4 minBusiness
Walmart Closures Cut Neighboring Shops' Sales by a Quarter in US Study
A study of 39 Walmart closures across 20 U.S. states found that neighboring shops lose foot traffic and sales, with the steepest decline arriving in the ninth month after a closure.
The closure of a Walmart store typically does not go without consequences for neighboring retail outlets, and these consequences can be far larger than local business owners and city authorities expect. A new study has found that, on average, sales and foot traffic at neighboring shops fall by about a quarter compared with similar shops located farther from the closed stores.
The study covered 39 Walmart closures in 20 U.S. states between 2019 and 2026. It was conducted by three marketing researchers from Binghamton University, the University of Guelph and Toronto Metropolitan University. The authors analyzed how the activity of shops located next to the closed branches changed, and compared it with the trends of similar retail outlets without such a neighbor. This comparison made it possible to separate the impact of the closure from general market fluctuations.
The most important finding is that Walmart acts as an anchor that attracts shoppers. Those who come to the hypermarket often also step into neighboring shops, so a large grocery and general merchandise store works as a magnet for the entire retail space around it. When the anchor disappears, a decline follows, even though some competitors may gain a certain advantage. The researchers describe this as the action of two opposing forces: on one hand, competitive relief for other merchants, and on the other, the loss of the clustering effect, meaning that retail outlets together draw more visitors than they do alone. In most cases, the second force prevails.
The decline follows a clear timeline. In the first month after a closure, sales at neighboring shops drop by roughly 5 percent, and in the second month the fall reaches about 6 percent. The situation then worsens: by the ninth month the decrease reaches approximately 17 percent, and one year after the closure, sales are on average 20 percent lower than before the closure. The harm to neighbors is therefore not limited to a short-term shock but builds up over several seasons.
The study also showed that not all neighboring shops were affected equally. Direct competitors in food sales generally fared better than other merchants nearby, since shoppers who previously went to Walmart for groceries often switch to them. Well-known brands and stores that largely operate online experienced a smaller decline, because their customers depend less on physically visiting a particular shopping center. This indicates that the impact of a closure depends on the nature of the business and on how tied customers are to the location.
For local authorities and property owners, this yields practical conclusions. The authors stress that planning should consider not only the empty premises left after a closure. It concerns the broader economic space around the shopping center, on which neighboring businesses depend. Decisions about the future of such an area, in the researchers' view, should take into account the indirect consequences for all businesses that operated alongside the large store, not just the fate of the building itself.
Source: fastcompany.com
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