Walmart announced last week that it was planning on closing eight stores in the city of Chicago after “decades of losses.” The company didn’t say so, but many on the right believe it was massive shoplifting that led to the closures.
Chicago, for whatever reason, does not have the scale of shoplifting problems that are found on the West Coast in cities like San Francisco. It’s still a big problem, but other issues far outstripped any losses Walmart absorbed due to retail theft.
Walmart used to avoid big cities, preferring the small towns and suburbs for its locations. But starting about 20 years ago. the powers that be in Chicago’s black community began to aggressively court Walmart, encouraging the company to move into the city proper instead of the periphery.
The result was four Walmart stores opening in predominantly black neighborhoods with four more opening in the next few years. The stores were located in some of the most crime-ridden neighborhoods in the city, but security was never a major consideration — until after the George Floyd riots in 2020. It was Democratic politicians and unions who fought fiercely against opening Walmart stores in the city, citing Walmart driving mom-and-pop stores out of business and hiring workers at barely minimum wage with few benefits.
But the riots changed everything. After the stores were thoroughly looted, the company began to take a second look at whether or not it was worth staying in areas where the profit margin was small and made smaller by retail theft and — something not mentioned often — poor management.
INSIDE LOOTED WALMART IN CHICAGO pic.twitter.com/TiRqAqHWHD
— JOHNSMITHMARKETING (@johnsmithtn) June 2, 2020
The poor management can be attributed to poor training and support from the company. But when a store has to spend extra on security, the profit-loss equation becomes a very tenuous thing.
“We’ll go in and work with the store managers and we know when store managers change, we know when new employees come in, we know when shelves are not clean,” Ald. Emma Mitts said about the store at North Ave and Cicero which opened in 2006. That particular location has been spared the ax. But a superstore in Chatham and three neighborhood outlets in East Lakeview, Little Village, and Bronzeville will be closing soon, and the reasons most often cited are low profits and the security of the store and its employees.
There’s a trade-off made when a big-box store like Walmart is invited into a neighborhood. And it’s not always a win-win situation.
A 2012 study of Walmart’s impact in Chicago found businesses closer to Walmart were significantly more likely to close than similar businesses farther away — and the number of jobs lost by nearby retail competitors essentially offset the number of jobs created at the new Walmart stores.
This is a particular issue in predominantly minority, low-income areas that experience economic neglect, and other chains have recently shuttered stores in these areas as well.
Whole Foods closed in Chicago earlier this year, along with CVS, Aldi and Save A Lot. In 2019, Target closed two stores, angering residents. Chains like Dollar General and Family Dollar are expanding in low-income areas, but they don’t sell fresh groceries.
“Since Walmart announced these closings, my office has been inundated with calls from seniors who are crying out, ‘Where do I go for my medicine?’ and with mothers asking, ‘How do I feed my children?’” said Illinois Sen. Elgie R. Sims, Jr.
“We have asked business to solve problems that we don’t want government to solve anymore,” said Bryant Simon, a professor of history at Temple University who studies the role of Corporate America and government. “We’re happy to have them do it and then shocked when they act like a business again.”
Indeed, some activists apparently have no clue what the definition of a “private business” might be.
“The comments on here are really telling. The people who own Walmart are some of the richest in the world and they didn’t get there by ‘working harder.’ Work with the community instead of complaining about a few stolen TVs,” tweeted Roberta Salas before the stream of invective and sarcasm forced her to lock her account.
Walmart says it has lost tens of millions of dollars every year since it opened these stores 17 years ago. It all adds up. Eventually, weak sales, marginal profits, endangered employees, and loss from retail theft makes operating these stores a losing proposition.