Walmart Closures Cut Nearby Store Sales by a Quarter, Study Finds

By Daniel Okafor

Nearby stores lost roughly a quarter of their monthly shopper traffic and sales revenue after a Walmart closed, according to a study of 39 closures across 20 states from 2019 to 2026. The damage compounded. The gap reached about 17% in the ninth month and 20% a year after the closure, the researchers found.

The work comes from three marketing scholars: Vivek Astvansh, associate professor of quantitative marketing and computational data science at Binghamton University, State University of New York; Preetinder Kaur, assistant professor of marketing at the University of Guelph; and Pushpinder Gill, assistant professor of marketing at Toronto Metropolitan University.

How did they measure the closure effect?

The team combined closure dates with monthly store-level shopper traffic and spending data. For each closed Walmart, they identified nearby non-Walmart businesses and compared their post-closure performance with that of businesses near Walmarts that stayed open.

That comparison group anchors the estimate. Those businesses had no lost anchor store, so their results serve as the baseline for what nearby stores lost.

The finding: a slump in both monthly shopper traffic and sales revenue of roughly a quarter, measured against comparable stores near Walmart locations that remained open.

Why does losing a competitor hurt?

Walmart plays two roles at once. It competes with neighboring businesses for shopper visits and spending. It also acts as an anchor, giving people a reason to travel to a shopping area in the first place.

Economists call the second role an agglomeration effect: businesses gain from proximity because the location itself attracts shoppers. Shopping center owners have long used that logic, placing prominent stores to anchor a mix of tenants. A trip to Walmart can generate a stop at a nearby restaurant, pharmacy, salon, specialty retailer or service business.

A closure sets up a tug-of-war, Astvansh, Kaur and Gill argue. Competitive relief helps nearby businesses because a formidable rival is gone. Agglomeration loss hurts them because fewer shoppers have a reason to visit the area. As the scholars put it, "competitive relief didn't overcome the loss of traffic that would have been generated by trips to the anchor store."

The arithmetic is counterintuitive. A store can capture a larger share of local consumer demand after Walmart leaves and still end up worse off if the total pool of shoppers arriving in the area shrinks enough.

Earlier research had gone the other direction. Other researchers found that Walmart's entry into a shopping area causes sales in nearby existing stores to drop, and follow-up studies suggest those shops can adjust assortment, prices and promotions to mitigate the effect. What had not been studied, the three scholars write, is what happens when an anchor store closes.

Why did the decline keep deepening?\n

The monthly sequence runs from about a 5% drop in the month after closure to 6% in the month thereafter, then about 17% in the ninth month and 20% a year after the anchor store closes.

Traffic and sales fell in parallel, and that pattern carries the diagnosis. If nearby stores were simply selling less to the same number of shoppers, spending per visit would have fallen instead. What happened was the opposite: fewer shoppers visited nearby businesses once the anchor disappeared.

Which nearby businesses held up best?

The damage was not evenly distributed.

• Direct competitors. Grocery stores and other close substitutes posted better post-closure sales than noncompeting stores, consistent with competitive relief being real.
• Recognizable brands. Well-known brand stores fared relatively better than unbranded businesses. A familiar name gives shoppers an independent reason to visit.
• Brand clustering. Stores surrounded by more outlets carrying their own brands also showed more favorable post-closure sales.
• Digital revenue. Businesses with a higher share of revenue from online orders saw a less severe drop, because "the more a business engages with customers online, the less it depends on people physically traveling to a cluster of stores."

Taken together, the patterns give managers options. Opening another location or expanding online sales can protect a retailer from an anchor closure.

What does this mean for landlords and cities?

A large retailer decides whether to keep a store open based primarily on what makes sense for its own portfolio. The surrounding businesses face a different calculation. A location that looks weak from the anchor retailer's perspective can still drive valuable traffic to neighboring stores.

Economists call that an externality: a positive or negative effect of an economic activity on other parties, even though market prices do not reflect it. Some of the economic value produced by an anchor sits outside the anchor's own sales and profits.

Three groups have to adjust.

• Neighboring businesses. Managers should not assume that a powerful competitor's departure creates a windfall. They need to know how many customers arrive because of the broader shopping destination, not merely how much their products overlap with the anchor's.
• Commercial property owners. Losing an anchor is more than risking an empty storefront. It can shrink consumer demand across the rest of the portfolio. Replacing the tenant quickly matters, but so does finding a replacement that can generate trips to the area.
• Local governments and economic development organizations. A major retail closure may affect businesses with no contractual relationship to the closed store. Responses should extend past the vacant property, whether that means speeding redevelopment, coordinating with local businesses and property owners to improve shoppers' access, or helping create a new destination that restores shopper traffic.

For operators watching the next anchor close, the data already ranks the exposures. Direct competitors, recognizable brands and retailers with a high online share absorbed the shock best, while unbranded, single-location and traffic-dependent businesses absorbed it worst. That ranking gives landlords and city economic development offices a screening tool before a closure becomes a vacancy problem.