Student Corner: As Walmart shutters stores, what’s next for small towns?

Community and Economic Development – Blog by UNC School of Government

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Student Corner: As Walmart shutters stores, what’s next for small towns?

By CED Program Interns & Students

Published February 9, 2016

Less than five years after Walmart introduced its small-format retail model, Express stores are throwing in the towel. This month, the big box retailer announced plans to shutter 154 stores across the country. North Carolina, one of the states to pilot the pared down Walmart experience, will see all 15 Express stores and a Supercenter closed by the end of January.

Walmart Express stores were designed to fill a convenience gap in small towns and urban centers where Walmart perceived an increasing demand for “everyday low prices” in a more accessible format. The stores specialize in healthy convenience food, pharmaceuticals and in some cases, fuel. They occupy between 10,000 and 15,000 square feet, less than a tenth of the typical Supercenter, and employ an average of 30 residents.

The announcement came as a surprise for most, especially since as recently as 2014 Walmart released plans to double the number of new small-format stores nationwide. This decision marks a public shift in strategy for the Walmart Corporation that will now focus “on building up its e-commerce firepower and improving its massive Supercenters and grocery-centric Neighborhood Market stores.”

The closure of the Express stores leaves behind a physical and economic vacuum in small towns across North Carolina. Stores were opened in or near downtown shopping districts in towns with populations ranging from slightly over 500 to 5,000. Although some of the stores set to close haven’t even been open for a full two years, it only took that long for towns like Oriental, North Carolina to be transformed by Walmart competition. In his recently published op-ed, Robert Miller documents the closure of the town’s only local grocer and pharmacy, which with Walmart’s departure will leave residents no other option but to travel 10 to 15 miles out of town to pick up groceries or fill a prescription.

A lot has been written about what happens when Walmart and other big box retailers come to town. The question now is what to expect when they leave. In addition to addressing the loss in tax base and jobs, local governments should be thinking broadly about ways to lessen the impact on their communities: Can they work with Walmart and local businesses to transition employees? Can they ensure that residents continue to be able to access basic consumer needs? Can they help existing businesses adapt to fill gaps in the market by, for example, helping a local grocer incorporate a pharmaceutical counter?

Or another matter: How to handle a large, vacant storefront in the center of town. With a Supercenter closure, comes the question of what to do with an abandoned monolith designed for very specific purposes. Each Supercenter typically ranges in size from 180,000 to 250,000 square feet and occupies up to 6 acres of land, not including parking lots, which cover several times the area of the store.

The Sustainable City Network Big Box Matrix visualizes the array of options available for adaptive reuse of these facilities. In North Carolina, The Bragg Blvd. Flea Market gave new life to a renovated Kmart in Fayetteville. The Sugar Creek Charter Elementary School was able to reduce its costs by capitalizing on existing infrastructure and transforming an abandoned Kmart in Charlotte. Examples of adaptive reuse abound across the country as documented by Julia Christensen, an Oberlin art professor, at BigBoxReuse. This blog has covered this issue in the past, providing case studies of adaptive reuse of abandoned shopping malls.

This seemingly sudden shift in strategy away from store expansion was also felt by towns that were in active negotiations to open new Walmart stores, both Express and Supercenter. In some cases, local governments had made large investments to prepare for new store openings and must now evaluate how to leverage those investments to bring in new opportunities. As Walmart shifts its priorities, local governments should adjust their economic development strategies to reflect this uncertainty. The trend towards online retail is important for local governments to consider when designing an economic development plan that relies on anchor big box retailers.

Walmart and other big box retailers will continue to expand their portfolios and move into new communities, even as they move further online and increasingly shutter stores that are not growing as expected. These recent closures highlight the vulnerability of smaller communities to the comings and goings of retail giants. Local governments, whether their retail anchors remain intact or they hope to welcome one in the future, should consider the case study of Oakland, Maryland. The town of slightly over 1,930 residents turned the prospect of a Walmart into a unique opportunity to diversify its retail offerings and build community-capacity in order to complement the new store instead of compete with it.

Although communities across the country will certainly be left with challenges in the wake of Walmart stores leaving town, the void left in each case may also present a unique opportunity.

Sarah Odio is a first year Master’s candidate specializing in Economic Development in the UNC Department of City and Regional Planning and is currently a Community Revitalization Fellow with the Development Finance Initiative.