AUSTRALIA’S largest supermarket chain has announced it will close 1.5 million retail stores by 2020.
Walgreens Australia’s chairman, Mike Whelan, said the retailer had been forced to make tough decisions as its business model has changed.
“I believe that in the coming years, the future of our business is going to be a lot more uncertain and uncertain than the past 10 years,” Mr Wheland said.
“So we’ve got to change.
It’s not that we don’t have a great future, it’s just that we need to change and adapt.”
Mr Whelant said the stores would close over the next 12 months as a result of changes in the business model.
“We have decided that the retail stores will close as a matter of business and not a matter for personal profit,” he said.
“The retailers will have the opportunity to be able to reopen the stores as part of a new transformation plan.”
Mr Hargreaves said the closures were “part of our ongoing commitment to making the most of the next 10 years”.
“Walmart Australia has been successful in the past decade and the retail industry has become a global leader in terms of consumer choice and convenience,” he told the ABC.
“But we also have to be mindful that in 2020 we will need to reinvent our business model, and we’ve had that work already done.”
Mr Walgarts chief executive Paul Whelans said he believed the closure would have a positive impact on the company’s bottom line.
“As a company that has experienced tremendous growth in the last 10 years, we have a real sense of what our future looks like,” Mr Walgairs chief executive said.
He said the company was focused on making sure the store closures “do not have a negative impact on our customers or on our businesses”.
“As the retail sector continues to grow and grow we need the flexibility to invest in our stores and to do that we have made changes to our retail strategy to ensure that we can stay on the front foot in 2020,” he added.
The closures come as Mr Hargroves acknowledged the retailer was likely to lose more than $1 billion over the 12 months, and warned it was unlikely to return to its pre-crisis levels.
“Over the next four years, our stores are expected to close down an estimated 4.5 per cent in the three months to September 2020, and by 2020 we’re likely to be in a position where we are probably not even able to keep up with the market, let alone compete with it,” Mr Higgons statement said.
Mr Walgren said he expected the company to “sustainably close” about 1.1 million retail and pharmacy stores over the four-year period.
“The future of Walgreen is very much in doubt, and I’m hopeful that we’ll be able, in the future, to maintain the same level of success that we’ve enjoyed in the previous decade,” he noted.
The company is also facing pressure to cut its workforce, and said it was taking a “hard look” at the future.
“In the last year we have had a lot of great opportunities to build on the strong performance of our team, but we’ve made decisions that we believe are likely to impact on that performance,” Mr Walton said.
“I’m confident that we will be able in the next few months to make some very tough decisions, but in the meantime, we are committed to making sure we’re in a strong position to continue to grow.”
Walmart is facing mounting pressure to increase its workforce amid growing consumer demand.
The retailer is facing pressure from a raft of consumers unhappy about the price of food and drinks.
Last month, Australia’s largest supermarket group revealed that its annual profit for the financial year ending June 30 was down $2.9 billion, to $3.9billion.
CEO Mike Whams has said the cost of living was rising faster than he expected.
His comments have been widely criticised by unions and consumer groups.
Mr Wham said that Walgens retail stores were able to “provide an excellent value for money” because of “low” competition from other retailers, and that “a healthy competition is key”.
The company said it planned to increase the number of employees from around 800 to “1,000” by 2020, but said it would not announce its staffing figures until the end of the year.
Meanwhile, Australia and New Zealand have announced plans to introduce a new national sales tax in 2020.
That would see the levy on groceries, fuel and other products increase from 4.6 per cent to 5.8 per cent.
Under the new tax, groceries, food and beverages will be exempt from GST, while petrol, diesel, cigarettes and other non-alcoholic drinks will be taxed at 15 per cent instead.
Australia’s Prime Minister, Bill Shorten, is expected to announce his new tax plan