If it ain't broke…fix it 'til it is.

Interesting article in Forbes, and it confirms once more what I’ve been preaching for several years now. The Big Box era has run it’s course and is dying a slow death.

“The new conventional wisdom says that big box retailers like Best Buy are going the way of the dinosaur. Online giants, notably Amazon, are the future. Online retailers are more efficient, because they lack physical locations, and so can offer better prices. Shopping online is also more convenient. On the web, consumers can shop anywhere they are, day or night.”

Link to article.

I’ve known for years that Wal Mart has lowered the quality of not only their products, but EVERYTHING we buy, as competitors engage in a race to the bottom to try and compete with them.. I’m proud of the fact that as of the date of this post I have not been in a Wal Mart store in almost eight years. Problem is, the “Wal Mart junk” mentality has spread to almost every other consumer product, but it’s still possible with a little effort to buy durable, quality products….and when shopping for quality, it’s often the US manufacturer that comes out on top.

If the federal government wants to create private sector jobs, they need to come up with a system whereby some independent agency (ie. Consumer Reports) rates products and assigns a “durability rating” giving the useful life expectancy of a given product in years (or months). That number would be required to be prominently displayed on all packaging, then the customer could make an intelligent choice between buying the underwear that cost $3 per pair and last 1 year, or the $6 pair that last 5 years…doesn’t take a math degree to figure out the most economical choice.

Link to article.

Printable .pdf version

Yes, I do despise WalMart for what it has done to America in it’s zeal for “lower prices”…oh well, at least the Chinese have prospered. Anyway, CBS Sunday Morning recently aired a piece about Alice Walton and the Crystal Bridges Art Museum she is funding in Arkansas. She seems like a very genuine and plain-spoken woman and I have respect for what she is doing with at least a portion of her fortune. Too bad the company her father started has become such a monster…

“For instance, merchants long have matched prices at competing bricks-and-mortar stores, but not online retailers. After all, it’s hard for them to compete with the online-only guys that can offer lower prices because they don’t have the high overhead costs of running physical locations.”

More confirmation of my theory…Big Box Retailing is a dead duck.

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“…Americans are expected to do more online comparison shopping and spend less time in stores….”

Whew…I’m sure glad I’m not tied to a high rent lease in a shopping center or mall.

Read the full article.

I’d bet that these execs read the writing on the wall…big box retail is a dead duck and Google and Amazon.com will eat Walmart alive in the online realm. A couple of key phrases in this article: “…shoppers are making more purchases over the internet.” and “…more shoppers migrate to the Web and same-store sales at U.S. stores decline.”

Wal-Mart Stores Inc. (WMT) is losing the two executives in charge of its online business as the world’s largest retailer works to win shoppers that are making more purchases over the Internet.

Eduardo Castro-Wright, a Wal-Mart vice chairman who ran global sourcing operations along with the online business, will retire in July, Bentonville, Arkansas-based Wal-Mart said today in a statement. Wan Ling Martello, Wal-Mart’s executive vice president of e-commerce, will replace Jim Singh as chief financial officer of Nestle SA (NESN), the food company said in a statement.

“It’s a serious loss of leadership in the e-commerce business,” Colin McGranahan, an analyst at Sanford C. Bernstein, said in an interview. “Eduardo had the internal firepower to make things happen.”

Chief Executive Officer Mike Duke has focused on improving the company’s Internet unit as more shoppers migrate to the Web and same-store sales at U.S. stores decline. Wal-Mart bought Silicon Valley e-commerce startup Kosmix and created @WalmartLabs to speed up innovation. The company also is testing home delivery of fresh groceries ordered online.

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Very interesting concept, but I think Walmart is far too addicted to it’s model of of selling disposable Asian made junk to ever change stripes.

WHAT WALMART COULD LEARN FROM NETFLIX

Walmart is the largest retailer in the world. The company sells many cheap, throwaway goods. Moving those goods across the globe and country burns energy. True, Walmart is taking steps, and setting a good example, to reduce its carbon footprint. But a bigger, Meshier opportunity lies before them and other big-box retailers.

Big-box retailers are poised to take advantage of a richer part of the value chain. They could move from being huge retailers to becoming huge product service and repair providers. Walmart and other big-boxers could become the center of gravity for the conservation of goods, employ people with actual know-how, and develop deeper, longer term, more profitable relationships with their customers.

Most of Walmart’s business, of course, is selling stuff. It sells a customer the cheapest TV or toaster today, expecting her to come back in a few years to again buy the new model of cheap TV or toaster. But every part of the value chain–manufacturing the toaster in China, shipping it, warehousing it, stocking it, and disposing of it–involves considerable waste. Setting aside the inevitable costs of climate change, or any future carbon taxes, a considerable part of that waste is in fossil fuels that are becoming scarcer, more costly to extract, and higher in price. That’s a significant risk to Walmart’s current business model, one that company itself is beginning to recognize.

What if, instead, Walmart guaranteed a customer the best-priced TV and toaster way into the future? If the TV breaks in three years or five years, Walmart repairs it, or offers upgrades that are less expensive than buying a new one. At the end of its life, the company reclaims the old TV, upcycles the parts and materials, and offers the customer a discount on a new one.

Members of a “Walmart Share Club” could be given a special password to a daily online auction on used equipment certified to be in good working condition. The auction would include many items that other customers traded up–customers grateful for a way to deal with unused consumer electronic devices that they don’t know what the hell to do with. REI, for example, has had success with offering a discount on new skis when people return their older ones. REI then refurbishes the old skis and offers them as rentals.

A shift toward access and service would deepen the big-box retailer’s relationship to customers, and win their loyalty. A service focus would bring more rewarding, frequent, and lasting contact with grateful customers. It’s fundamentally a different business model, with additional rich profit.

Reprinted from The Mesh by Lisa Gansky by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright © Lisa Gansky, 2010.

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