Is inflation the true cause of recent supermarket closures?
Some big name grocers have been closing store locations against the backdrop of record-breaking inflation.
Walmart closed three under-performing locations in April, in Louisville, Cincinnati and Bellevue, Washington, with plans to close two more soon, according to Eat This, Not That!
Whole Foods announced the impending closure of six stores, including ones in Chicago, Alabama, California and Massachusetts.
Kroger has closed two underperforming store locations so far in 2022, in Kentucky and Mississippi, and is relocating a third.
Piggly Wiggly has announced the closure of several stores in the 17 states in which it operates.
Particularly controversial for Whole Foods has been the closure of the chain’s location in the Englewood neighborhood on Chicago’s South Side.
The store opened to great fanfare only six years ago, according to the Chicago Sun Times. Alderwoman Stephanie Coleman characterized the chain’s decision to close the store as reneging on its commitment to the neighborhood and eliminating its only source of fresh foods and produce.
Amazon.com has not revealed if financial performance played into the decision to close either the Englewood or another in the Lincoln Park neighborhood of Chicago, but Whole Foods did recently report its first quarterly loss since 2015.
The inflationary economy may be forcing grocers to take a closer look at the profitability of individual locations. Inflation brings increased costs from suppliers, which makes it more difficult for retailers to protect margins, leading them to pursue their own cost-cutting measures.
The news of major enterprises closing stores comes a few months after reports that inflation was already putting small, local grocers out of business.
Community Foods Market in February was forced to close its doors in West Oakland, CA, due to inflation, according to an NBC Bay Area report. Inflation and associated costs constituted the last straw for the business, which was struck first by diminished foot traffic early in the pandemic and then supply chain disruptions leading to shorted orders and lags in delivery from suppliers.
Even before the pandemic and ensuing inflation, however, experts were anticipating significant store closures throughout the U.S. retail landscape due to the market being over-stored.
- Walmart, Whole Foods, and Other Grocery Stores Are Closing Locations Soon – Eat This, Not That!
- Englewood Whole Foods to close after just 6 years in neighborhood, leaving few healthy options – Chicago Sun Times
- Inflation Forcing Grocery Store Closure in Oakland – NBC Bay Area
- Did stores prove their worth during the pandemic? – RetailWire
DISCUSSION QUESTIONS: Do you think inflation has played a role in recent store closures? How will continuing inflation affect grocers, particularly smaller ones, through the balance of 2022?