Photo: The Post Millennial
Why is Walmart Closing Its Portland Stores?
Walmart’s planned closure of its last two stores within Portland’s city limits later this month has drawn national coverage amid speculation that it may be due to rampant shoplifting.
The discount giant closes a handful of underperforming stores across states each year and the two were part of 15 announced for 2023. Walmart has said that each closure involves numerous factors.
On the Portland closures, Walmart said in a statement to an NBC affiliate, “The decision to close these stores was made after a careful review of their overall performance. We consider many factors, including current and projected financial performance, location, population, customer needs, and the proximity of other nearby stores when making these difficult decisions.”
The closures come after Walmart CEO Doug McMillon commented on CNBC last December that shoplifting spikes across the U.S. could lead to store closures and price increases. Portland has seen a surge in homicides and other crimes, including shoplifting, and the spread of homeless camps following moves by the city in 2020 to temporarily reduce police funding after months of politically-charged protests.
Texas Governor Greg Abbott said on social media about Walmart’s Portland closings, “This is what happens when cities refuse to enforce the rule of law.”
Portland Mayor Ted Wheeler, retorted, “The retail industry is changing and retail theft is a national issue,” while pointing to recent Walmart closures in Texas.
An article in the Oregonian cited a number of other potential factors leading to the exits, including the city’s high taxes, cultural mismatches that Walmart has also faced in other cities, and inflationary/macroeconomic pressures.
Neil Saunders, managing director of GlobalData’s retail division, believes local competition from Fred Meyer and independents played a role. He told the Oregonian, “Walmart typically needs to be where they can be a big player and capture all the shares.”
Portland’s population slid 1.7 percent in 2021 after decades of growth and other businesses have closed in recent years amid the city’s social problems. Last week, Cracker Barrel announced plans to close its three stores in the Portland area, saying it was “unable to overcome the impact of the pandemic.”
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All Walmart stores in Portland to permanently close - KPTV
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Texas and Portland, Oregon, politicians take to Twitter to argue over why Walmart is closing stores - Business Insider
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Shoplifting unlikely the driving force in Portland Walmart closures, retail watchers say - The Oregonian
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Walmart will close handful of stores in 8 states and DC this year. See the list. - USA Today
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Rising thefts at Walmart could lead to price jumps, store closures, CEO says - CNBC
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Walmart to close remaining Portland stores as crime-ridden city battles shoplifting wave - New York Post
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Walmart closing an Everett store that locals say was plagued by theft - The Seattle Times
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What’s the matter with Portland? Shootings, theft and other crime test city’s progressive strain - Los Angeles Times
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Cracker Barrel joins Walmart in closing all locations near this major city - Al.com
Discussion Questions
DISCUSSION QUESTIONS: How likely is it that high shoplifting rates significantly contributed to Walmart’s decision to close its stores in Portland? Are Portland’s issues similar to or much different than those facing other major U.S. cities?
Poll
Loading …BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Lucille DeHart
Principal, MKT Marketing Services/Columbus Consulting
Given the rise in shoplifting and retail theft in general, all retailers should be considering crime rates in their store location decisions. All major cities are facing societal challenges related to homelessness and substance abuse and these factors contribute to retail crime. While every city is different, I’m not sure that Portland is an outlier. The fact is, retailers have a responsibility to their customers and employees to operate in a safe and welcoming environment and if that can’t be achieved, then closing the store is an easy business decision.
Shoplifting and theft play a role, mainly because they impact profits. However turning the Portland store closures into a political hot potato around crime is erroneous and unhelpful. There are lots of factors that went into the decision to close, including sales growth and competitive factors. And the truth here is that the Portland stores were simply not performing as they needed to and the trajectory suggested that would not change.
Portland has become a fixation for the far right as a symbol of woke culture. That said it is odd that Walmart and Cracker Barrel are willing to pull the plug as a business decision. But I believe, like Nordstrom leaving Canada, it was a number of decision based on many things, not the easily consumed 10 second headline.
This is a case of how many will suffer for the crimes of a few. While consumers like the idea of retailers working on behalf of their communities, their first priority is to yield a profit, pay their employees and protect shareholders who invest in them. Loss prevention will continue to not only play a role in store closings but, more importantly, in real estate selections. Sadly, poor, high crime areas are usually the ones most in need of food and commodities stores. Neighborhoods need to take action to drive change and work in cooperation with businesses.
Could it also be that Portland may not represent the ideal demographic for Walmart stores?
I don’t think it is fair to speculate to answer the specific question posed here. We don’t really know the reasons behind Walmart’s decision and if it was driven heavily by shoplifting, they would serve the general marketplace better by coming out and speaking directly about the problem.
As a consumer, I have noticed more and more “doors closing” with retailers. When I no longer can enjoy a particular benefit or am restricted in some way, it’s usually expressed by a store associate saying that “it’s because so many people cheat/steal/commit fraud.” This has the tone of what Mom used to say about a few bad apples ruining it for the rest of us.
I would expect to see the retail experience degrade to some extent as retailers look for ways to combat the current societal trends.
Crime is just one of many factors Walmart considers when closing a store. The article touches on many other factors and when taken holistically, the Portland stores fell on the other side of the red line. Walmart, like all retailers, is in business to turn a profit for its shareholders and, when stores underperform, decisions must be made. This was not a political decision. It’s pure economics.
It is not just Walmart. Every retailer is facing real threats to their ability to be profitable. Property owners want more money. The economy is lagging, impacting customers’ ability to buy, and many people and businesses are reluctant to spend over their limits. As one retailer told me: I can’t live like this. So blame it on theft, lack of desired inventories, squeezed customers and–it all adds up to tough times looking for brilliant people to solve the issues.
The big point is that the economy holds many trapdoors for retail to navigate. It is not any one thing, but a number of issues with the big one being a contracting economy with a very concerned public that is careful with respect to spending. But we all have to remember this: Tough times never last, but tough people do.
It’s easy for politicians to take cheap shots at cities and places that are run by the “opposition.” Abbott goes right to the crime card, making an assumption that’s not supported by Walmart’s press release or by the city of Portland. The reality is that there are a number of issues at play here if you take the data provided at hand. Portland is an expensive city to do business in. They have entrenched competition in the market and, culturally, are probably not a great fit for Walmart. To jump to shoplifting as the main reason, given the issues the entire country is facing around retail crime, is just too easy an argument.
Rising shoplifting and other crime, and homelessness, have gotten plenty of headlines in Portland, San Francisco and other cities. I don’t know how Portland prosecutes shoplifters, but chances are that other factors weighed into Walmart’s decision. For example, how do competitors’ hourly wage rates (or minimum wages in the Portland market) compare to whatever Walmart was paying its associates? To lay this decision only on the shoplifting problem is overly simplistic.
Are we discussing societal issues or speculating about Walmart’s decision? Since I am not privy to Walmart’s decision, I will comment on the other alternative, shoplifting.
Is Portland unique?
I was recently in Baltimore and observed blatant shoplifting as a group of young people grabbed products and ran out of the store. No one reacted. Not even the security guy at the door. I am too old to run out the door, so I will pay for what I want. Here in NYC, the Duane Reade across the street locked up many of their on-the-shelf items because of shoplifting.
My regular Starbucks in China keeps their shelved products (coffee, coffee cups, etc.) shelved next to the entrance. I got a quizzical look when I asked an associate if they were concerned about shoplifting. Then he said, “the customers will stop them, and we will call the police. But, we never see it.”
As a Portland resident on the BrainTrust here are a few facts, and a few opinions:
The stores closing in Portland were not center city stores, (where quite a number of cities have center city challenges) they were suburban–one in fact located on a main shopping drag which also includes a major mall, Costco, Home Depot and other retailers. Shoplifting is a significant problem here, more so because there is little hope of police attending to any issue. As bad or worse though is the fact that keeping employees and property safe is also problematic, particularly after dark. That factor was not stated in the financial review comments but it is an issue for a number of businesses here in Portland and had to be a factor in Walmart’s review, even if it was unstated.
In my opinion there have been a series of unintended consequences of policies that have made things worse here. We decriminalized harder drugs, and magically drug trade and use flourished, our liberal city turned a blind eye to crime during the protests, and Portland became a magnet for all kinds of non-resident undesirables. I’ll get in trouble for this next one, but there is also opinion that says we “enable” homeless people to remain on the streets, as opposed to helping them find ways off the streets. We deliver tents, meals etc. There is the odd story, whether true or not, that other cities send their homeless to Portland, or that Portland is a magnet for non-resident homeless based on the services provided.
What is probably the saddest though is that all levels of government have raised huge pools of money (including through extra business revenue taxes which couldn’t have helped Walmart) to help with the homeless issue (which is certainly at the root of many of these problems), making Portland in fact the highest taxed city in the U.S. That said the politicians can’t get their act together across the various jurisdictions (city, county, state) to productively spend it, so it goes largely unused.
Portland is a canary in the coal mines for sure, and Walmart isn’t the first or only business pulling out, it may just be the largest so far. Sorry for the length of this, but Portland was a great city not very long ago, and now even Walmart can’t make it here.
Peter, thank you for the posting. I have heard bits of and pieces of this but never put together like this. I appreciate it.
Highly likely. Of COURSE high shoplifting impacted the decision to leave Portland! Walgreens left San Francisco for the exact same reason. And what, exactly, is a “cultural mismatch?” People in Portland don’t like to shop at Walmart because of a cultural mismatch? That is a heap of PR drivel served up by someone who writes for the Oregonian.
Shoplifting, taxes, higher wages, a highly regulated environment and more–all of these increase costs without adding value to the customers. Walmart decided it was no longer worth it to stay, that is the story.
Any medium to large business should include a SWOT/PEST analysis when considering opening a new location. Such analysis will take into account factors like shoplifting, which in my retail experience is often internal (employees and often security and operations people). There are similar considerations when deciding to shutter a location, but given the difficulty in getting people interested in low-wage, menial jobs the employment pool is also a likely contributing factor to Walmart’s decision.
High shoplifting rates were no doubt a consideration, maybe even a significant one, in Walmart’s decision to close its Portland stores, but my sense is that it’s viewed – at best – as the straw that broke the chain’s back. The greater problem is Portland itself. As things have evolved – or in some people’s minds devolved – cultural issues must have made it less and less attractive for Walmart to continue its Portland operations. The city, and a significant percentage of the more affluent sector of the population, oppose any “Big Box” retailers on principle – without question. Period. Full stop. Additionally, Portland’s tolerance of homelessness is creating a counterculture of poverty and in some cases addiction and mental illness that has driven even some longtime residents to leave the city. Shoplifting is a tangible side effect of rampant poverty, especially rampant poverty that is essentially encouraged and tolerated by city officials. There are also more conventional business considerations including relatively high labor costs, taxes, and property costs. Some of Portland’s problems are shared by every large city, but its approach to addressing these issues is unique – perhaps for better and certainly – in some cases – for the demonstrable worse.
As someone who lives in Portland, I want to add some facts to this discussion. There are a number of factors that likely influenced Walmart’s decision to close. It wasn’t because of sales. The smaller, undersized Delta Park store had 201 employees, while the larger Eastport Plaza store had 379 employees according to documents filed with the state. If the stores lacked sales volume, they would not have had this many employees. Every time I went in these stores, they seemed busy.
So what might have caused the stores to close? Well, shoplifting certainly was a contributing factor. Portland Police even admitted they have a problem, days after the announced closure. Taxes? The city of Portland imposes a 1% gross receipts tax on “large retailers” doing business in Portland. For a low margin, high volume business that reduces the margin to the point where the margin can no longer cover theft. Store Expenses? Adding a large number of uniformed and undercover loss prevention agents is a huge expense.
Walmart likely did not see a path forward. Keep in mind that Walmart has stores in the Portland suburbs, there’s another Walmart down the street from the Eastport Plaza store but is just over the county line. A lower cost of doing business combined with fewer shoplifting issues is probably why that store is still open.
As for Cracker Barrel, their only Portland location was closed a while back, these other locations are located in the suburbs (where Walmart is still open) and in Bend, OR.
So what, exactly, is the evidence for this speculation? The musings of noted retail expert Greg Abbott? Stores never close for a single reason — other than the collective one of not being profitable (enough) – and it’s simply irresponsible for people who have no specific knowledge of the situation to play guessing games.
All cites face the same issues, but to drastically different degrees. I suspect most cites in the country would like to have Portland’s demographics.
These two stores had over 500 employees. All of us here know how Walmart staffs stores. These were high volume stores. These stores had packed parking lots all day and into the night.
Clearly theft and other issues caused these closures. Whether or not one wants to believe that is up to them.
I am surprised they closed these stores. Walmart’s coverage in Portland suburbs isn’t great and multiple are just neighborhood markets.
It seems like Walmart has issues controlling theft in its stores. We will see how Target and Fred Meyer do now that they are likely to be the next target (no pun intended) of the displaced Walmart patrons.
It is sad that this simple business decision became wrapped in politics. As a Portland resident, right wing parties have chosen to make Portland into a mythology to support their political opinions. Fundamentally, though, other than a serious homeless problem shared with most west coast cities, Portland is what it always was — a great place to live and raise a family.
Walmart likely made good decisions — no one I know liked those stores or liked to shop in them. And, they haven’t left Portland — only the two stores strictly within city limits which has never been Walmart’s core business. They continue to thrive in the near suburbs.
Of course, business decisions often become political footballs and it’s no surprise the governor of Texas wants to distract focus on his state by pointing to Portland. But there’s nothing to see here. Please move along.
A retail giant like Walmart has all the capabilities and access to technologies to handle an issue like shoplifting. So, in my opinion, shoplifting may not be the only or major contributing factor for the closure of Walmart’s Portland stores. Walmart typically wants to be the dominant player wherever it operates and aims to build an ecosystem with its own subsidiary stores. So, I think the bigger factor here seems to be what Neil Saunders has said.
On the other hand, amidst all the economic downturns businesses have to continuously examine their performance, so to analyze and take the closure decision is a bold move by Walmart. The result may or may not put the ball in Walmart’s court, however, since a company’s ultimate goal is to create value for their shareholders and increase their profits, taking actionable decisions becomes necessary.