I see Amazon on the horizon. Has had consecutive losses, and low profit margins for years.
I doubt they will shut down any time soon and they aren’t so screwed that they can’t turn it around, but they are seriously screwing up their business right now because of poor staffing and stocking levels (what’s a walmart without everything you need in it ? not a store many people would go to). The staff abuses, product issues, etc are meaningless/marginal IMO, but not having what people want goes against their core business and is likely to lead to massive defection of consumers if it continues.
I’d bet big bucks against Amazon failing - they are busy spending an absolute fortune building sustainable competitive advantage where most people can’t see that there could be one. In 5 years, you’ll likely be able to get almost everything from Amazon overnight, for less cost to them than it costs other web sites to ship it in a week. If they continue and don’t screw it up they are going to have a shipping cost and logistics advantage that no other e-tailer will be able to beat.
Yeah, last time I went in one, it looked pretty bad. But that was five years ago. I certainly wouldn’t bet on Toys’R’Us, Sears, K-Mart, or any of the other stores mentioned disappearing in 12 months just because they look in bad shape. Hell, most Wal-Marts look in horrendous shape and they’re the #1 retailer in the US.
I think these days most company liquidations happen as a result of behind-the-scenes antics, and there’s usually little visible sign of trouble in the stores. At least, in how the stores look. Before Circuit City went under its stores looked clean, neat, and positively bright compared with Best Buy, but because of a dumb management decision in firing all their best and most expensive employees to hire all newbies you couldn’t find anybody in the store who would help you.
That’s why I think Barnes and Noble is set for the chop, at least for their non-campus operations. Beautiful store. Employees who do nothing but try to sell you e-readers and know nothing about any of their other products. Where’s the value added in comparison with online retailers? Overpriced coffee drinks? We could just go to Starbucks for those.
I agree. While they took a lot of crap for reducing hours and not having the personnel to stock shelves they have enough money to survive this blip and get things back on track.
Read a recent article on this and Amazon is doing quite well. They are taking the profits and plowing it back into the business under R&D expense.
Apparently Billabong is tanking. I asked my husband why and he said “Because WE grew up.”
(Meaning “our generation” isn’t buying the brand anymore because it’s no longer “cool.”)
Whilst I agree they do alot of R&D, their profits are razor thin. This guy gives a pretty good analysis of the situation.
Yeah sky is falling predictions are from those seeing the kids leaving for newer even shittier sites. But most of those sites are flash in the pan fads. And that age group may buy a lot but to a limited market. Facebook has expanded their business model to go after those with disposable income. Its not the hip place for kids. But it is where business is sinking their ad dollars.
Amazon isn’t trying to make money. They could, if they wanted to. They’re trying to become ‘the place you buy stuff’. They spend constantly on R&D, and they keep their prices low, because that’s the path to total retail dominance. They probably won’t start making fat profits anytime soon, but don’t get the idea that they’re anything other than hugely successful.
Amazon may have serious issues if shipping expenses keep rising. As it is some of their solutions are a bit dicey (A Plus couriers that they use around here area bit shifty, and I think Amazon using DHL a few years ago killed DHL in the US). I suspect they may limit what kinds of Free Shipping they offer in the future. You can only have so many loss leaders. But I doubt they will die, they’ll just quietly adapt and change some programs.
And that’s the argument I bet Amazons management have been making for the entirety of their existence, like I said, Amazon is a good company, however most of their stock price is based on the expectation of large profits in the near future. The fact is, Amazon will have to contend with imitators who can do most of what they do, localised to a certain area, tailored to certain markets, which I believe is what will happen.
Some companies that are widely considered to be in trouble:
American Apparel
Avon
Barnes & Noble
Best Buy
J.C. Penney
Netflix
The New York Times
Office Depot
Pacific Sunwear
Rite Aid
Sears
Sprint Nextel
Suzuki
I’ve got a fifty-something friend who wears Billabong clothing a lot, it’ll be gone within 5 years.
I disagree about Suzuki - brightly coloured Swifts seem to eb the car of choice for the over 60s around here.
Rite Aid is a horrible place. The one I occasionally am forced to go to is like K-mart.
I agree with Sea Otter on Amazon. I don’t think they’re in any immediate danger. They may be facing some short-term problems but the company still has a lot of room for flexing. Companies that are in serious trouble are those that are attached to a shrinking market (like Kodak or Netflix or Barnes & Noble) or companies that aren’t at the top of a market that only allows the top companies to thrive (like KMart or Sprint or Rite Aid).
Amazon isn’t facing these problems. It’s not like people are going to stop buying products online in the near future. Nor is there any other company in a position to surpass Amazon in the online sales market. So if Amazon is facing some short-term financial problem it could just bump up its prices without worrying too much about the effects. The reason it hasn’t done so already is because of what Sea Otter wrote: they’ve decided to keep their immediate profits relatively low in order to build up their market and build up their dominance in that market. It’s a similar strategy to what Microsoft was doing back in the nineties.
Actually, my Fedex driver said they’re developing their own carrier, trucks and all. He said that Fedex’s local business is nearly all from Amazon Prime, and that Amazon will kill Fedex in this area when their shipping program goes live. I’m in Seattle, Amazon’s home, so maybe we’ll just be a test market for awhile, but I found that very interesting.
I keep having to be reminded that they are still around. They closed a bunch of their stores a few years ago and it seemed like they were history. But every now and then I see one of their few remaining sad stores in a Shopping Center.
This would be best, simply because if they did tank the other local retailers would be overwhelmed with demand. Can you imagine the mayhem of local shops trying to absorb the traffic of a closed WalMart? But it would essentially take a new mission statement and business model to see them make the necessary corrections. They’ve been so mercenary up to this point it really wouldn’t surprise me to see the family dump the business rather than fix it. Replace vs. repair is, after all, why you buy stuff at WalMart.
Keep in mind the public face you see on big companies doesn’t always reflect their fundamental business. Yes, it’s true about companies like KMart or Rite Aid - they’re retail chains and the stores you see are their core business.
But a counterexample is how a lot of people are mistakenly writing off Sony. Yes, it’s taken some losses in its recent products lines in electronics. But it’s a mistake to think of Sony as a company that makes electronic products (or an entertainment company). Their electronics and entertainment divisions are actually a relatively small part of the overall corporation. Sony’s big money is in financial services: banking and insurance. And that stuff, while it doesn’t draw the attention, is chugging along making solid money every year. So stuff like a new gaming platform or movie franchise can be spectacular public failures without really having a significant effect on the company’s bottom line.
Two car brands
Mitsubishi
Volvo
If they don’t get a home run new car that really boosts their sales, they won’t be in the US in a year or two.