# The Retail Apocalypse is going to get worse before it gets better **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 24, 2018, 9:57pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133 "2018-03-24T21:57:52Z")\ **Posts on this page:** 11\ **Page:** 2
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [March 27, 2018, 5:54pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/21 "2018-03-27T17:54:03Z")
> [@Little\_Nemo](#): > > Some people have the unsupported belief that if a big corporation decides to do something then it must be a sensible idea even if it looks foolish. This seems like moving the goalposts a bit. I didn’t make an argument anywhere close to that. Your first comment strongly implies that there’s _either_ a future in online stores or a future in physical ones, so it can’t both be correct for an online store to move to physical locations and a physical store to move online. That’s a simplistic analysis that’s just wrong. There’s no obvious conclusion to be drawn from the fact that both stores are branching out into different distribution models. It might be a good move or it might be a bad one, but it’s not obviously incorrect for one or both of them. > [@](#): > > Personally, I think there’s a good chance both companies are screwing up. They’ve been successful following the same formula: be the top company in a field where the top company dominates the field. I’m assuming both companies understand how they became successful. Your formula for success is pretty tautological: They’ve succeeded by being the biggest and the most successful. Neither Walmart nor Amazon succeeded because they were dominant. They _became_ dominant because they were the best. Both started out small and outcompeted the existing dominant companies. > [@](#): > > But for some reason they’re both trying to defy that formula in another field; they’re both trying to come in as a second-tier company in a field where the top company crushes second-tier companies. Amazon will end up becoming the next K-Mart and Walmart will end up becoming the next [Pets.com](http://Pets.com). The big question is whether they’ll sink enough money into these attempts that it will endanger their core business. Are you sure those are the only possibilities? Other companies have successfully moved into different lines of business and distribution models in the past and been successful. I bet it could happen in the future, too. Hell, Amazon has entered and dominated new markets _in recent memory_. They were just a bookstore not long ago. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [March 27, 2018, 7:37pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/22 "2018-03-27T19:37:01Z")
> [@Little\_Nemo](#): > > Some people have the unsupported belief that if a big corporation decides to do something then it must be a sensible idea even if it looks foolish. Who are you talking about? I never said that. > [@](#): > > Personally, I think there’s a good chance both companies are screwing up. They’ve been successful following the same formula: be the top company in a field where the top company dominates the field. I’m assuming both companies understand how they became successful. > > But for some reason they’re both trying to defy that formula in another field; they’re both trying to come in as a second-tier company in a field where the top company crushes second-tier companies. Amazon will end up becoming the next K-Mart and Walmart will end up becoming the next [Pets.com](http://Pets.com). The big question is whether they’ll sink enough money into these attempts that it will endanger their core business. As was already said, but you ignored, there is no reason to assume that a company is making a mistake simply because it changes its business strategy. You might be interested in reading Andy Grove’s book on the subject. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [March 27, 2018, 8:41pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/23 "2018-03-27T20:41:00Z")
> [@iamthewalrus\_3](#): > > Your formula for success is pretty tautological: They’ve succeeded by being the biggest and the most successful. > > Neither Walmart nor Amazon succeeded because they were dominant. They _became_ dominant because they were the best. Both started out small and outcompeted the existing dominant companies. > > Are you sure those are the only possibilities? Other companies have successfully moved into different lines of business and distribution models in the past and been successful. I bet it could happen in the future, too. > > Hell, Amazon has entered and dominated new markets _in recent memory_. They were just a bookstore not long ago. I’m not saying these are universal truths. There are obviously businesses where multiple companies exist and compete side by side on an ongoing basis. Look at fast food: McDonalds may be number one but Burger King and Wendy’s aren’t going out of business. But that’s not the case in online sales or department stores. I’m not talking theory, I’m observing the reality. The model in these businesses is that the top company gets bigger every year and every company that isn’t the top company gets smaller until they go out of business. So if Amazon was opening a chain of fast food outlets, I’d say they have a decent chance of succeeding. But department stores? No, that’s a business they’re going to fail in. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [March 27, 2018, 11:10pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/24 "2018-03-27T23:10:37Z")
> [@Little\_Nemo](#): > > But that’s not the case in online sales or department stores. I’m not talking theory, I’m observing the reality. The model in these businesses is that the top company gets bigger every year and every company that isn’t the top company gets smaller until they go out of business. > > So if Amazon was opening a chain of fast food outlets, I’d say they have a decent chance of succeeding. But department stores? No, that’s a business they’re going to fail in. I’m not sure I understand the distinction you’re making. It’s true that in the (relatively short) history of the “selling stuff online” industry, Amazon has been the only victor. It has gotten bigger every year. But it got bigger before it was the biggest, and it continued getting bigger. So it’s definitely not true that the “top company” got bigger every year, unless you define “top company” retroactively as the company that got bigger. And the history of selling stuff online is awfully short to draw major conclusions. Do you think that in another 30 years, Amazon is still going to be the biggest online retailer? I mean, they might be, but I wouldn’t take that bet. Certainly not true in department stores. There have been department stores for ~150 years, and not only have there been many successful companies in the space, the title of “biggest” has been held by Gimbels, Woolworths, Sears, Macy’s and Walmart (I think, depending on how you measure and which companies are in the same space). Going back to your initial point, do you still think it’s not possible for both Amazon and Walmart to be making the correct move by diversifying their retail channels? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 27, 2018, 11:15pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/25 "2018-03-27T23:15:44Z")
> [@iamthewalrus\_3](#): > > It’s true that in the (relatively short) history of the “selling stuff online” industry, Amazon has been the only victor. It has gotten bigger every year. I don’t think it’s correct to describe Amazon as the “only victor” in online sales. There are plenty of other companies selling stuff online. ---
**Author:** ![Lucas\_Jackson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lucas_jackson/32/303_2.png) [@Lucas\_Jackson](https://boards.straightdope.com/u/Lucas_Jackson)\ **Post date:** [March 27, 2018, 11:33pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/26 "2018-03-27T23:33:26Z")
To be fair, Sears would be failing regardless. Their products are only fair, the customer service is for shit and checking out is a nightmare given their antiquated computer POS software. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [March 27, 2018, 11:37pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/27 "2018-03-27T23:37:50Z")
Had someone competent been managing Sears starting perhaps twenty years ago, the failure might not have been inevitable. Their catalog could have given them a leg up in the Internet/e-commerce business and their brands (Craftsman, Kenmore, DieHard, etc) could have put them in a good position in B&M retail. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [March 28, 2018, 1:59am UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/28 "2018-03-28T01:59:05Z")
> [@Aeschines](#): > > Bonus topic. I think Amazon’s acquisition of Whole Foods is a big mistake UNLESS it is just grabbing the locations to do something truly surprising and different. Do I think Bezos has something up his sleeve? If so, it’s not visible yet. Whole Foods is a good example of how something that is special and “differentiated” at first can fairly rapidly be commoditized and made boring. It’s possible that (one of many) future uses of the Whole Foods acquisition will be for them to function as ‘pickup points’ for your online Amazon purchases. You order online from Amazon, and their truck delivers it to your local Whole Foods store overnight, so you can pick it up there the next day – free of any delivery charges. And while you’re there, you grab some milk & bread & other groceries. So that gives Amazon a better chance for online sales of rush needs, as well as reductions in their delivery costs (one of their bigger expenses now), and also could give a boost to the sales at Whole Foods locations. Win-win for them. Wal-mart’s push for more online sales might be aimed at much the same market – sell online, deliver via their existing physical store network. ---
**Author:** ![DesertDog](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desertdog/32/11503_2.png) [@DesertDog](https://boards.straightdope.com/u/DesertDog)\ **Post date:** [March 28, 2018, 3:17pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/29 "2018-03-28T15:17:24Z")
> [@Little\_Nemo](#): > > Some people have the unsupported belief that if a big corporation decides to do something then it must be a sensible idea even if it looks foolish. Not just corporations. In 2006 three individuals bought thoroughbred [The Green Monkey](https://en.wikipedia.org/wiki/The_Green_Monkey) as a two-year old for $16,000,000, a record that still stands. At the time Cigar held the record for lifetime earnings, some $10,000,000. Now, a good stallion earns far more at stud than on the track, but first you have to prove he’s any good. Commentators at the time thought they were [nucking futs](https://www.theguardian.com/sport/2006/may/07/horseracing.features). They were right; in three starts before he was retired he never broke his maiden and his stud fee as of 2016 is $5,000. That would be 2,000 mares covered to recoup just the auction price, never mind ongoing expenses. ---
**Author:** ![Isamu](https://avatars.discourse-cdn.com/v4/letter/i/7c8e57/32.png) [@Isamu](https://boards.straightdope.com/u/Isamu)\ **Post date:** [March 28, 2018, 3:43pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/30 "2018-03-28T15:43:37Z")
> [@Tom\_Tildrum](#): > > The legal structure is a bit more elaborate, but the business is the collateral pledged by the new owners for the purchase loan. It’s the same way most people buy a house. > > LBOs are risky but can pay off under the right circumstances. [Here](https://www.quora.com/What-have-been-some-successful-leveraged-buyouts) is a Quora discussion of some of the factors involved, with a few examples of successes. > > Remember that in 2005, Toys R Us was a category killer, in the process of crushing FAO Schwarz and KB Toys. Its collapse is only noteworthy now because it was the toy store that (debt notwithstanding) managed to hang on the longest. The LBO was a gamble that the market for toys would keep growing and that TRU’s dominance would continue. They didn’t foresee the severity of the 2008 downturn or the expansion of Amazon (or the rise of the direct-download video game market), but plenty of retailers not laden with debt have also died in recent years after missing those same two factors… Thank you. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [March 28, 2018, 6:10pm UTC](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133/31 "2018-03-28T18:10:25Z")
> [@Dewey\_Finn](#): > > I don’t think it’s correct to describe Amazon as the “only victor” in online sales. There are plenty of other companies selling stuff online. That’s fair. “only victor” is not accurate. There are plenty of stores that are making profits and growing. Amazon is without a doubt the dominant online retailer, though. And [their sales are growing _faster than the sales of every other online seller combined_](https://www.fool.com/investing/2017/02/10/amazons-us-online-sales-growth-last-year-was-mor-2.aspx). Which means their dominance is continuing to increase. [Previous page](https://boards.straightdope.com/t/the-retail-apocalypse-is-going-to-get-worse-before-it-gets-better/811133.md?page=1)