Walmart Closing Most In-Store McDonald’s By Summer’s End

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The pandemic is forcing retailers to rethink their strategy to their brick-and-mortar locations. One of those retailers, Walmart, has already closed several in-store McDonald’s locations they consider their physical partnerships.

On this episode of Marketscale TV, Voice of B2B, Daniel Litwin talked with Prof. Ed Fox, Professor of Marketing, Director, JCPenney Center for Retail Excellence at Southern Methodist University’s Cox School of Business. Also joining in on the conversation was Dr. P.K. Kannan, Dean’s Chair, Marketing Science, University of Maryland Robert H. Smith School of Business.

The trio explored the partnership between this retail and fast-food giant, as Walmart plans to close hundreds of in-store McDonald’s after sluggish demands due to the pandemic. Only 150 stores will remain at the end of summer 2021.

“The McDonald’s/Walmart case is amplified,” Fox said. “It’s the largest of these kinds of partnerships. I think it’s useful to look at this as one of two things has to be happening: either there’s a symbiosis. In this case, one of the retailers, McDonald’s, is borrowing traffic from Walmart and taking advantage of that traffic, and having access to many more customers. Or, there should be synergy, where both benefit from that relationship.”

Low foot traffic is undoubtedly driving the downturn for these McDonald’s, as consumers shift to a digital-first approach. So, it seems Walmart is examining this symbiotic relationship. Most of McDonald’s sales came from drive-thrus during the pandemic, so without in-store drive-thrus, business on both sides was lost.

“If you look at it from the viewpoint of McDonald’s,” Kannan said. “During the COVID pandemic, 70 percent of their sales came from drive-throughs, and even as they are looking forward when Walmart is changing their store formats … McDonald’s is facing a challenge because they must also upgrade with these new stores.”

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