 140 new stores nationwide. Plans include opening or expanding nine stores in California.
A Los Angeles Wal-Mart store on Crenshaw Boulevard and a Wal-Mart Neighborhood Market in Chinatown on West Cesar E. Chavez Avenue will close to the public Sunday. A store in Oakland also will close Sunday.
Wal-Mart stores in Long Beach and San Jose, and Wal-Mart Neighborhood Market locations in Altadena, Bell Gardens, Hawaiian Gardens and San Bernardino will shut Jan. 28. The smaller markets primarily sell groceries.
Local residents are already worried about the effect in their communities, especially in economically depressed areas such as Crenshaw and Chinatown. The Crenshaw Wal-Mart has an especially symbolic place in its neighborhood because the store replaced a suddenly vacant Macy's to anchor the Baldwin Hills Crenshaw Plaza.
George Yu, executive director of the Chinatown business improvement district, said residents near the store, which opened in 2013, had waited 25 years to get a full-service grocery store within walking distance. Yu said he has already received calls from dismayed shoppers.
“Every community needs a grocery store, especially in a community that is so mass-transit oriented or pedestrian oriented,” he said. Yu said he will work to attract another grocer to replace Wal-Mart.
There are several other grocers downtown, including Ralphs, Smart & Final, Target and Whole Foods Market, but the closing of Wal-Mart makes the choices less diverse.
Clifford Brown, 51, has been shopping at the Chinatown Wal-Mart for about a year and a half and always walks to get his groceries because he doesn't own a car. He said he likes the deals, except some of the pricey meats.
“The rest of the stuff is pretty reasonable,” Brown said. “This store is definitely going to be missed.”
The news has hit him harder than most customers because he works at another Wal-Mart store, which is also closing. He said he's looking for other opportunities with the company.
“Wal-Mart said they're going to take care of their people,” Brown said.
Esperanza Jaime, 58, said she comes to the Wal-Mart Neighborhood Market in Hawaiian Gardens every day. The store is only five minutes away from her house, making it easy for her to load up a few groceries on her electric wheelchair.
“When they opened, I couldn't wait,” she said. “I was so excited.”
After the Hawaiian Gardens store closes, Jaime said she'll have to take the bus to another store, probably in Long Beach.
The closures include Wal-Mart and Sam's Club locations and will affect 16,000 employees globally, about 10,000 of whom are in the U.S. About 1,780 California employees will be affected, with 1,040 in Los Angeles County.
The Bentonville, Ark., company said that more than 95% of the affected stores in the U.S. are within 10 miles of another of its stores, and that affected employees will receive priority for transfer opportunities to nearby stores.
The company said it would provide 60 days of pay if employees are unable to be transferred, and severance for those eligible.
“The decision to close stores is difficult and we care about the associates who will be impacted,” Wal-Mart Chief Executive Doug McMillon said in a statement. “We invested considerable time assessing our stores and clubs and don't take this lightly.”
In the U.S., the company will shut all 102 Wal-Mart Express locations -- a pilot program started in 2011 to appeal to customers who wanted smaller-format stores. Wal-Mart will also close 23 Neighborhood Market locations, 12 Wal-Mart Supercenters, seven stores in Puerto Rico, six discount centers and four Sam's Clubs.
The retailer said it will focus more on e-commerce and expanding pick-up services for customers. Wal-Mart also said it would open 50 to 60 new Supercenters, 85 to 95 new Neighborhood Markets and seven to 10 new Sam's Clubs across the U.S. in fiscal 2017, which begins Feb. 1.
The company said it expects to open seven new stores in California in the coming year. Those will be in Burbank, Compton, Downey, Lodi, Red Bluff, Rialto and Ridgecrest. Two California stores – one in Glendora and one in Riverside — are to be expanded.
Analysts said the store closures are a way for the retailer to focus more on its grocery offerings and try to capitalize on the growing popularity of e-commerce.
Wal-Mart was a leader in grocery sales from the mid-1990s to 2000s, but since then, other chains such as Kroger Co. have pulled ahead, boasting lower prices and attracting more customers, said Brian Yarbrough, consumer research analyst at Edward Jones. Grocery still makes up about 55% of its revenue and the plans to add neighborhood markets could be an opportunity for the company to regain some customers, he said.
“To really get their business going, they've got to get the food going,” Yarbrough said.
The closing of the Express locations is a tacit acknowledgment, analysts said, that the retail giant with rural roots has yet to figure out urban markets. These smaller stores struggled to compete against the Dollar Stores, which have a strong hold in the market and generated high customer loyalty.
By adding more pick-up locations, the company is also trying to cash in on the “click and collect” concept, where customers can order online and then get their merchandise at the store, said Ken Perkins, equity analyst at Morningstar. That creates an opportunity for more items to end up in shopping carts.
Worker advocates said they fear this could be the beginning of a slew of cuts.
“This sends a chilling message to the company's hard-working employees that they could be next,” Jess Levin, communications director for Making Change at Walmart, said in a statement.
Making Change at Walmart is a coalition anchored by the United Food and Commercial Workers International Union that is pushing for better pay and benefits at the retailer.
Wal-Mart is just the latest chain to announce store closures after the retail industry struggled through the holiday season.
Last week, Macy's said it was closing 40 of its department stores and cutting 4,800 jobs. Two days ago, Sears Holding Corp. said it was closing a number of Kmart stores across the country, including three in California.
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