When Walmart pulls out of town, the stores next door don’t pick up its shoppers — their sales are down 20% a year later
The decline keeps getting worse, reaching about 17% in the ninth month and 20% a year after the anchor store closes.
When Walmart pulls out of a town, its neighboring stores do not necessarily see an increase in shoppers. In fact, a study of 39 Walmart closures across 20 states found that nearby stores experienced a 20% drop in sales revenue a year after the anchor store closed. The research, conducted by marketing scholars, suggests that while Walmart competes with local businesses for shopper traffic and spending, it also acts as an anchor, attracting people to the shopping area.
When Walmart leaves, the loss of a shared shopper destination can outweigh the benefit of having one less competitor. Stores that directly competed with Walmart and had recognizable brands fared relatively better than noncompeting stores. Additionally, businesses with higher online revenue saw a less severe drop in sales after Walmart closed, indicating that they relied less on physical traffic generated by the anchor store.
The study highlights the need for local businesses to recognize the externalities created by the presence of anchor stores, such as increased consumer demand, and consider strategies like expanding online sales to mitigate the impact of an anchor store closure.
Written by urgent.news from Fortune's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
