Not All Store Closings Are Created Equal

Walmart has announced plans to shutter several stores across the US, but a new report analyzing foot traffic from Placer.ai shows that the store closures are likely a move to maximize location impact rather than a sign of instability. Walmart is overexposed in some markets, and in some ways, it is creating a cannibalization effect. Closing stores could reduce costs without impacting the store’s consumer reach.

“Placer.ai data shows that Walmart is looking to maximize its footprint and while expansion may increase sales, they want to ensure that they are as efficient as possible,” Ethan Chernofsky, VP of marketing at Placer.ai, tells GlobeSt.com. “It’s not about the number of stores that Walmart has, but the reach for each specific property. Why have two stores when one store can accomplish the same thing? This is the sign of an increasingly sophisticated and data-driven approach to offline retail—something that could reinvigorate the wider space.”

The finding isn’t only true for Walmart. With online shopping as an alternative, many stores are reevaluating the foot traffic of brick-and-mortar locations. “Opening up a location and managing it is expensive, so retailers put a lot of emphasis into maximizing the impact of each property,” says Chernofsky. “Placer.ai data is showing that there are ways for retailers to create win/win and reduce costs without impacting their ability to serve customers effectively. There is a wider data revolution happening in offline retail, and the goal is to improve the offering to customers while reducing costs. Store closures or relocations can sometimes be a sign that this process is taking place.”

Other retailers, however, have few locations, forcing consumers to travel to shop. IKEA is the most notable. The Placer.ai report shows that there is almost no cannibalization between stores. “There are a few big takeaways,” says Chernofsky about the finding. “The key point is that there is finally data that helps offline retailers achieve the same type of efficiency and impact as their eCommerce counterparts. Once this data is in place, there is an incredible opportunity to improve to drive better decision making throughout the lifecycle of a property. Location analytics can help retailers choose better locations, avoid cannibalization, better understand and market to their audiences, drive sales, measure performance and identify the right ways to expand.”

The disparity between the two stores also reveals the importance of location for retailers. “What’s incredible is that this is just the tip of the iceberg for the type of data innovation that will be coming in the near future,” adds Chernofsky. “Location data is going to play a central role in shifting the ‘Retail Apocalypse’ narrative.”

In addition, the report also shows that retailers are spending more time analyzing and strategizing about the use of brick-and-mortar retail. “Our research indicates a company that is becoming increasingly sophisticated in how it handles its offline activities,” says Chernofsky. “Whether that be expansion, relocation or a reduction in locations Walmart is proving that they deserve the benefit of the doubt when making decisions like these.”