Last Thursday Walmart announced that the company is closing 269 stores worldwide. The company is not shrinking, as Walmart intends to open more than 300 new stores in the next year. Walmart’s explanation is that, “Actively managing our portfolio of assets is essential to maintaining a healthy business,” according to Doug McMillon, president and CEO, Wal-Mart Stores, Inc.
People in Luther, Oklahoma are outraged. The Walmart store closing in Luther only opened eight months ago on the former site of a youth football team playing field sold to Walmart by the town. The team now plays on a local high school field and as a consequence no longer enjoys concession sales that used to pay for team equipment and uniforms. People in Luther are calling the closing a “slap in the face.”
While it is easy to get mad at Walmart, understand that as a Bulk thinking company customer value is not a driving principle. Increasing shareholder value is the main concern, and as such Walmart needs to manage their portfolio of properties. And this is not the first time Walmart has closed stores, sometimes only to open a new store a few towns over because the move enhanced their portfolio of properties. That is how the company has always operated.
The people of Luther were seduced by the opportunity to make a few bucks by selling some land, and may have believed that the new Walmart would generate tax revenues, new jobs and lower prices for household staples. Stacy Mitchell in her book Big-Box Swindle cites data showing that prices at large chains including Walmart are, beyond a handful of loss leaders, not lower than prices at smaller retailers. As for jobs, a national study cited by Mitchell found that retail employment falls in counties once they add Walmart stores.
Mitchell’s book was published in 2006, so this pricing and jobs information was available to the people in Luther. So with Walmart having an established pattern of store development and closing, and the consequences of big box development to communities known, Luther is not so much a victim of Walmart as a victim of Bulk thinking. In this case Luther bet that an outside company, run by people far removed from the customers and community the store would serve, could somehow deliver new tax revenues and jobs. Luther is not alone. Economic development professionals across the country work hard to bring large employers, retailers and otherwise, to their communities.
Communities would be better served to take a Lean thinking approach, focusing on building businesses led and managed by people close to the rest of the community by helping existing local enterprises make a Lean transformation and enacting policies that encourage local business ownership.
