Walmart to close some tech hubs and stores, including pickup center in Bentonville

Walmart is closing technology hubs in Austin, Texas, Carlsbad, Calif., and Portland, Ore., with the hundreds of employees at the locations invited to relocate to San Bruno, Calif., or Bentonville. The retailer said that moving expenses will be covered, and severance will be paid to those who do not transfer.

The closure announcements were part of an internal memo sent by Walmart Global Technology Chief Suresh Kumar last week.

Walmart has 11 U.S. tech hubs and six abroad, and the time had come to shift away from some markets, Kumar said. The technology staff has worked remotely since early 2020, but Walmart said technology division employees are now expected to work at least two days a week in their offices.

Scott Benedict, a former Walmart executive now working for Rogers marketing agency WhyteSpyder, said the tech hub consolidation looks like an attempt to streamline costs and allow for more in-office collaboration in a post-COVID business climate. He said the location in Portland resulted from a tech acquisition made by WalmartLabs in 2012. The offices in Austin and Carlsbad – near San Diego – were a way to draw interest and talent from the two larger metro areas.

“Perhaps Walmart is trying to pare down the costs of operating multiple centers in expensive markets,” he said.

The retailer is also closing eight stores for various reasons. According to media sources, three of the stores are in the Chicago metro and have not performed well. Stores in Plainfield and Homewood will close on March 10. One of the closures is a pickup and delivery-only store in Lincolnwood scheduled to close on Feb. 17.

Walmart’s first pickup and delivery dark store, located at J Street and South Walton Boulevard in Bentonville, is being closed on Feb. 17. The dark store opened in 2014 and was a precursor for the online grocery pickup now being offered nationwide in Walmart stores.

Traffic declined at the Bentonville store as more families can pick up their orders at stores near their homes, have the orders delivered to their homes, or inside their homes for Walmart InHome subscribers. The retailer said that the pickup-only centers were testing labs in the early days of online grocery and helped with where the service is now.

Clint Lazenby of Traverse Group in Rogers said the closing of the last of the pickup-only locations looks like the retailer is cleaning up loose ends and signals Walmart’s confidence in what they are doing for the next few years. Benedict also said the pickup grocery format, modeled after Walmart’s grocery business at ASDA in the United Kingdom, has served its purpose: to provide lessons on the front-end and back-end of the business. He said it was valuable information that allowed Walmart to rapidly scale its online grocery offering into the booming business it is today.

“It’s time to sunset this format, something Walmart does from time to time,” he said.

Walmart is also closing a store in southeast Albuquerque, N.M., and on Milwaukee’s north side. A Walmart Neighborhood Market in Pinellas Park, Fla., will close next month. The retailer said workers in the shuttered locations can transfer to other stores in their areas.

The store closures and technology hub consolidation come as the retailer looks for ways to rein in costs. Operating margins continue to be squeezed between higher labor and supply chain costs and persistent inflation sending wholesale prices higher. Benedict said the store closures look like regular house cleaning, and it’s something Walmart and other retailers do periodically at the start of new fiscal years. He said Walmart doesn’t close stores unless they underperform year after year, or there are persistent location or theft problems that also compromise profits.