I’m currently taking a Business Systems class and the instructor posed an interesting question that I thought I’d share. What, if anything, do you anticipate will be the downfall of Wal-Mart?
I’ve already submitted my initial response but I thought it would be fun to have some more ideas for the continueing discussion.
My answer. Short of an Enron style meltdown, there’s not much of anything forseeable in my lifetime. About the only thing that they could do would be to overreach themselves in trying to be a one-stop get everything store. Wal-Mart Realty. Wal-Mart Pre-Owned Cars. Just trying to stake out more territory than they can tend to.
Any other ideas? What iceberg will sink this Titanic?
Funny you should ask. I was at a Walmart today and there were huge lines all through the store and out of 16 checkstands only four were open, and the self check out lines were closed but you couldn’t tell that until you had walked all the way down there because the lights were on. And when I asked two clerks who were stocking shelves, the checker and the manager why there weren’t more checkers and why the self check lines were closed, the all, each & every one, said, “It’s always like this.” So apparently what is going to destroy Walmart is the loss of customer service. I have never had experiences like this in Walmart. They have always been way more polite than Tar-Jay or K mort. Reminds me of Home Depot who started out with well-mannered and knowledgeable staff and who are now hiring the merely ambulatory. I shop at Lowe’s now, mostly. Where will I go in lieu of Walmart? Penneys??? Ha.
Wal-Mart is a behemoth right now because they provide cheaply priced products of acceptable quality to a large market of people out there who make purchasing decisions primarily based on price, not quality.
Sears was the mega-retailing behemoth when I was growing up, and they tended to sell higher quality products than Wal-Mart, but at a higher price (as would be expected.) If you wanted a good product at a reasonable price, you went to Sears. Sears hurt itself by getting involved in too many extraneous business, for example Sears started the Discover credit card, Allstate insurance, the Prodigy internet service provider and a host of other non-retail products and services that, by the early 1990s were severely cutting in to Sears’ bottom line.
Sears also failed to adapt to the changes Wal-Mart was bringing to the market. Wal-Mart was rapidly taking over the lower-income consumers. Sears, having always been perceived as a middle-quality retailer was sort of squeezed out, as lower-end consumers started going to Wal-Mart instead of Sears and higher-end consumers started becoming more attracted to stores owned by Federated Department Stores (Macy’s and Bloomingdale’s) in greater numbers.
Sears also was less innovating than Wal-Mart. Wal-Mart offers some of the best grocery prices available, and by and large the groceries sold at Wal-Mart are the same major brands that you can buy at any supermarket in the United States, the only real difference is Wal-Mart has (at least in my opinion) lower quality fresh meat and deli compared to a quality local or chain supermarket. Wal-Mart’s grocery sections in their stores attract people who need groceries and may not otherwise be attracted to Wal-Mart’s products which are seen as being relatively lower quality than other stores, however once they’ve come in to buy groceries they may pick up a few other things they normally wouldn’t go into Wal-Mart to get (light bulbs, batteries, et cetera.)
So basically, Wal-Mart could fail by doing the same thing Sears did, fail to adjust to new competitors and a changing market, and get overburdened by assets that operate outside their core business area.
Yeah, actually it’s usually rare that I go to Wal-Mart. I get my groceries from a local supermarket, and almost everything else they sell they have poor-quality brands that I’m not interested in buying. However, there are a select number of items I do search for at Wal-Mart because they often price them cheaper than other stores, Wal-Mart has a moderately decent electronics department around here. If I want to buy a DVD or a PC game Wal-Mart often has better prices and selection than some of the dedicated electronics stores out here. It used to be whenever I went to Wal-Mart, it was effortless to check out because the electronics department has its own cash register that was always manned. The last year or so, it’s never manned, and their man cash registers at the front are severely under-manned like you’ve noticed. The Wal-Mart I go to does not even have a self-checkout, which I view as ludicrous. The supermarket I go to is just a local chain and they have self-checkout that is open and working 24/7, it’s ridiculous a megacorporation like Wal-Mart doesn’t have that in every one of their stores.
Not in the short term, but in long term, there is a possibility that their “cheap forign suppliers” might eventually dry up.
The cheaper products they are getting from the far east (for the most part) are enriching the far east there. This will eventually (possibly) enrich those societies until such concepts as “worker’s rights, fair wages, and unions” become a reality.
I know this is a fairly wild possibility, and doesn’t score highly on the probablility meter, but it does have a possibility.
Also related are rising fuel prices. Just for example, let’s say it costs Walmart 70 cents per t-shirt to bring it over from where ever it is being made. What if rising fuel costs bring that to $3 per T-shirt?
Finally, terrorist attacks. Walmart is a symbol of american enterprise, and is often seen as an example of foriegn exploitation by american business interests. If it was targeted a few times, with civilain loss of life/injury, People would probably quit shopping there. The decline in business would be fatal to WM, as most of their business model revolves around rapid turn over of stock/goods.
These are all purely theoretical situtations, piled up with a lot of “IFs”…
Also, as much as I diskile walmart, they are a major employer, and provide goods cheaply, so I wish them no actual harm
Tons of things. Operational inefficiences brought about by any numbers of factors including complacent managers/executives, size and scale of the overall enterprise, decreasing returns on invested capital.
Political problems from NIMBY’ism to anti-trust worries to outright nationalization in some countries.
Competition: There’s nothing too hard imagining a Chinese retailer, supported by a base of a billion shoppers, coming into the US and undercutting Wal-Mart. They could very well muscle in on WMT’s suppliers… with the tacit approval of the Chinese government.
Externalities: The employees unionize. Bentonville, AK is wiped out by a flood.
If anything outside Wal-Mart does it in, it’ll be some change–rising fuel prices or lawlessness, say–that quadruples the cost of transport, especially long-distance shipping, and then goes on from there.
If WM’s current buisiness model is built on inexpensive, reliable long-distance shipping, and they can’t change it in the face of such events, they’re screwed.
At one time Montgomery Ward was about as big or maybe a bit bigger than Sears. Now? gone.
At one time K Mart ruled the discount universe. Now? Trying to keeps their ass afloat.
In both cases the reason is the same. Bad management. I worked for Wards back in the early 1970s. Management had a real bad case of our shit does not stink. Guess what Sparky, your shit did stink, and you fucked for so much for so long you went out of business.
Same thing could happen to Wally world. They start to believe their press releases, and start making bad decisions.
I think the size does as much to help them as hurt them. I find myself not going to walmart precisely because it is so huge, you have to walk so far, through so much stuff you don’t want, to wait in abysmally long lines behind people who evidently, are buying one of everything.
I consider going to a walmart similar to the hassle of going to a mall. I’d rather go somewhere where I can get in, get what I want, and get out. Every now and then they win, because I know I can get so many different things there.
FWIW, when my daughter was born premature, the only place that (reliably) carried preemie diapers or clothes were the babys r us and walmart. When I got a flat tire on a Sunday, walmart was the only place I could find open on that had my obscure tire in stock.
The service and the condition of the stores. I won’t shop at Walmart anymore (not that I did much shopping there, mostly diapers back in the day), but I have yet to see one that is clean, tidy and staffed by nice people. I also dislike their labor policies.
Walmart isn’t growing anymore (isn’t their market somewhat saturated–I’m not a keen follower of business news, but I recall hearing that somewhere).
I think its time will end, as does every retail giant’s. I’m not sure just what will bring it down, but reputation, public perception and PR image all matter to some extent.
IMHO, Self-Checkout is ludicrous. You are paying the same amount to check out and bag your own stuff. Also, the person that typically stands behind that register is standing there because they need that $6.50/hr job which you are now doing… for free.
Self-checkouts are a sham, and I hope that people will eventually realize this.
Not meaning to hijack - but that was my IMHO inside of this IMHO.
No, the reason I think people like self-checkout is because of the fact most supermarkets and other major retailers for years now have had 7-8 checkout lanes but only staff 4 cashiers at any given time, sometimes that 4 includes one express lane (which I refuse to use if I have more than the posted number of items–some of the most dickish behavior out there is to pull up with a month’s worth of groceries at an express lane.)
This creates a situation where just about any supermarket I care to go to in my area has 2-6 minute lines. Is that the end of the civilized world? No, but it’s nice to have a self-checkout area.
To give you an example, the Kroger near my house had, for years, 8 checkout lanes. Now, it’s possible that sometime decades ago Kroger actually used those 8 checkout lanes, but it has never had more than 4 employees running checkout lanes in the entire time I’ve gone to this supermarket.
Eventually a few years back, they got rid of two of the manned-checkout counters which had never been manned and replaced it with four self-checkouts. Two of the self-checkouts are marked as “express” (they only have a small area where you can rest two bags) and the other are standard, with a carousel set up where you can bag like 9 bags of groceries.
Anytime I’m out grocery shopping and there is no line at the manned checkout line, of course I’ll go there. This almost never happens. I prefer to have someone else scan and bag my groceries, but I’d rather do it myself if I can save 4-5 minutes that way by not having to wait in a long line.
I also frequently do my grocery shopping very late at night, and Kroger’s has always had its cashiers do other stuff other than cashiering during the night shifts. I used to come in and would have to search the store for 4-5 minutes to find someone who could check me out because they were off stocking shelves or something, now, I just check myself out; don’t have to bother anyone, and spend far less of my own time.