Why Walmart Is Suddenly Closing A Slew Of Stores In Chicago

Walmart announced that it would be closing four stores in Chicago because annual losses doubled in the last five years.

By Iqra Butt | Published

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With the rising cost of groceries, it’s becoming more and more difficult to find deals and save money. What would you do if your go-to place for shopping suddenly decided to stop servicing your area? Walmart announced a plan to close multiple locations in the Chicago area due to financial concerns

Last week, in a statement, Walmart announced that it would be closing four stores in Chicago because “annual losses nearly doubled in the last five years” in these locations. CNN says these Walmarts are in predominantly Black and low-income neighborhoods. This will force residents to travel farther for groceries and medications.

The departure of Walmart in these areas is raising concerns for causing “food deserts”. The USDA explains that food deserts are geographic areas, typically in low-income neighborhoods, where residents have limited to no access to affordable and healthy food. These food deserts have horrible health consequences for a community, such as exacerbating health disparities and residents being unable to access pharmacies. 

Studies, such as one conducted at UC Berkeley, suggest that Walmart’s presence in communities push out smaller, family-owned stores. Specifically, a study from the University of Illinois Chicago concluded that Walmart “had not increased retail activity or job opportunities” in the studied Chicago neighborhoods. This is because the jobs that Walmart added were roughly equivalent to the ones they eliminated from local stores, the study found.

Unfortunately, Chicago has witnessed this phenomenon often. BlockClub Chicago reports a similar situation when Aldi closed last year, and then when Whole Foods did the same. This was all despite protests from locals against major retailers settling in Chicago, according to the New York Times

Now their exit exacerbates the need of local governments to step up and address the very shortcomings that they expected retailers like Walmart to fix. Instead of promoting infrastructure, the local government relied on retailers, for example, Starbucks, to provide basic services, such as restrooms, in the city, reports CNN. So as companies flee Chicago, they not only take with them affordable, healthy food and jobs, but also basic amenities. 

However, Walmart is not entirely leaving the community deserted. In their statement, Walmart assures current employees that they will be eligible to transfer to any other Walmart of Sam’s Club. Further adding that associates will be paid until August 11th, and those who do not transfer will receive severance benefits. 

Earlier last month, Walmart permanently shut its doors in Portland, reports Fortune. Now, their pullback from Chicago is an interesting note on how far aggressive corporate expansion can progress until the growth needs to be scaled back. Even more so, when this aggressive expansion ravages the communities it leaves. 
Walmart has seen many indicative actions as of late. Stores ceasing 24-hour operations, layoffs, the transfer of their Chief Merchandising Officer, and statements from the CFO to CNBC about harboring trepidation into the coming months, all seemingly indicate that Walmart is reaching the point where they plan to scale back. While the closing of stores in two major cities is concerning, it could signify a brewing trend as Walmart attempts to weather the impending economic recession.