Wal-mart has said it will close all stores in the US, and Amazon is set to announce a $7bn deal to buy Whole Foods, in a deal that is likely to raise questions about its ability to provide service to the growing number of American consumers.
Walmart, the US’s largest retailer, said on Tuesday that it would close nearly 3,000 of its more than 4,400 stores and reduce the number of its stores to 1,800 by the end of the year.
It said it would also close most of its online operations, as it works to reduce its reliance on online retail.
The retailer said it expected to sell an additional 4.5m to 6m items in 2017, and it would be cutting back on its staff in order to comply with US tax law.
The deal would see Amazon acquire Whole Foods for $13.5bn, bringing the total value of the deal to $22.8bn.
The Amazon deal comes as the US has struggled with a severe drought that has caused widespread crop damage and food shortages.
Wal-Mart, a major player in the American grocery market, has said its store closures will begin later this year and the company is currently looking to fill some of those positions with workers who are not US citizens.
Wal-mart said it plans to hire about 5,000 employees this year.
The company said it expects to make the cuts in the second half of the decade.
The news comes as Amazon and Wal-Marts competitors like Target and Walgreens have announced similar initiatives.
Target announced plans to close its remaining 100 stores by the middle of this year, and Walgreen said it planned to close as many as 10,000 stores by 2020.
Walgreens has said that its store closings will be permanent and that it will be hiring about 50,000 people by the year 2020.
“Walmart will not be a place to go to stock up on products,” said Chief Financial Officer Michael Pina in a statement.
Pina said the company had seen “a steep drop in retail spending”, and would “make the best business decision for the long term”.
“We’re building the right business for the future and making the right decisions for the people who will be part of it,” he said.
Walmer, meanwhile, said it is closing stores to comply to the law.
“The US is a nation of laws, not a nation built on an unyielding adherence to outdated and outdated laws,” a company spokesman said in a press release.
“We are not going to be a retailer where you can get away with doing anything and everyone else is going to have to pay a price.”
“Our goal is to provide the best possible service to our customers, and we will do so with the highest standards of customer service,” the company added.
“I want to be clear that this is not about whether we will close our doors, but rather how we will react to the laws and regulations that exist in the United States.”
Walmart is also working on an expansion plan in the U.S. to accommodate its growing number, and its chief financial officer said that the company would have up to 400 stores in 2020.
“It’s not an expansion that we’re actively working on, and this is part of our ongoing plan to be more customer centric and focus on serving our customers more efficiently,” he told CNBC.