If there’s one thing Walmart is known for, it’s everyday low prices and a vast selection of goods under the same roof.

Walmart’s reputation is such that the big-box giant could easily sit back, keep doing what it’s doing, and continue enjoying a steady stream of revenue.

But Walmart isn’t the type of company that likes to be complacent. Instead, Walmart is investing in a few key areas of its business, including:

  • Using AI to improve its fashion game
  • Building high-tech fulfillment centers to improve delivery times
  • Enhancing its website to improve the digital experience

Walmart is also dipping its toe into real estate. And the strategy could prove very successful as the company attempts to secure its foothold in retail in the near term as well as the long term.

Walmart makes bold move to secure its future.

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Walmart makes a strategic decision to buy real estate

It’s common for major retailers to rent commercial space rather than own it. Walmart has generally relied on a mix of owned and leased spaces. But recent moves on the company’s part suggest that it’s looking to expand its real estate footprint more aggressively.

Walmart recently acquired a Norwalk, Connecticut shopping center for $44.5 million, marking its third major real estate acquisition since January.

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Earlier in the year, Walmart purchased the Bethel Park Shopping Center and the Monroeville Mall in Pennsylvania.

Interestingly, Walmart isn’t a tenant in the Monroeville location. But owning the property certainly puts that option on the table.

Owning its own real estate doesn’t just give Walmart first dibs on large spaces, though. It also gives Walmart an opportunity to identify other retailers to which it will or won’t rent.

As TheStreet retail expert Chris Versace says, “Sounds like Walmart is taking an expanded real estate playbook move compared to McDonald’s by buying the center itself, which means another revenue stream as a landlord. It also allows them to control the tenant mix, which could reduce competitive pressures.”

Walmart’s foray into real estate could benefit the company, and consumers

For a company with significant cash reserves, buying real estate is a smart move.

Walmart can not only benefit from additional space to operate stores, but can also invest in assets that appreciate in value over time — something real estate has historically done.

Owning real estate also gives Walmart an opportunity to reimagine spaces and redesign them in a manner that suits its needs.

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As more consumers turn to e-commerce, it’s crucial that retailers have a way to fill orders quickly, whether for shipment or pickup in stores. Owning real estate allows Walmart to play around with store design in a manner that could make order fulfillment more efficient.

“I’ve always spoken about experiential and retail and I think it’s a smart move,” says retail expert and RTMNexus CEO Dominick Miserandino. “By owning the entire shopping center, Walmart isn’t just a tenant anymore. It’s in control of its own world.”

Ultimately, owning real estate could make Walmart a much stronger company. And the more revenue it’s able to derive from real estate holdings, the more flexibility the company should have to pass savings along to its customers in the form of consistently low prices.

“[Owning real estate] gives Walmart the flexibility to shape the customer experience, the tenant mix, and even future redevelopment. That kind of control is worth more than the rent,” says Miserandino.

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