Walmart's decision to shutter its Express stores does not bode well for a company with few prospects for growth.
The retailer, which already brings in half a trillion dollars of annual sales, announced 269 store closures Friday, with an added surprise: 100 or so of those will be its smaller Express stores, modeled after convenience stores.
And just like that, one of Walmart's only avenues for growth was closed at a time when its two other growth prospects -- international expansion and online sales -- are slowing. Shares dropped by 2 percent.
Back in 2011, Walmart's cavernous super centers were losing customers who no longer wanted to traverse a giant store just to pick up eggs or milk. After having some success with Neighborhood Markets, medium-sized stores modeled after grocery chains, Walmart took a shot on smaller stores to help it win back customers.
The company has repeatedly declared that the smaller stores were its next avenue for growth. It even broke out "smaller-store" results on its financial statements to give investors more insight into their progress. But it never seemed like the company could fully adapt to thinking small. It often stocked superstore-type items, such as 20-pound dog food packages, in small Express stores in cities such as Chicago, where customers were walking, not driving, to pick up their groceries.
Walmart said it would build some 300 new stores this year and is committed to its Neighborhood Markets. The company hasn't released fourth-quarter sales results yet, but if the first 10 months of 2015 are any indication, then the results aren't likely to be great.
With more than 5,000 Walmart stores already in the U.S. and consumer spending stagnant, how many more traditional Walmarts can America really sustain? Giving up the convenience-store format will just make it easier for dollar stores and pharmacy chains to keep eating into Walmart's market share.
Meanwhile, prospects for international growth have dimmed amid a global economic slowdown, and e-commerce sales don't appear to be the saving grace, either: Year-over-year growth in online sales at Walmart fell to 10 percent in the third quarter, the lowest since Walmart began breaking out e-commerce sales.
The fact that it took Walmart five years to decide whether or not to scrap the Express effort -- roughly the same amount of time it took startups like Lyft and Snapchat to become household names -- underscores just how hard it is for the slow-moving giant to adapt to the fast-changing needs of consumers.
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