The U.S. retail giant was due to spend $100 million on the facility slated for the Montreal-area municipality of Vaudreuil-Dorion. It will instead spend that money upgrading stores in the province.
Company hasn’t said what led to the decision, expert says politics could play role
Isaac Olson · CBC News
· Posted: Jan 04, 2024 1:42 PM EST | Last Updated: January 4
The fulfillment centre is still under construction in Vaudreuil-Dorion. The land is owned by the real-estate development firm, Harden. Walmart rents the land. (Rowan Kennedy/CBC)Walmart Canada says it is abandoning plans to open a new fulfilment centre in Quebec.
The U.S. retail giant was due to spend $100 million on the facility slated for the Montreal-area municipality of Vaudreuil-Dorion. It was expected to open early this year.
Walmart Canada spokesperson Sarah Kennedy confirmed the change of plans in an emailed statement, but did not say what prompted the company’s decision.
Kennedy says the company will instead focus its attention on accelerating upgrades to its network of stores, including locations in Quebec.
She says Walmart has plans to invest about $100 million to upgrade eight stores in Quebec by the end of the company’s next fiscal year.
The announcement is a surprise, said Luc Boyer.
Boyer is director of economic development and an industrial commissioner with Développement Vaudreuil-Soulanges. The organization’s mission is to foster economic growth in the area by initiating large-scale, collaborative projects.
Empty building up for leaseNow there’s a large empty building owned by Walmart that is sitting on rented land. Walmart will be able to sublet the building, but that’s not a concern, he said.
“It’s always a disappointment when a big company like Walmart decides to start a project in the area and then changes its mind,” said Boyer.
“On the other hand, the location is in a prime spot and we are pretty confident it won’t remain empty for a long time.”
Luc Boyer says he is confident the building will be sublet. (Rowan Kennedy/CBC)Boyer said his organization hasn’t spoken with Walmart yet, so it’s not clear why the company changed its mind. However, he said it does not appear that traffic-clogging construction on the Île-aux-Tourtes Bridge is behind the decision.
He said it is more likely related to the general economic situation.
Overall, Boyer said he does not think Walmart’s decision will have a large impact on the local economy because the building will likely be rented.
Quebec politics could play role, expert saysJuan Camilo Serpa is an associate professor at Mcgill University who specializes in business analytics. He said Walmart, like many other companies, is moving aggressively toward e-commerce as brick-and-mortar retail is slowly dying.
In April 2023, Walmart boosted its website and app. Now its online business accounts for 15 per cent of total sales, said Serpa.
The fulfillment centre would have played a role in Walmart’s effort to expand its online offerings. (Rowan Kennedy/CBC)The company is working to compete with Amazon, and part of that means investing in high-tech fulfilment centres like the one that had been planned for the Montreal region, he said. Given that, it was an unexpected decision to cancel the project.
He doesn’t believe it has anything to do with the economy.
He said Walmart’s reasoning is “anybody’s guess,” but it could be related to something bigger — like, perhaps, the start of a domino effect that may lead to further closures throughout the country.
“Another theory, and I think this may be a more educated guess, is that this has to do a lot with Quebec’s political situation,” said Serpa.
This tech-driven fulfilment centre requires high- and low-skilled workers, including a strong bilingual workforce because it would also cater to Atlantic provinces, he said. Quebec has become an increasingly hostile environment for skilled workers and there are severe labour shortages, Serpa said.
“There are labour strikes all around, and even if that is in the public sector, that scares companies,” he said. “Supply chains are extremely sensitive to political disruptions, especially in the last few years.”
ABOUT THE AUTHOR
Isaac Olson is a journalist with CBC Montreal. He worked largely as a newspaper reporter and photographer for 15 years before joining CBC in the spring of 2018.
with files from The Canadian Press and CBC’s Rowan Kennedy