Wal-Mart eliminates 24-hour operations in 64 supercenters, list could grow
This week, 40 Walmart Supercenters will begin testing the closing of their stores at midnight and reopening at 6 a.m., as the retailer looks for ways to optimize store labor in accordance with peak shopping periods.
"This 40 is a working list in addition to about two dozen other supercenters that began testing the overnight closures this spring. More stores are expected to join the pilot in the coming months," Brian Nick, corporate spokesman for Wal-Mart Stores in Bentonville, told The City Wire on Monday (July 27).
He said none of the supercenters in Northwest Arkansas are part of this pilot. Nick said Wal-Mart studied traffic patterns in its 3,400-supercenter network and that was the basis for which stores join the pilot. Nick said Neighborhood Markets use a similar metric to determine which ones are open 24 hours a day, as some are and others are not.
He said closing in the overnight hours, will allow store managers to reallocate resources that should lead to better in-stock, cleaner and more organized stores to better serve shoppers during open hours.
Nick said the stores in the pilot are located across the country and are a small fraction of the retailer's 4,500 U.S. store count that includes supercenters and Neighborhood Markets. He said it was inaccurate to assume that the stores in the pilot are located solely in the Northeast or in larger metro areas.
This move did not surprise Jason Long and other retail experts who agreed that all retailers have to constantly re-evaluate operations in this evolving sector.
"I don't think Wal-Mart loses here. Few competitors are open overnight now. Wal-Mart stores shaving hours probably weren't justifying their overnight sales to begin with. Taking a few extra hours to restock shelves, etc. combined with the labor savings will probably be a net positive," said Long, CEO of Shift Marketing Group.
He said it also could signal to those Walmart stores not affected that they need to ramp up sales or potentially see their hours cut as well.
The new management inside Walmart U.S. has made it clear that they intend to clean up stores, improve customer service and in-stocks and reallocate the store labor as it is needed. Nick said most of the overnight workers will be retained for stocking and prepping the store for daytime hours. He said overnight cashiers will be offered other positions, those not accepting other positions will be offered severance if they are full-time and have worked there for at least one year.
Retail expert Max Goldberg said that Wal-Mart should do what's best for its bottom line even if that means discontinuing some 24-hour openings.
"Some shoppers will be inconvenienced and there will be complaints, but this should not be a large factor in the company's decision," Goldberg noted on a RetailWire discussion on this topic.
Retail consultant David Livingston said any supercenter grossing under $60 million per year is likely a prime candidate for closing overnight. He doubts this has little to do with re-stocking shelves and is more likely an effort to rein in costs. He said stores in areas where there is a propensity for violent crime or theft is also a good reason to close in the overnight hours.
Carol Spieckerman, CEO of newmarketbuilders, said closing some stores for a six-hour window and the other "block-and-tackle changes that (Walmart U.S. CEO) Greg Foran has been championing" could make a "real difference" in the future financial performance of U.S. store operations.
"It's incredibly difficult to operate stores on a constant 24-hour cycle and Walmart stores will benefit from a bit of down time. Although the initial reason for testing the new hours in select stores might be financial, Wal-Mart may well find that these locations perform better over time as the benefits of overnight TLC take hold," Spieckerman said.
At least one Wall Street retail analyst is skeptical that the overnight closures will significantly improve in-stock levels. Brian Yarbrough, an analyst with Edward D. Jones, said this may be a trial run to see if Wal-Mart can reduce overhead by cutting store hours without losing sales.
Yarbrough said there aren't that many overnight shoppers and he wonders if this test will result in a broader national rollout.