Industry experts offered several possible explanations for the announced closing of 269 Walmart stores worldwide, but no one seemed to be overly worried about the move, especially concerning the U.S. stores.

In its announcement in early January, the Bentonville, AR-based retailer said it would close 154 stores in the United States and Puerto Rico, including all 102 of its smaller-format Walmart Express stores; 23 Neighborhood Market stores; 12 supercenters; six discount stores; seven Puerto Rican stores; and four stores operating under the Sam’s Club banner.  

Internationally, Brazil took the biggest hit with the closing of 60 stores. There will be 55 additional stores closed in Latin America, but the retail giant did not go into location details on those stores in its initial press release.

Although the 269 number appears large, experts noted it represents less than 1 percent of Walmart’s worldwide locations and revenues.

Bruce Peterson, president of Peterson Insights and the longtime top produce executive for Walmart until his retirement in 2007, said Walmart has a history of looking at different formats, expanding those that work and discarding those that are less successful. He put the closing of Walmart Express in this category and further explained that just because they are closing does not mean they lost money.

Peterson believes the closings are an indication that the current management is very willing to make hard choices and utilize resources where they make the most sense. He believes it is quite likely that Walmart Express was a money-maker but proved to return less on the investment than either Supercenters or the Neighborhood Market formats.  

In fact, in making the announcement of the closures, Walmart Chief Executive Doug McMillon said the firm will open more than 300 stores worldwide in the next year, led by the Neighborhood Market and Supercenter banners.

Dick Spezzano of Spezzano Consulting Service, based in Monrovia, CA, also said the closings are not overly troubling. He said retailers are always closing underperforming stores and shifting assets. He believes the closing of so many stores at once and the accompanying announcement were designed to limit the impact on the company’s stock to a one-time hit rather than a series of closures over a long period of time, creating a longer public relations problem.

Ed Odron of Ed Odron Produce Marketing Consulting in Stockton, CA, said, “Like everyone else, it is something you have to do. It is just good business. In the retail business you always have stores that are doing well and others that are hemorrhaging. You have to get rid of those stores and you have to have someone who is willing to make the tough call.”

However, all three former retailers said that the closings do deserve examination and reveal possible chinks in the Walmart armor.

Peterson and Spezzano agreed that the 60 stores closed in Brazil were more significant than the U.S. closings.

“I think that means something a little deeper,” Spezzano said.

He noted that Brazil is an important market and the store closures there indicate that the performance of those stores might have been having a significant negative impact on the company’s bottom line. He expects that there will be more news concerning the Brazilian division regarding revamping of stores or realigning of personnel.

Peterson agreed, saying he does not believe Walmart will exit that market as it did in South Korea, Indonesia and Germany in recent years, but he thinks there could be a shakeup. Although those stores still only represent a small percentage of Walmart’s revenue in Brazil, Peterson called the closings “significant.”

He added that Walmart in 2016 is much different than the Walmart he was part of in the 1990s and 2000s. He said Walmart’s value proposition of being the low-cost leader is no longer always the case. There are other retailers — including dollar stores, retail discounters and on-line merchants — that can often claim to be a lower-cost operator.

“Sam Walton always said if you are the low-cost operator, you can sell products for less and you will get business,” said Peterson. “That isn’t always the case anymore [for Walmart].”

He said specifically that Walmart has not been the low-price operator in Brazil, and like other retailers, Walmart has to adjust.

“It’s difficult to be in the middle (not the lowest prices and not the premium upscale firm),” said Peterson. “Other retailers had to go through it in the 1980s and 90s and Walmart is going through it now.”

Spezzano hit on a similar theme, noting that what Walmart always did was sell national brands for less than anyone else. He said it isn’t the best operator, nor is it the best managed, nor are its in-store employees top-notch. Walmart was often the winner because it was the lowest price option, especially on national brands. Take that away and the chain is beatable. He added that the company sells more private brands also, which is not the same as being lower priced on a national brand.

Odron noted that it is a difficult process to close stores and hang on to the top employees from those stores.  

“Some of us were unfortunate enough to have to go through it a number of times,” said the former Lucky produce executive. “You learn by your mistakes. This is the first time Walmart has had to do it and there will be missteps.”

Odron said gone are the days that Walmart marches into a town and other retailers panic and run for the hills.

“The other retailers — Winco, Food 4 Less, Albertson’s — have learned how to compete,” he said. “Walmart is still a formidable competitor, but it’s not as easy as it used to be.”

Peterson agreed, noting that the company has changed quite significantly in the past two decades.

“Walmart used to be a general merchandise company that sold food, now it is a food company that sells general merchandise,” he said, noting that food items now account for more than 50 percent of store sales.

Peterson said in his heyday, the company used low-priced general merchandise to get the customer into the store, “and at that point it wasn’t difficult to sell them a pound of grapes.” Today, it has to use food — including a lot of private labels — to attract customers, which is more difficult, as there are more cost factors involved and a much thinner margin.

Of course, no one, including Peterson, was sounding the death knell for Walmart.

“Walmart is taking a hard look at how it deploys assets and resources and making hard decisions so it can have better returns for their stockholders, which is what it should do,” he said.