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.
Shipping costs are important.
In terms of groceries, Walmart and Grocery stores are where people go these days. Food manufacturers do not seem to want to sell online, although they easily could.
I’d buy more food online if the costs were less. I would stock up on food that isn’t available.
A significant part of the cost of food in a supermarket includes cost of delivery of the product from the manufacturer to the supermarket, and all the costs associated with running a supermarket.
But food manufacturers won’t give you a discount off the retail price if you order from their website. They should.
I have no idea how South Korea and Germany fared with a Walmart. I doubt that you do either if you can take a loon that wrote this article seriously.
Walmart doesn’t hire UNION workers and gives consumers VALUE for LESS money.
“They give you less value for less money in many cases. A pair of pants or a drill at Walmart are not of the same quality as those in many other stores.”
You can buy name brands at Walmart. Perhaps you are not a knowledgeable shopped when it comes to price and quality? Others also don't see it that way since Walmart’s REVENUE is UP and others are DOWN.
“This article is a crock of anti-capitalistic propaganda.”
Really, I thought part of capitalism was analyzing markets and trends and adjusting to them. Where do you see the anti-capitalism?
Wal Mart is already adapting.
It is sourcing items more locally (to cut down on long haul shipping costs), opening smaller stores in more areas that are more easily accessible to people without a long drive to get to them, etc.
In addition they are building their stores with more daylighting (as Costco does) to cut back on energy costs and utilizing more so-called ‘green’ features in their new buildings ... to save money, but they are also using that as PR.
Wal Mart has consistently been able to adapt to different conditions rather quickly.
And yes, the fact that they are non-Union means they can adapt to wage fluctuations quicker than Union outfits.
In the darkness with a great bundle of grief
the people march.
In the night, and overhead a shovel of stars for
keeps, the people march:
"Where to? what next?"
Hate to break it to you but big box retailers survived the Great Depression of the 30’s and will survive this current nightmare unless the entire economy collapses.
You better hope they do.
Unless you want to learn how to sew...and make all your own clothes.
For many products Wally World dictates the price to the manufacturers. They also don’t pay for the product until its sold to the consumer. All of this eats into the profit margin of the producer.
The producers only choice is to make the items cheaper. This means cutting all areas that contribute to the production cost of an item. Clothes are made with cheaper fabrics. Bikes are make with lower quality metal.
I know people that have gone into Wally World to negotiate pricing. Wally World has no respect for anyone and operates as a monopoly. They provide lawn chairs for people to sit on. They will quite literally make grown men cry with their tactics.
How about it Walmart? Do Wally Jrs sound like an idea that might fly?
Trying to ridicule me, doesn't give you credibility. A good business has unlimited growth. To make that happen means they ADJUST to the market place as changes in the market place occur.
No there is no “saturation”. Clearly this individual has NO IDEA the market research that goes into where to build a store.
“Clearly you are in love with Walmart.”
Clearly you don't know me. I support capitalism and you don't. You are probably one of the Walmart haters for NOT hiring union people and wanting others to pay MORE for goods and services. Walmart is the typical punching bag of the LEFT and you fit right in with their attacking a very SUCCESSFUL CAPITALISTIC run company . Walmart is wuite the business success story.
“Clearly this blog ow whatever he is has NO CLUE on what Walmart is up to as it INCREASES and SURGES AHEAD of other retailers.”
"In the South East it has lost market share in the grocery business to Publix Supermarkets." Publix wouldn't go over well up north. They are dirty and don't have a wide selection. Walmart is cleaner, better prices and a larger selection. Not all Walmarts have a grocery business - it depends on the area it is in. Walmart is not big in the south it never has been big in the south so no market share was lost due to a lack pf presence to really speak of.
We do most of our shopping at Wal-Mart, and thankful for them, but there is a definite decline in quality and choices over time. Declining dollar, faultering economy, and the availability of “quality” cheap stuff, takes it’s toll.
“I have no idea how South Korea and Germany fared with a Walmart. I doubt that you do either if you can take a loon that wrote this article seriously.”
Do a search. Walmart closed all their stores in both countries. They were unable to make a profit. I’ve been in the stores of the South Korean company that forced Wally out. Tons of customer service, cheap, clean and a pleasure to be in.
“Walmart doesn’t hire UNION workers and gives consumers VALUE for LESS money.”
Lack of unions is not the only factor. They give consumers less value for less money. Less customer service and lower quality products.
“You can buy name brands at Walmart.”
Sure you can. If you cannot tell the difference in quality then you are their ideal customer. You’ll buy the same item more often which will end up costing you more money.
Again, Where do you see “the anti-capitalism” in this article?
With respect, that's not the only choice. The producer can try to sell the item elsewhere. For example, I will never buy clothes at Wally. A) They don't stall tall in ladies. B) I don't like their styles. So I'll pay more and buy my clothes elsewhere. If producers can't compete, don't blame Wally. That'd be like blaming Ford the the demise of the buggy industry.
“Hate to break it to you but big box retailers survived the Great Depression of the 30’s”
Really, and who would they be?
You better hope they do.
Unless you want to learn how to sew...and make all your own clothes.
Some people just can't help themselves.
They will go to great lengths to fabricate reasons to HATE a successful capitalistic company like Walmart.
ALL LIBERALS HATE CAPITALISTIC companies like Walmart. This author is another one of them that also lacks common sense, logic and has no clue on what Walmart is doing to maintain their competitive edge. The author of this article is extremely ignorant, biased and with an agenda fueled by wishful thinking.
Note to Wally: But if you decide to carry tall ladies fashions, I'll take a look :)
Maybe you need a refresher course in logic, inferences and implications? I am unwilling to be your teacher. You are old enough to seek out resources to correct this comprehension problem - along with distinguishing between fact, opinion and bias.
Few things last forever. I do not know what will cause the downfall of the big box stores, but they will eventually fail.
Sam Walton went against the trend when he began Wal-Mart. Somewhere out there is another Sam Walton with a great idea. That new idea will push the big box stores aside.
There’s a big difference between saturation and failure. Wal-Mart may not build as many new stores, but the chain isn’t going anywhere.
“A good business has unlimited growth”
nonsense, every business has a limit. That you continue to make that claim proves you don’t know what you are talking about and are full of hyperbole.
“I support capitalism and you don’t.”
No, I don’t support blindly following a massive corporation who eats people up and spits them out. Clearly you cannot think for yourself and swallow the marketing Walmart puts out.
“Publix wouldn’t go over well up north. They are dirty and don’t have a wide selection.”
LOL you’re funny, it’s obvious you’ve never been in a Publix store. Walmarts are like dollar stores, cheap and dirty. Publix actually has customer service and cleans their stores.
Don't get me wrong. You can do it, but would you prefer to be driving around in a horse and buggy? If the answer's no, seems to me that dissing big boxes for selling folks what they want is a waste of breath :)
Not for me!
The last two items I bought at WM were “made in China” and didn’t work for sh*t.
I have a bathroom sink now falling apart and I blame me for not checking the “where made” info.
If they keep selling crap they will end up like Obama....gone AND forgotten!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.