If it ain't broke…fix it 'til it is.

“The falling same-store sales at its supercenters might be a reflection of the fact that many U.S. shoppers no longer favor one-stop-shop mega-boxes.”

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It’s a foregone conclusion that the Big Box Era is over….even Wal Mart can’t figure out what hit them. I hate to tell the boys and girls in Bentonville, but you’re going down. You’ve stacked cheap Chinese junk in huge, inefficient buildings that people are sick of trying to navigate. You can open all the “small format” stores you want in inner cities, but the your bread and butter SuperCenters are dying….and the sooner they disappear the better if you ask me.

Check out the following article:

Big US chains begin to ‘shrink’ their stores

It’s pretty well known, and frequently discussed in the media, that the greedy folks on Wall Street wrecked the economy by building a “House of Cards” industry on bogus mortgage loans. What I don’t understand is why we don’t hear much at all, if anything, about how Walmart has destroyed hundreds of American industries, eliminating millions of American jobs in the process, by fostering a culture that accepts junk quality merchandise as long as it’s cheap?

Twenty years ago, and depending on the products being sold, retailers were competing with the store down the street, across town, and in few cases stores in the next town down the road. No more…it does not matter what product line you’re selling, the technology revolution allows your customers to compare your prices to other resellers anywhere in the world. And with advances in smart phone mobile technology, a simple swipe of a bar code will tell them where to find the best deal on the web, or from a nearby competitor.

The bottom line is that retailers must be super efficient and competitive to survive….and those big guys paying premium rents and high utilities are at a distinct disadvantage. That’s why mass market retailers, in every industry, are sweating bullets, closing large format stores and looking at opening dramatically smaller store formats….it’s the new normal. The “Big Box” era has run it’s course, the war is over, the internet won and those who fail to realize this are doomed.

I hate to say I told ‘ya so…but I told ‘ya so. The Retail Mall era ended in the early 90′s, next in line for the firing squad is the Big Box format…it’s far too inefficient and costly to compete with the Internet sellers. I know all of you real estate developers and commercial landlords hate to hear this, but you might want to start thinking about what you’re going to do with those expensive piles of brick and mortar, sitting on that expensive real estate, sucking up those expensive utilities to keep cool and warm….

The Morning after Wall Street Carnage in the Office Supply Sector
Thursday, May 19th 2011

New York, NY

NYSE & NASDAQ

Wednesday was a near apocalypse in the office supply sector with industry leader Staples (SPLS) losing over $2 billion in shareholder value, while Office Depot (ODP) and Office Max (OMX) were also crushed. Analysts, investors, financial reporters and industry insiders were consistent in there scathing reviews of the sector, none of the big boxes were spared their wrath. All three office supply big boxes were called on the carpet for out-dated store formats, broken business models and the inability to quickly adapt to market changes. A near universal consensus emerged that neither Office Depot nor Office Max would probably survive without merging or being acquired. The Motley Fool reported that Wal-Mart was preparing a massive retail expansion into the office and school supply markets, and that such action could be fatal to either Office Depot or Office Max.

More reporting cited market fragmentation with the likes of Amazon.com; multiple on-line venues, Best Buy, and Target all relentlessly eating away at the office supply markets; all adding to downward pressure for industry laggards Office Depot and Office Max. Staples reported lower margins within their contract sales division which has been stealing large chunks of the market from rivals Max and Depot. Financial reporting also noted that a resurgent independent dealer community had formed powerful consortiums and associations allowing them to compete toe to toe with the big boxes.

All day Wednesday, negative evaluations and reports came in a dizzying blizzard of negativity towards the industry.
Now the question is: What happens next? Will some of the yesterday’s losses be clawed back or will the unrelenting bad news and negativity cause further slides today? One senior industry insider opined “Is this the beginning of an apocalypse for the big box office supply retailers?” Well, the answer may become known sooner than later.

Source article

Stihl executive Fred Whyte advises manufacturers to spurn the big box retailers and sell though local stores. Hopefully more and more companies will come to realize the peril that they place themselves in by playing the Wal Mart game and decide to follow Stihl’s lead.

….Selling through the giant retailers can begin a vicious cycle, Whyte said. The mega-companies keep cutting your price. So you are forced to cut quality, eventually losing your profit margin and possibly your reputation for making a good product, he said. “Walmart has made us all much better retailers,” Whyte said.

But even Walmart, with $405 billion in yearly sales, has its problems. Walmart stores in business a year or longer have suffered seven consecutive quarters of declining sales, he said.

Levi’s jeans, designed during the California Gold Rush days, had 60 U.S. plants until it started selling through Walmart, Whyte said. The demand for lower and lower prices and the unanticipated refusal of younger people to buy their jeans at Walmart eventually forced Levi’s to close all 60 U.S. manufacturing plants, he said….

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