Sam’s Club, a division of Walmart Stores, Inc., announced that it was closing 63 locations across the United States. Twelve of these locations will be converted to e-commerce fulfillment centers.
This move marks a strategic decision to focus on online growth and to better position Sam’s Club and Walmart to compete with major competitors like Costco and Amazon.
Sam’s Club President and CEO, John Furner, announced that a review showed having too many stores was hindering the business of other locations, and the additional stores were not supported by expected population growth in those areas.
“Transforming our business means managing our real estate portfolio—we need a strong fleet of clubs that are fit for the future,” he wrote to employees. “After a thorough review, it became clear we had built clubs in some locations that impacted other clubs, and where population had not grown as anticipated.”
By utilizing existing facilities, Walmart has been able to leverage its vast real estate holdings and their unparalleled proximity to customers. The company is hoping to expand its e-commerce capabilities by building a wider network of fulfillment centers to give them quicker access to more online customers and the ability to deliver goods to customers faster.
Furner notes, “We’ve decided to right-size our fleet and better align our locations with our strategy,” he wrote. “We will be closing some clubs, and we notified them today. We’ll convert some of them into eCommerce fulfillment centers—to better serve the growing number of members shopping with us online and continue scaling the SamsClub.com business.”
The first of these converted e-commerce centers will be located in Memphis, Tennessee.
These closures came as a shock to many Sam’s Club employees, leaving approximately 10,000 workers unemployed. The company has promised to work closely with employees, transitioning some to other locations and providing severance and bonuses to those who are eligible.
“We know this is difficult news for our associates and we are working to place as many of them as possible at nearby locations. Our focus today has been on those associates and their communities, and communicating with them,” says Furner.
Despite reported growth of 4.4% of Sam’s Club sales in the most recently reported quarter, Furner is confident that the store closures will allow them to redirect resources to focus on improving the Sam’s Club website and in-store technology. The company also plans to expand its fresh food offerings and improve overall product selection.
