An underperforming Walmart Supercenter on Technology Drive in Irvine will close March 5, the retailer said Monday.
Walmart said all 250 employees at the 136,000-square-foot store near Irvine Spectrum Center would have the option of transferring to a neighboring Walmart. The company operates six other locations within a 15-mile radius, including another supercenter at 16555 Von Karman Ave., also in Irvine.
Employees who choose not to transfer to another store will be paid through May 7.
“Closing a store is never an easy decision,” company spokesman Charles Crowson said Monday. “We have a series of criteria that we judge our stores on. We look at a lot of factors.”
What fuels closures?
Crowson declined to reveal what those factors are, but Burt Flickinger III, managing director for the retail consulting firm Strategic Resource Group, provided some insight.
One of the factors that typically fuels a closure, he said, is lower foot traffic. Another is “shrinkage,” an industry term for loss of merchandise or shoplifting. In California, shoplifting items valued up to $950 is considered a misdemeanor, punishable by up to six months in county jail.
Flickinger also noted that many Walmart stores open with the support of tax incentives from the communities they serve. The incentives typically last 10 years, he said, and once they run out, some stores close. The city didn’t provide any tax incentives for the Irvine supercenter, which opened in 2012
Officials with Irvine Co., which owns the Irvine building, said the company is “in discussions with several top tier retailers” regarding the space. Located in Alton Marketplace, the company described the complex as “one of the region’s most sought after retail centers due to its exceptional freeway visibility and prime location adjacent to I-5.”
“Some will transfer and some won’t,” he said. “Some employees may be at a point in life where they are ready to retire. Regardless, we want to give all of the associates a chance to stay within the Walmart family.”
He said the store’s pharmacy will remain open through Feb. 19.
Retailers facing challenges
Retailers with a large brick-and-mortar presence have, in some cases, downsized their physical footprint and placed an increased focus on e-commerce in an effort to compete with Amazon and other robust online businesses.
Flickinger said retailers have also been saddled with “massive increases” in shoplifting in recent years, adding that items like batteries, razor blades and cosmetics are easy to steal. That — coupled with expiring leases and tax incentives and increased costs associated with COVID-19 safeguards — will ultimately put many out of business.
“We’re going to see hundreds of stores closing in California over the next two years,” he said. “When you look five years out … it will be well over 1,000 closures.”
Walmart operates 310 stores in California, including standard-sized big-box stores, larger supercenters, smaller Neighborhood Markets and Sam’s Club locations. They employ roughly 91,000 employees.