When a Walmart closes, what happens to nearby stores?

When a Walmart store closes its doors, the impact on nearby businesses can be significant and far-reaching. While some may view the disappearance of a Walmart as an opportunity for neighboring shops to gain new customers, research suggests that the opposite may often be true. Mark Ralston/AFP via Getty Images Shoppers often associate a Walmart closure with a loss of choice, yet the economic consequences can be more complex.

Mark Ralston/AFP via Getty Images In a study analyzing 39 Walmart closures across 20 states from 2019 to 2026, researchers found that nearby stores experienced a decline in both shopper traffic and sales revenue by around a quarter. This effect persisted for several months, with nearby stores seeing a further 5-17% drop in traffic and revenue in the weeks and months following a Walmart's exit.

This phenomenon, known as agglomeration, occurs when businesses benefit from being in close proximity to other businesses. However, when a prominent anchor store like Walmart is removed, the agglomeration effect can be disrupted, leading to a loss of shopper traffic that exceeds the benefits of having one less competitor. The study highlights that competitive relief, which would typically benefit nearby businesses, is often outweighed by the loss of agglomeration.

While stores that directly competed with Walmart fared better post-closure, overall sales still declined. This suggests that the disappearance of a Walmart anchor store can create a ripple effect, causing neighboring businesses to suffer collectively. For retailers facing the closure of a Walmart or any anchor store, the findings emphasize the importance of diversifying revenue streams.

Businesses that have a strong online presence or can attract customers through other means, such as unique products or services, are better positioned to weather the impact of an anchor store's departure. Additionally, commercial property owners should consider the broader implications of anchor store closures on the surrounding retail landscape, rather than solely focusing on the performance of their own individual businesses.