This article is from June of 2014 but it’s predictions do seem to be slowly bearing out. Do you believe that the big box stores will slowly phase out? I’ve got Amazon prime and it does make a difference in encouraging getting small purchases via the net vs the B&M stores.
Wall Street Analysts Predict The Slow Demise Of Walmart And Target
I’ve been having this discussion for some time. Box stores have created an environment for their own demise. If 5 different chains carry the same crap then the consumer will base their decision purely on price. At that point they’re all fighting to see who can slice a nickle in half.
One of the largest grocery store chains in the country has enlarged their stores over the years yet their selection seems poorer and aimed at impulse purchases. We have a small but upscale chain in my area and they have a much better overall selection of products in a smaller foot print. If I have to go to the upscale store to buy the products I want then I do the rest of my shopping there.
If you can’t differentiate your product line then you compete against price and now that includes the internet. I’ve purchased all kinds of products on line because they are not available locally. I would much rather buy locally.
I keep hearing this claim, but I really haven’t seen it come true. Sure, dollar stores are a growing industry, but their lack of selection necessarily means people can’t make them their primary resource.
Around here, Target and WalMart are opening new stores and expanding existing ones, while Kmart is dying, which proves nothing about the industry as a whole.
The big box may fade away, but it isn’t happening to date.
I suspect that they will evolve to a delivery and display service. The big boxes will turn in to a local warehouse where customers browse the products, make their selections and establish a shopping list. After that occasional visit, which is what differentiates them from Amazon, for subsequent purchases customers will order online from their own shopping list and have the products delivered later that day. Amazon will have the huge selection and search engine, the big boxes will have the in-person browse capability with backup on-site purchasing. It will be a long time before I will be comfortable letting some 18-yr stock clerk pick the meat or bananas I need. I understand that latter could be met by the small store-but the large browse capability can’t.
The problems reported in that article had nothing to do with the big-box format. It’s just how the economy played out right then.
Macy’s also lost sales Q1 2014. I didn’t see quarterly information for Kohl’s, but 2014 as a whole was not good for them.
Walmart is a special case. The average Walmart customer is much more price-sensitive than the overall average customer. They lost a lot of business to dollar stores in recent years. However, their results for the last year or so have been much better.
Compounding that, and largely contributing to it, was high gas prices. The average price was above $3 from about Feb. 2011 to Oct. 2014. This hurt Target to some degree, but hurt Walmart far more. It is unlikely to be a coincidence that Walmart’s sales started improving about the time that gas prices started coming down.
Walmart decided that small stores were a good idea and opened a chain of them called Walmart Express. Within the last two weeks it has announced that they were not sufficiently profitable and is closing all of them (over 100 stores) immediately.
What does that have to do with the subject under discussion?
Well, the quote in the OP says, “So-called “narrow format” shops – think dollar stores, drug stores and warehouse clubs – have been thriving at the expense of big-box stores like Walmart and Target for several quarters now, the analysts wrote. That suggests shoppers are interested more in convenience than in having access to the kind of product variety Walmart and Target offer.”
I imagine that these smaller Walmart Express stores were aimed at customers who are more interested in convenience than having access to the kind of product variety (a typical) Walmart or Target offers.
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One big thing is that Amazon is increasingly forced to charge sales tax so there’s much less of a savings without that automatic 5-8% “discount”. I’m not sure if I’ll bother renewing my Prime membership since I’ve been using Amazon a lot less since the change and there’s a Target close to me. The fact that they bumped Prime to $99 doesn’t help, of course.
I really only use Amazon because I have an Amazon rewards credit card. I was buying all my books for law school there (generally for about a third of what the B&N-affiliated school bookstore was charging).
Now I don’t have to buy textbooks, but I have a Kindle so I buy all my entertainment-reading stuff from Amazon. I also usually buy big-ticket electronics there.
But there’s no way I’ll ever buy my groceries online. I don’t plan ahead for that sort of purchase.
You’d think so, but they weren’t. They were basically scaled down versions of non-supercenter Wal-Marts (the old ones without a grocery section) and it turns out that grocery purchases are what drive enough extra foot traffic into Wal-Marts to keep housewares and such profitable.
Their product selection basically tracked the same selection as supercenters except they only stocked tiny quantities of each. Companies who’ve been in the small-store game longer are smart enough to stock only one or two brands of each product (plus their store brand) instead of a dozen.
Thank you. That’s interesting. It reminded me that Toys R Us stores used to house the Babies R Us stores but then at one point they built out separate stores for Babies R Us. (In my town, they’re right next to each other.) Sales at Toys R Us suffered and the reason, according to an article I read, was that parents only went into Toys R Us perhaps once a year, but would go into Babies R Us maybe once a month. So they would sell more stuff with combined stores than distinct ones.
Brick and mortar has been suffering from on-line sales, and WalMart is brick and mortar. So it does make sense that the smaller stores will survive in the end if convenience is the last advantage to brick and mortar. I wouldn’t go to the Super WalMart near hear for anything, the parking lot is huge and always filled.
You don’t see a contradiction between:
“Brick and mortar has been suffering from on-line sales”
and
“I wouldn’t go to the Super WalMart near hear for anything, the parking lot is huge and always filled.”
“Nobody goes there anymore. It’s too crowded.”
– Yogi Berra