Walmart's closure of 63 Sam's Club stores shows what the company is willing to do to take on Amazon
- Sam's Club is closing 63 of its stores to "better align" its store locations with its strategy.
- 10 of the closed stores will be turned into e-commerce distribution points, highlighting the reasoning behind Sam's Club's pivot.
- This move reveals just how far Walmart is willing to go to compete with Amazon.
Walmart is closing Sam's Club stores, but that doesn't mean the chain is going away.
Sixty-three stores in total will be closing, but customer traffic and sales comparisons - the typical reasons why companies scale back store count - can't entirely explain why Walmart has done this. In fact, both year-over-year sales and store traffic are trending upward for Sam's Club as of late last year.
Instead, e-commerce is the major factor at play. 10 of the closed stores will be transformed into e-commerce distribution centers from their current warehouse store footprint.
That's being done "to better serve the growing number of members shopping with us online and continue scaling the SamsClub.com business," Sam's Club CEO John Furner said in a note to Sam's Club employees.
The implication here couldn't be any clearer: as Walmart is embracing digital through Walmart.com, so will its smaller, buy-in-bulk sibling through SamsClub.com.
Furner goes on to explain that Sam's Club will be "able to invest more in eCommerce, remodels, and in-club technology," and expand "fresh food, Member's Mark, and exciting merchandise."
Sam's Club has already been narrowing the products it's offering, boosting the number and quality of its Member's Mark private-label brand, and focusing on delivering to its core customer, who is different from the one Walmart serves through its discount store and Supercenters.
The store closures - and the layoffs that happen because of them - prove that Walmart is willing to endure some pain in the short term for long-term gain as it sets its sights on its largest rival online: Amazon.
Though Walmart has done a lot in the past year to better compete with Amazon online, it's not about to sit still. Bringing its bulk purchasing fully digital and figuring out how to deliver bulk goods to customers before Amazon does is just one more opportunity for Walmart to compete better with Amazon as the two giants continue to duke it out for retail domination.