When I was growing up, Sears was the place to go. They had the gadgets, the appliances, tools and electronics, and so much more. It was a fun place to go as a young boy. And for much of the time in their hey day, they were the low cost leader in the marketplace. But as we all know, Sears has been a shrinking brand of diminishing stature for several decades now. Sears is no longer the place to go or be seen. Sears is simply one of those iconic retail brands that has lost its way and and its future is uncertain.
Today, I’m thinking WalMart is on a similar path towards irrelevance as Sears started to go down some 20 years ago. And I’m thinking that 20 years from now, WalMart could very easily be a marginal brand. Here are a few of the reasons that could lead to WalMart’s demise.
- WalMart Likes To Fight: WalMart is a fighter. It fights with their suppliers to constantly lower their prices. It fights with their employees at the local, regional and national level (for instance the gender class action lawsuit now in front of the Supreme Court). It fights with munincipalities to gain access to their marketplace. And indirectly, it fights with its customers by being understaffed, their employees undertrained and less than enthusiastic (its simply a job), and their shelves at times, understocked. From my perspective, fighting and dissatisfaction are directly linked.
- WalMart Stores Are Tired: WalMart stores simply weren’t designed to provide an upbeat customer experience for most consumers (which is in sharp contrast to their #1 competitor - Target). Now, many stores are especially feeling tired and worn, which simply adds to an already weak customer experience.
- WalMart Suppliers Play the Game: Over the years, suppliers to WalMart have figured out how to play their game. Today, WalMart needs their suppliers as much as their suppliers need WalMart. Ten years ago this was not the case.
- WalMart Feeling The Squeeze: WalMart is being squeezed by the likes of DollarTree on the bottom end of the market (small stores with really low prices), warehouse stores like Costco and upscale stores with good pricing like Target. In essence, the number of individuals feeling compelled to shop at WalMart is declining.
- WalMart’s Sourcing Strategy: WalMart led the maretplace to China, even setting up their own trading office early on. It’s been reported that suppliers were told that if they didn’t source from China, they would no longer be a supplier in the future. With the increasing valuation of the yuan, higher labor costs, etc. WalMart’s China strategy is providing decreasing returns.
- Mother WalMart Doesn’t Know What’s Really Going On: WalMart in their gender class action suit currently in front of the Supreme Court essentially pleads innocense, because they didn’t know what was going on at the local level. This might sound like a smart defense, but its also a terrible way to run a business. Think about it. If corporate doesn’t know what’s going on a the local level, does it really know what’s going on? Scary?
During the go-go days, WalMart was the place to shop. Stores were packed with customers and shelves filled to the brim with value-priced merchandise. Well the times have changed, and WalMart stores open a year or more have experienced reduced revenue for seven straight quarters. Suddenly, WalMart is desperately trying to figure out how to get their momentum back. They have a plan, although I suggest it’s going to be extremely hard. The reason being, a growing legion of shoppers are “anti WalMart” Plus, many WalMart stores are tired, their offerings unattractive, their employees unmotivated, their value proposition weak and the competition is getting better. This is not a combination that will enable a swift and exciting turnaround. Yes, WalMart is filled with many silent problems that hold it back from achieving its glory days in the U.S. at least.
What do think? Will WalMart be able to regain their growth oriented momentum?
