Prairie Grove’s 14,000-SF Walmart Express was one of the 154 stores across the country that Wal-Mart closed last month. The Bentonville retailer closed all of its 102 Express stores.
Since Wal-Mart Stores Inc. announced last month it was closing 154 stores in the United States, Gentry Mayor Kevin Johnston has been on the phone and sending emails trying to attract a grocery store to the Benton County town.
The closing of the Walmart Express leaves Gentry without a grocery store, Johnston told Arkansas Business last week. The closest store is a Walmart Supercenter about 6 miles away in Siloam Springs.
“Our focus now is to find someone to come fill that void,” said Johnston. But as of last week, he hasn’t had any takers.
The Gentry location was one of Wal-Mart’s original Express stores, which was the company’s smallest format and considered to be an experimental “pilot” project since the first ones opened in 2011. Wal-Mart said on Jan. 15 it was closing all 102 of the stores, most of them on Jan. 28.
Wal-Mart spokesman Brian Nick said last week the company was just beginning the process of shedding itself of the properties.
“Depending on whether they’re leased or owned, we’re working with interested buyers,” Nick said.
He said it was too early to say what the status was on individual properties.
“Not every area is the same,” Nick said. “We’ve had an ongoing dialogue with elected officials and developers since we first made the announcement. And those discussions continue.”
Still, Johnston and other city officials in Arkansas are anxious. The closings also could cause a headache for landlords who have to find new tenants.
“This is a major blow to the landlords,” said Matthew Cypher, director of the Steers Center for Global Real Estate at Georgetown University’s McDonough School of Business.
Of the stores being closed, about 30 were leased rather than owned by the corporation; none of those leased properties were in Arkansas.
Meanwhile, local officials worry that their city revenues will fall without a Walmart to generate sales taxes.
“We’ve estimated that probably $40,000 to $50,000 a year in sales tax revenue is going to be lost,” said Charleston Mayor Sherman Hiatt. “It was very busy. … And they did very good business on their fuel because the traffic count here is 7,000 to 8,000 cars a day.”
Hiatt’s estimate and Charleston’s 1.5 percent sales tax suggest annual sales at the Express of between $2.7 million and $3.3 million.
The Franklin County city of just more than 2,500 people had sales tax revenue of $350,813 in 2015, which was up 2.1 percent from the previous year. Hiatt said the Walmart Express was open exactly a year and a day before it closed.
“It was a shock,” Hiatt said. “You don’t expect Walmart to go out.”
He said that Wal-Mart owned the stand-alone location in Charleston, and Hiatt is trying to spread the word about the closed business.
“We have sent some letters out to some different businesses, making them aware of it,” Hiatt said. “We have not had any response back.”
The city of Maumelle also started contacting potential occupants to fill the only Walmart Neighborhood Market that closed in Arkansas last month.
Judy Keller, director of community and economic development for Maumelle, said she didn’t know if Wal-Mart has any restrictions on who could buy the space and was waiting for the answers as of last week.
“Without knowing if there are any restrictions, it’s a little premature for us to do too much,” Keller said.
The closing of the approximately 35,000-SF Neighborhood Market hasn’t seemed to hurt the other businesses in the Maumelle Town Center retail strip that it anchored, , said Bob McCarley, whose family owns the 33,950-SF mall.
“I think somebody will take the space,” he said. “It won’t be another grocery store.”
Kroger has a store just down the road from the location and a Walmart Supercenter is a few miles away. McCarley said he has 13 tenants in the strip mall, including several restaurants.
Decision to Close
Wal-Mart Stores said on Jan. 15 it would close 269 locations, most of them in the United States and Brazil, where 60 closed.
More of than 95 percent of the store closings in the U.S. were within 10 miles of another Walmart store, the company said.
“Actively managing our portfolio of assets is essential to maintaining a healthy business,” Doug McMillon, president and CEO of Wal-Mart, said in a news release. “Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future.”
Wal-Mart still has more than 11,000 stores around the world and plans to open more.
Nick, the company spokesman, said Wal-Mart had 69 store grand openings in the U.S. in January. And the company plans this year to build between 50 and 60 Supercenters and 85 to 95 Neighborhood Markets in the U.S., he said.
“All of this is going on simultaneous from making the decisions like we did to get out of the Express store format,” he said.
Leases
Wal-Mart is considered a “very high-quality tenant” to property managers, said Cypher, the director of the Steers Center. “When we say ‘high quality,’ what we mean is the likelihood that they’re going to pay their lease.”
He expected Wal-Mart to have leases that were to 10 years to 20 years in length.
“A building’s value is at least in part tied to the length of the lease, which is positive in this case with Wal-Mart.”
Cypher predicts landlords are “reading their leases word for word” and possibly looking for ways to sue as a result of the store closings.
He said that’s why the shutting down of stores should serve as a cautionary tale to property managers on the importance of having well-negotiated and well-written leases.
“If it was just a one-year lease, it wouldn’t be as challenging,” Cypher said. “But under these circumstance, there’s a meaningful impact to you as the landlord.”
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