What Walmart’s pullback from Chicago says about Corporate America’s limits | Hacker News Reader

What Walmart’s pullback from Chicago says about Corporate America’s limits

cnn.com

20 pointsbluedino36 comments

Is this a significant reduction in Walmart availability in Chicago or is this like the recent stories that Walmart is closing all its stores in Portland Oregon?

In the Portland case it was indeed true that they are closing all their stores that are actually in the city of Portland. But in the Portland metro area there are something like 10 Walmarts with only one or two actually in Portland. For the closing ones just go a couple miles down the road and there is another one.

This is a significant reduction in Chicago, but I don’t think the Portland comparison works. The Chicago metro area is enormous and Walmarts can be found all over the suburbs, but the specific factors of geography and no-car living among city dwellers (especially low income) mean that this isn’t just a matter of driving a few more miles down the road.

If you’re living in a city neighborhood, those suburban locations might as well not exist. And because of the small businesses driven out when Walmart first entered the scene, the impact is potentially large, and will disproportionately impact those who are least prepared to deal with it.

I hope this causes a resurgence of small businesses, but I don’t think going back will be so easy.

(I live here).

Why does this article not mention the rampant criminal activity that likely pushed out these stores?

Because they fought very hard to open those stores over the last 20 years in the very neighborhoods you’re talking about. While at the same time forcing out smaller stores that were there for decades. What changed?

Lack of arrests and prosecutions for theft of merchandise. Despite popular opinion, stores can’t just magically subsidize thieves through insurance or a tax write off and Walmart’s low margin business model doesn’t leave enough room to eat these costs once they become large enough.

I know this is anecdotal, but I’ve noticed more and more products at my local Walmart (not even in a high crime neighborhood) being put inside locked cabinets. Even razor blades, condoms, and beauty products need to be locked up. Shoplifting is spiraling into an epidemic because it is no longer being treated as a serious crime.

Wrong. They’re not losing that much money because of theft.

They thought they could come into these neighborhoods and profit and it turns out they were wrong. They’re the bad guys, go look up how much these stores were not wanted by its residents.

That does not make them bad guys

Speaking of "Wrong"...

https://www.dailymail.co.uk/news/article-10112809/Chicago-bl...

https://chicagocrusader.com/shoplifting-a-big-problem-at-loc...

But you just put "wrong" with zero facts, this surely makes you right..

The average shrink rate has hovered around 1.4% of sales for the past decade[1].

We don't know exactly what shrink is because the rate is low enough companies don't bother investigating in depth. It includes some mistakes and damage, employee theft, and shoplifting.

[1] https://www.cnn.com/2023/01/18/business/retail-shoplifting-s...

> 1.4% of sales

What are the margins in typical retail? If 10%, then that's some 10% of the margin lost to shrink.

> In 2021, retail shrink hit $94.5 billion,

I realize the economy as a whole is big, but that's still a pretty big number. Like, the budget of a large state's government. Still, not all of it is theft. As you say shrink is a larger category than that.

What I was trying to point out is that contrary to the breathless reporting this isn't a new problem and it isn't getting worse.

So it's unlikely any recent phenomenon is to blaim.

Why not spend 20 seconds and GOOGLE it and find out for yourself.

what changed? The laws around prosecuting shoplifters:

"Previously, if you were charged with theft or retail theft, and the value of the item or items taken was over $300 you could be charged with a class 4 felony. A class 4 felony carries with it a penalty of between 1-3 years in prison. The new statute has raised the value of the item to $500."

300->500 threshold strikes me as a relatively minor change akin to inflation, this seems unlikely to be the primary driver.

My impression is that a lot of people are struggling to make ends meet, and stealing from a walmart employed by careless slackers is always a more attractive option than from your neighbor or straight up armed mugging/robberies. I highly doubt the $500 felony threshold is what's green-lighting them vs $300.

A PS5 is more than $300 but less than $500 as an example.

No single items over $200 are readily accessible in any WalMart I've been to, certainly not in the last decade. But the whole expensive electronics behind lock and key practice started long ago...

Such as events like this?

https://www.fox32chicago.com/news/hundreds-of-teenagers-floo...

>> The closures are another example of the shortcomings of local governments and even national political leaders betting on leading chains to provide key public services and fill gaps.

>> Unlike local government, which is theoretically accountable to voters, companies answer only to their shareholders and don’t have an obligation to stay in communities if they aren’t making a profit.

>> Whether it’s handing over responsibility for providing public bathrooms to Starbucks and McDonald’s or vaccines and basic health services to CVS and Walgreens, the public is left vulnerable when these companies’ business priorities change or they close locations.

main idea in this story is that people trusting these big companies to come to they neighborhoods for food and jobs but these companies only care about money and leave.

story pushes narrative about specific ethnicity and economic group being victims.

main questions this story never asks is WHY these businesses closing?

and if billion dollar company like Wal-mart cannot survive in this places, how can small business?

cnn conveniently did not describe these communities in detail.. out of control crime, organized theft at businesses, missing or reduced law enforcement.

as immigrant myself from country where healthcare is more danger than you sickness (imagine getting a shot and catching hiv or hepatitis), where electricity only for 6-8 hours a day in 40+ centigrade, where running water not a real thing and to flush toilet you empty bucket of dirty water into toilet to force it flush..

the big sin is not walmart leaving but this fake news media making people victims born in USA. victimhood mentality

Have you been to the neighborhoods in question?

The people didn’t trust them. Walmart came in with all types of promises of economic development but the people did not want those stores. They lied thinking they could still profit and now in a short time they destroyed alternatives and are leaving as well.

Why do you keep posting misleading information over and over again on this topic?

People are literally PROTESTING the closure, but yet here you are, once again with your BS...

The one "lying" clearly is you...

https://www.fox32chicago.com/news/chicago-walmart-closures-p...

CHICAGO - Activists protested the closure of four Chicago Walmart stores Thursday morning in Chatham.

https://wgntv.com/news/chicago-news/chicagoans-blast-walmart...

Community activists gathered at 84th and Stewart in Chatham at the site of one of four Walmarts that is set to close, slamming the retailer’s decision.

“Everything I go into this store, it is packed with people,” said Father Michael Pfleger.

[deleted]

>> ...as if any of the things you've suffered justify your anti-Black animus.

my comment on stores unable to operate in high crime environment. it does not mean im anti black. you comment a personal attack. this is not reddit. maybe you forgot what website you are on.

>>> By being a local business that people don't associate with exploitative labour practices?

strawman argument. my point that if large company cannot afford to “swallow” losses in high crime location.. then small business have zero probability.

> By not being an attempt to turn misery into a profit center?

oh yes! the extreme misery of having born in USA where you have option to move and climb upward and get education.. where internet easily available everywhere.

it is truly a horrific atrocity that crime filled city or no personal accountability have consequence.. yes? even born in USA one needs charity of government or business??

good on wal-mart for leaving such places. there many places in world desperate need of charity. but you strawman personal attacks not charity and help no one but perhaps you ego.

You can't just dismiss the suffering of one group because it is worse somewhere else. Even if it is much, much worse. It isn't a race to the bottom or a game where we should tell people their problems don't matter because "it could be worse" and it can be dealt with.

There are huge swathes of people that simply don't have the opportunity. More so in other countries, yes, but there is a great deal of it in the USA too. More than is acceptable.

me believe that if you want to achieve something.. you can do it in USA. and if you goal not to change world or become rich but just lift from poverty.. yes you can do that in this country. just need hard work and determination.

but if you idea hard work that you have easy job.. little stress not too much labor then USA not enough by itself. Now you must blame someone and show you victim.

People and companies who would quickly kill unprofitable business cheerlead propaganda campaign. CNN writes this propaganda article against business but how willing is CNN to keep funding ventures that do not make money? Where is their justice war then?

They don’t care. Its just to get eye ball and clicks.

Yikes, can you please refrain from personal attacks and/or posting in the flamewar style? You've unfortunately been doing the latter repeatedly. It's not what this site is for, and destroys what it is for.

If someone else is wrong or you feel they are, please explain how they are wrong thoughtfully—odds are they won't learn from it, but there will at least be a chance (unlike what you posted here), and more importantly, the rest of the audience reading your post may have a chance to learn something.

If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

> In Chicago, Walmart is closing in both low-income and high-income areas, a sign that it’s struggling across the city. But it’s the stores in low-income areas that will feel the loss most.

This isn't about crime, it's simple; Amazon is eating their lunch.

When I visited family in the west chicago suburbs last summer, Amazon deliveries on our block were as frequent as the post man. Walmart was consolidation 1.0, Amazon is consolidation 2.0. These people don't bother going shopping irl anymore unless it's in a pinch, and that's not enough to support the huge urban retail presence.

Shrinkage is real, and is a major problem in poor areas. For political reasons stores don't say that, but just go into the big stores in poor areas - everything they can lock up is locked up. Wal-mart carries too much stuff lock up, so they close the stores.

Politicians try to ignore it too, but then they complain about food deserts.

>Wal-mart carries too much stuff lock up, so they close the stores.

Tell that to my local Wal Mart, which locks up, among other things: all shaving products including $1 travel size bottles of shaving cream and all USB cables.

Successful companies don't build strong economies (cf Fordlandia); strong economies provide the foundation for successful companies.

Certainly your statement is false in economies such as South Korea which have heavily and intentionally relied on national champion corporations to drive economic growth.

Thanks for the counterexample; I'll have to look at them. (although my initial bias is to suspect that KR may have developed with significant external, as well as internal, non-market forces — eg, as far as I know, the war is still not over, just frozen)

Some locales cannot support building and maintaining a strong economy. Chicago should consider building and operating food coops that are comfortable operating at a loss in the same way you would the local library or CTA line.

If big chains cannot survive in these neighborhoods, nor can the mom and pops who have been driven out, this is the logical conclusion if the expectation is healthy food being provided to the community.

If densely populated, highly developed metropolitan locales in the richest large nation on Earth can’t support profitable business formation, something is wrong that won’t be fixed by government-sponsored coops.

The poor have no purchasing power and healthy foods have low margins (as the article mentions; grocer margins are typically 1-3%). You’re either stuck with a food bank, a coop, or folks buying low quality food from corner convenience stores and gas stations (ie Dollar General’s rural MO).

Median income and economic demographic info for zip codes where these stores are closing is publicly available.

Capitalism isn’t always the solution, and not all solutions require a profitable business. Most roads are not toll roads, for example.

The poor are already given money for food and other necessities through government subsistence programs like SNAP and TANF. Something else is going on here.

Have you tried living on benefits?

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