We’re only 11 days into 2018 but Walmart is making it clear that this year, it’s waging a bigger war with Amazon.
In a press release, Walmart stated that it 63 Sam’s Club stores around the country will close. Twelve of those stores will instead become “ecommerce fulfillment centers,” with the first one in Memphis, Tennessee. The company’s reasoning? “[These ecommerce fulfillment centers] will speed delivery of online orders.”
The company also stated that it “will provide support and resources to those associates who are affected, including the bonus announced today and 60 days of pay, as well as severance to those eligible.”
Before the press release, the company’s only statement came via a Sam’s Club tweet: “After a thorough review of our existing portfolio, we’ve decided to close a series of clubs and better align our locations with our strategy. Closing clubs is never easy and we’re committed to working with impacted members and associates through this transition.”
Industry analysts think it’s no surprise that Walmart closed these Sam’s Club stores and believe the company is trying to more readily compete with Amazon.
“As online changes [and] grows, they don’t need as many stores—they need regional warehouses,” said Bruce Winder, a retail consultant. “It’s definitely a reallocation of resources.”
More warehouses for Walmart could help the company to continue shifting its strategy towards ecommerce and competition with Amazon.
“They aren’t the only retailers who are really making a valiant effort to go after Amazon,” Winder said. “These guys are like ‘We have to make a run for it, but we’re not going to give up.’”
To Howard Davidowitz, a retail consultant, Walmart is realigning its retail centers and and moving away from dedicating space to in-store consumers. He also points to Sam’s Club’s poor performance in competing with Costco.
“Costco has dominated this business,” said Davidowitz. “And Walmart has never been able to get into the game and this closing reflects that.”
The news comes on the same day Walmart announced that it will raise hourly wages for employees to $11 in February, as well as offering 10 weeks of paid maternity leave and 6 weeks of paid paternal leave for full-time hourly employees. The company also said it would give store associates who’ve been with the company for at least 20 years a one-time bonus of $1,000 and will financially help both hourly and salaried employees with adoptions.
One big question remaining: Will any of this will help Walmart more effectively compete with Amazon?