How Will 150 New Walmart Stores Affect the US Economy?

In a bid to expand its already significant presence, Walmart is planning a significant escalation in its reach across the U.S. The retail company’s plans include the construction or conversion of over 150 large-scale stores within the next half-decade. The new stores will be predominantly new establishments, although some will be upgrades from smaller locations to Supercenters, which offer a wide variety of groceries and products.

Walmart opted to keep the locations and cost of these new stores under wraps. As it stands, the company boasts over 4,600 stores nationwide, with almost 600 Sam’s Club warehouses in its portfolio. The latter, too, is set to grow, with plans to open over 30 new additions in the U.S. This expansion underlines Walmart’s confidence in its physical stores’ future, despite facing stiff competition from e-commerce giants like Amazon and SEHIN, and its own efforts to boost online sales and its third-party marketplace.

The retailer has demonstrated remarkable resilience in the face of the economic climate, outperforming other retailers who have suffered due to a pullback in discretionary spending. As the country’s most prominent grocer and a favored discounter, Walmart has so far weathered inflation and managed to charm more affluent households into its stores.

Walmart’s U.S. CEO, John Furner, stated on the company’s website that 12 new stores will kick off this year, and an existing smaller store will be upgraded to a Supercenter. This move aligns with the company’s ongoing renovation plan for some of its existing outlets.

The upcoming stores will personify Walmart’s modern aesthetic, with a design often termed as the “Store of the Future.” This design concept focuses on more fashionable clothing brands, incorporates technology like scannable QR codes, and offers clear signage. Furthermore, these new structures will prioritize sustainability features, such as energy-efficient lighting and greener refrigerants. There are also plans for a network of affordable electric vehicle fast-charging stations to make EV ownership more convenient while visiting a Walmart.

Walmart’s Redesigned Stores

Toward the end of 2023, Walmart began its renovation plan when it revamped over a hundred stores to “pull in more customers and keep them in stores for longer.”

Despite remaining competitive in food sales, Walmart has found it challenging to sell items like home goods and electronics, which yield higher profits. To counter this, Walmart initiated a massive project, starting with remodeling 117 stores across 30 states. This came with a hefty price tag of half a billion dollars, all aimed at enhancing customer engagement and promoting purchases across all store sections. This effort is part of a broader $9 billion investment over the past two years to upgrade more than 1,400 stores nationwide.

In the modernized stores, customers will notice significant changes. For example, Walmart has relocated pharmacies to the front of the store, with new private screening rooms. Moreover, the company has creatively displayed home goods like bedding products at the end of aisles with an interactive approach, hoping to draw customers’ attention and encourage interactions with the products.

In line with its reputation as the country’s leading discount chain, Walmart has also introduced new “dollar shops” within the remodeled stores. These shops offer seasonally appropriate items at low prices every day. Plus, there’s a convenient “Grab & Go” food section for customers who wish to pick up wraps, sandwiches, or cold beverages on the go.

While the changes may not seem drastically different from the regular Walmart store setup, these modifications come at a time when the company is keen on boosting sales. The goal is not just to attract new customers but to enhance their shopping experience and keep them in the store for extended periods.

The Walmart Economy

Walmart thrives on providing affordable products to customers. According to Business News Daily, this, in essence, creates a “Walmart economy,” where consumers can purchase necessary goods at cost-effective prices, instead of shelling out more at expensive retailers.

Savings from low-priced products are a considerable boon to many people. It allows customers to spend less on necessities like household goods and instead channel that money toward nonessential expenditures, like dinner or a movie.

However, this economy also has a less desirable side, where small businesses end up suffering. Small businesses are crucial for any economy. They open doors for innovation, create jobs, and nurture entrepreneurship.

Let’s examine the pros and cons of the “Walmart Effect.”

When Walmart sets up shop in a location, it acts as a magnet for other businesses. Its low prices pull in consumers from surrounding areas. These consumers, drawn by Walmart, often end up spending at nearby businesses too. This scenario is especially beneficial in rural areas, where access to essential goods might be challenging. Walmart offers a one-stop solution, saving customers from traveling extensively or waiting for online orders.

On the downside, however, Walmart’s entry into markets already serviced adequately by local businesses can result in a steep decline in the latter’s sales. Walmart’s scale enables it to operate on smaller profits, unlike small businesses.

Unfortunately, Walmart’s arrival can also decrease local wages. According to a study by Puget Sound Sage in 2012, in communities where Walmart opens, wages drop and overall town wealth declines. This decline is mostly attributed to the lower-than-average wages Walmart offers to its hourly employees. A comparison with wages at other local businesses revealed that Walmart pays at least $3 less per hour. This wage difference results in an annual wage loss of nearly $660,000, due to the sales shifting from local businesses to Walmart.

However, Walmart increased its minimum wage last year to $14, and it recently announced the raise of annual salaries for managers. Thanks to stock grants, “Walmart managers can now earn $400,000 a year, no college required,” according to NBC News.