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Wal-Mart Cutting Back on 24-Hour Stores

3:22 PM, Oct 31, 2011   |    comments
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INDIANAPOLIS -- It's known nationwide for rolling back prices. Now Wal-Mart is rolling back something else: its hours.

At select locations in markets across the United States, the nation's largest retailer is ditching its round-the-clock, 24-hour schedule and closing some stores from midnight to 6 a.m.

Cities like Indianapolis, Montgomery, Ala., Fayetteville, N.C., and Baltimore have watched Wal-Mart end its 24-hour service at some stores within the past year.

Still, Wal-Mart says it's not a trend, but a business move specific to each particular store.

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"This is market-by-market. This reflects our ability to make sure our stores reflect the community, make sure the hours are consistent with what our customers are doing," said Daniel Morales, spokesman for Wal-Mart. "Some stores, customers do tend to shop at off hours. Some they don't."

The company as a whole, however, is not pulling back from the 24-hour format, he said.

Which begs the question: If Wal-Mart is re-evaluating the all-night model, is it really worth it to stay open 24 hours?

Do that many people really shop in the middle of the night? Maybe not. But being open whenever a customer gets a craving for a frozen pizza or needs construction paper for a school project creates loyalty you can't buy, said Richard Feinberg, a retail professor at Purdue University.

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And that adds to profits during daylight hours.

"A retailer does not want to build any other habit from a customer than shopping in its store," he said. "So, even if it is not cost-effective for those overnight hours, it builds loyalty, which feeds the profitability of the other hours."

Then there is the competitive issue. The drugstore across the street is open all night long, so others follow suit.

Meijer, known for being one of the first 24-hour stores year round - even on holidays, said it plans to keep its open-all-the-time strategy at all stores nationwide.

"We consider our 24-hour operation part of our brand identity," said Meijer's Frank Guglielmi. "Customers count on us to be open when they need us, which is why we have no plans to change."

Other grocers say they are operating under the same philosophy.

Kroger will continue all its 24-hour locations. Marsh, with 40 of its 97 stores open 24 hours, is keeping those hours intact, as well.

There are items like diapers, baby food and other staples and necessities that customers need The company as a whole, however, is not pulling back from the 24-hour format, he said and they can't always get to a store on the 9-to-5 schedule, said Ed West, a spokesman for Marsh.

"Marsh feels offering the 24-hour service is all about offering convenience for customers and serving the neighborhoods," he said.

Wal-Mart feels the same way, said Morales. The company, in fact, is opening a new 24-hour location in Fort Wayne.

But even as it boasts 24-hours at some stores, there's been a buzz in the retail world that Wal-Mart is reducing hours at some stores, said Britt Beemer, who follows the retail industry and is the founder of America's Research Group.

Beemer believes it's all about the bottom line.

"It's really trying to re-establish itself as a low-price leader, and the only way to be a low-price leader is to be a low-overhead leader," said Beemer. "I think Wal-Mart is looking at all of their costs. They are trying to figure it out."

Wal-Mart, being the mammoth retailer it is, likely won't have to worry about losing money to competitors. The money it will save in overhead from closing stores during the night will far outweigh the losses in overnight sales.

And you better believe Wal-Mart researched all of that before making the decision to roll back some hours, Beemer said.

"Wal-Mart probably figured out the sales from midnight to 6 a.m. just weren't worth the effort," he said.

 

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