Posted on 01/17/2010 10:58:08 AM PST by Captain Peter Blood
The other night I was reading Nathan’s Economic Edge Blog, http://economicedge.blogspot.com/, and he had a link posted to an interview done by Eric King of King World News with Gerald Celente of The Trends Research Institute, http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/1/9_Gerald_Celente.html, where he gave his take on 2010.
Mr. Celente has a pretty good track record in discerning future trends in business, politics, social and world events. He has been at this for 30 years. You can examine his website at; http://www.trendsresearch.com/index.htm.
One of the things that caught my attention in this interview was his prediction for big box retailing, i.e. Wal-Mart, Target, Home Depot, etc.. His thesis was that we have seen the apex of big box retailing as we know it and it is now on it’s way down and with it a change will come to a new or I might say previous form of retailing to the public.
I will use Wal-Mart as the main example since I happen to work for them and see quite a bit of validity to what Mr. Celente was talking about.
All big box retailers, especially Wal-Mart, for the last 35 plus years have had a same formula for success and growth, a constant round of new store openings.
Even in past troubled economic times Wal-Mart has never Faltered, they have even prospered greatly in previous recessions. Until now Wal-Mart has never closed a store or laid off workers at the retail level.
One of the main problems Wal-Mart has had in recent years is where else to grow. They saturated most every market in the country along with all the other big box retailers. Their solution has been to build more stores in clusters around existing stores.
Example, you have two Wal-Mart Supercenters in a two to five mile radius, depending on population density, that are doing well. The company decides to build another Supercenter in the area knowing that it will cannibalize customers from the other stores, but based on sales figures it says that together all three will have a combined increase. Even though sales at the other two Wal-Marts will suffer to some degree.
Now you take an area like Southern California where this practice has gone to outer extremes. In a two the three square mile radius you have three Wal-Mart Supercenters, a Sam’s Club, and all the other big box retailers in a cluster. With rising wages and a expanding economy somehow all these stores can be supported to a certain level.
But in times like these, with a severe economic crisis with no end in sight and the California unemployment rate at 12.5% plus then that economic model can’t continue to work and won’t.
Wal-Mart and other big box retailers have hit the wall on growth, that is opening new stores. Stores open at least one year or more have had flat or declining sales and will continue to do so. The past Christmas shopping season was a disaster even for Wal-Mart, the fourth quarter numbers will tell the tale and I look for flat profit or maybe after we really dissect the numbers a loss.
Witness last week Wal-Mart announced that it was closing, primarily in California and Western States, 10 Sam’s Clubs. The Wal-Mart explanation is that they were barely profitable or losing money. The real explanation is that this economic crisis has made it nigh impossible to support all the big box retailers in these so called cluster areas.
In my opinion in the next few months the unheard of and unspeakable will happen, Wal-Mart in high population density suburban areas will start closing stores. I look for this to happen in states like California, Florida, Michigan, places where there is very high unemployment.
If we get another market crash and/or banking crisis, which I fully expect to happen in the next 12 months or so then Wal-Mart and all of the other big box retailers will be retrenching even more.
Mr. Celente’s theory is that big box retailing will be out and small box retailing in. Sort of the reverse Wal-Mart effect, the local Mom and Pop will make a comeback as people will want better service and will be willing to pay more for a quality product.
In a way I see this as a positive for the new long term rejuvenation of this country. By reversing that trend it could possibly promote resurgence in a domestic manufacturing base that we need to have along with a more balanced economy and then we can wean ourselves off the cheap Chinese goods we have been consuming like a ravenous beast for the last 15 to 20 years.
Our economy for the last 20 years had evolved into a consumer driven one where the consumer was 70% of GDP. That was never a sustainable long term viable economic model. We have to get back where we once were, that of a balanced economy to have any hope of once again being the prosperous Capitalistic country we were 50 years ago.
Joseph Schumpeter the Austrian Economist once said, “Capitalism by its very nature is a wave of destruction”. I took that to mean it is ever changing and evolving and with this country’s great resource of Entrepreneurs we can turn things around. At least that is my hope.
yes but their store failure rate is very low and i am not lying...hee in metro nashville never seen one close unless moving to another spot
no they are not evil but they have become more lefty since ol Sam died
There is a difference between calling a liberal that supports unions blocking a grocery store they don’t like and you calling freepers drunks.
The “communities” that you are talking about are the biggest cities in the nation, in the size of millions, it is powerful, left wing politics that keeps out Walmart supercenters, not the people.
As you point out, Walmart has a conservative base and gives money to conservative causes, what they do not have is the support of liberals and you, to compete freely in the marketplace.
“There is a difference between calling a liberal that supports unions blocking a grocery store they don’t like and you calling freepers drunks.”
I’ve never tried to stop a grocery store and I never called freepers ‘drunks’. I called you a drunk.
“The “communities” that you are talking about are the biggest cities in the nation, “
Really? Well we have the stores here. But it seems those people are getting along fine without them. Perhaps if htey really wanted a walmart they would move somewhere with them.
“what they do not have is the support of liberals and you, to compete freely in the marketplace.”
Yep, little ole me is stopping Walmarts global expansion plans.
You drinking whisky or wine?
Your anti Walmart passion is amazing and it seems to occupy a lot of your time, judging from this thread, you could just adopt a conservative view and let people shop where they want rather than supporting this shut out of Walmart superstores from the largest markets, like mine.
again, put down the booze. If you want a walmart move to where they have one or petition walmart to open one near you.
Perhaps you can point to the section in the Constitution or Bill of Rights that promises every person a neighborhood walmart?
hmmm, perhaps you can?
yeah I know it sucks that you live in Kalifornia. Life is full of choices.
Ignoring the point is not an argument.
Walmart is denied the right to build their grocery stores or super centers in entire cites for political reasons, which you evidently share along with the liberals.
You keep trying to shift to words like neighborhood and communities, Los Angeles, New York city and San Diego, are not neighborhoods, they are massive and diverse cities that politically block Walmart from competing in the grocery field.
What is your liberal argument for keeping Walmart groceries out of the largest cities in America, how do you people think, is it just about the unions, the support of conservative causes, is it dislike for what you described as their “conservative” customers?
“which you evidently share along with the liberals.”
And evidently you are still drunk
“You keep trying to shift to words like neighborhood and communities, “
Still drunk
“What is your liberal argument for keeping Walmart groceries out of the largest cities in America”
I never made one but you’re still drunk.
"petition walmart to open one near you."? You don't even seem to know what we are arguing about.
“”petition walmart to open one near you.”? You don’t even seem to know what we are arguing about.”
I’m not arguing, I’m trying to encourage you to return to sobriety.
If you aren’t happy with your city making it difficult for walmart then run for mayor. OR you could sit there flap your gums and have another drink.
I know that’s what you concluded, but your discussion preceding that did not support that conclusion. The case you made was that the big box stores were running out of places to build new stores and in fact may already be saturated and so their growth rate would decline. I generally agree with that part. The part that I don’t agree with is your conclusion that as a result of that ma and pa stores are going to make a big comeback.
When it comes to retail, the one that can deliver the best good at the lowest price will win. There will always be niche markets where service and highest quality will succeed, but they will always be small markets.
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