Walmart Closure Cuts Neighboring Stores' Sales 20% Within a Year

Stores near a closed Walmart lost roughly 20% of sales and shopper traffic a year after the closure — nearly four times the 5% drop recorded in the first month. Marketing scholars who studied 39 Walmart closures across 20 states from 2019 to 2026 found the decline worsens steadily: about 5% in the month after closure, 6% the month after that, 17% by month nine, and 20% at the one-year mark. The research compared nearby non-Walmart businesses against businesses near Walmarts that stayed open.

The finding overturns a long-held assumption among critics of the big-box retailer: that displaced shoppers seeking groceries, household goods, meals and services will simply flow to businesses down the road. They do not.

What does the closure actually change?

The authors — Vivek Astvansh of Binghamton University, State University of New York; Preetinder Kaur of the University of Guelph; and Pushpinder Gill of Toronto Metropolitan University — argue a closure sets two forces against each other. 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 at all. In this contest, agglomeration loss wins.

Economists call this benefit an agglomeration effect: businesses gain from proximity because the location itself attracts shoppers. A trip to Walmart generates stops at nearby restaurants, pharmacies, salons and service businesses. Remove the anchor, and a store can capture a larger share of local demand yet still end up worse off if the total pool of arriving shoppers shrinks enough.

The data confirm that mechanism. Traffic and sales fell in parallel. If stores were merely selling less to the same shoppers, spending per visit would have dropped; instead, fewer shoppers arrived at all. The scholars note that prior research had examined Walmart's entry — which cuts sales at nearby existing stores — but not, until now, what happens when an anchor closes.

Takeaway: competitive relief is real, but it did not overcome the loss of anchor-generated traffic.

Which businesses escaped the worst?

The damage was uneven, and the pattern is instructive for finance teams weighing exposure to anchor tenants:

• Stores competing directly with Walmart, such as grocery stores and close substitutes, posted better post-closure sales than noncompeting stores.
• Well-known brand stores fared relatively better than unbranded businesses; a recognizable name gives shoppers an independent reason to visit.
• Stores surrounded by more outlets carrying their own brands also showed more favorable post-closure sales.
• Stores with a higher share of revenue from online orders saw a less severe drop, because they depend less on physical trips to a store cluster.

The authors' implication for managers: opening another location or expanding online sales can protect a retailer from an anchor closure. A caveat follows every promise here — the study measures averages across 39 closures, and no individual store's outcome is guaranteed.

Takeaway: differentiation, brand strength and digital revenue cushioned the shock.

Who else carries the risk?

A large retailer closes a store based on its own portfolio logic. Neighboring businesses face a different calculation: a location that looks weak to the anchor can still drive valuable traffic to its neighbors. Economists call this an externality — economic value that sits outside the anchor's own sales and profits.

For commercial property owners, losing an anchor risks more than an empty storefront; it can depress the rest of the portfolio. Replacing the tenant quickly matters, but so does choosing a replacement that generates trips to the area. For local governments and economic development organizations, a major closure can hit businesses with no contractual tie to the closed store, so responses should extend beyond the vacant property — speeding redevelopment, coordinating access improvements, or helping create a new destination.

The study's numbers, not its assumptions, carry the argument. A rival's departure is not a windfall; it is a demand shock measured at one-fifth of sales.