WAL-MART and UNBRIDLED CAPITALISM: WHEN IS ENOUGH ENOUGH?
The following is from MSN. The article can be found at
http://www.msnbc.msn.com/id/6451543/
Forbes.com: Wal-Mart's next victims
by Penelope Patsuris
The world's largest retailing machine is always looking for new worlds to conquer. Here are 5 that look particularly vulnerable, including banking and electronics. When Toys "R" Us said in August that stiff competition from mass merchant Wal-Mart Stores was making it consider exiting the toy business, the news struck fear in the hearts of retailers everywhere. After all, Toys "R" Us pioneered the "category killer" concept that's now employed by big-box specialty stores like Best Buy, Home Depot, and Bed Bath & Beyond. The notion of creating giant specialty stores that cater to a particular product segment has become a staple of the U.S. economy. But Wal-Mart, the antithesis of a category killer with aisles stocked with a vast spectrum of products, is posing a dire threat to this way of business. Wal-Mart had sales of $259 billion for fiscal 2004, ended Jan. 31, ranking it as the world's largest retailer. That sheer size has vaulted it to the No. 1 spot in categories as disparate as food, apparel, jewelry and home furnishings. For fiscal 2005, Wal-Mart plans to add 310 new stores and 30 new Sam's Clubs to its stable of 3,625 locations. Oppenheimer retail analyst Bernard Sosnick expects that by 2010, Wal-Mart will have 3,000 supercenters, up from 1,600 this year, and total company sales of half a trillion dollars.
That kind of growth will make Wal-Mart No. 1 in plenty of other product categories soon enough, and it will put an even tighter squeeze on existing players in arenas that Wal-Mart already dominates, like apparel and food. With a lion like Wal-Mart on the loose, no store is ever safe, but here we've identified five categories that that look particularly vulnerable to its looming threat.
Consumer electronics
Wal-Mart is the second-largest consumer electronics retailer in the U.S. behind Best Buy, but it won't be for long. This spring, it rolled out a private-label electronics line, ILO, which thus far includes low-priced 42 inch plasma TVs, LCD monitors and DVD recorders. That move put electronics stores large and small on notice, as have Wal-Mart's efforts to boost its brand partnerships, introducing Sony and expanding its relationships with Panasonic and RCA. Says retail analyst Howard Davidowitz, "They are going to fry Best Buy's brains out."
Banking
The superstore has been trying to get into banking for five years, but its efforts to buy banks in California, Oklahoma and Canada were thwarted by regulators. Wal-Mart has a ready-made market at hand: 20% of the 100 million customers that come through its doors weekly don't have bank accounts. The chain already offers financial services such as check cashing, bill payment and money orders, and it boasts 28 Wal-Mart Money Centers, which are operated by SunTrust Banks, as well as hundreds of other in-store bank branches. The company says it has no plans to get into retail banking, but industry sources say Wal-Mart is still pushing this agenda quietly and is expected to take another run at banking again.
Pharmacy
Wal-Mart ranks fourth in the pharmacy business, behind giants Walgreen, CVS and Rite Aid, according to the National Association of Chain Drug Stores. But it is upgrading its profile, rolling out a handful of 24-hour pharmacies in August. Pharmacies are low-margin propositions, and people with health insurance who pay only co-payments aren't price-sensitive. That could put a kink in Wal-Mart's strategy of squeezing supply chains to push down retail prices. But for the shoppers who don't have insurance, many of them its customers, Wal-Mart's brand of competitive pricing would be just what the doctor ordered.
Gasoline
Gas pumps are a huge traffic driver for Wal-Mart. There are 1,555 stations on Wal-Mart properties, 300 of which are operated directly by Wal-Mart's warehouse arm Sam's Club and the rest by third-party vendors like Murphy USA. Launched in 1996, its pumps already have a 3% share of U.S. retail gas sales -- the 10th largest in the U.S. As Wal-Mart's share grows, the only question is whether Wal-Mart will oust its vendors and go it alone. Independent gas suppliers are growing as the oil giants spin off their refineries, which makes that kind of a move plausible, and the sheer number of Wal-Mart locations makes it an appealing partner. Says retail analyst Kurt Barnard, "The volume they could offer would be of enormous interest to refineries."
Fashion
Wal-Mart may lead the apparel market, but it does so with the sale of mundane items like underwear, socks and sweatshirts. Analysts say that Wal-Mart is losing sales of fashion items to companies like J.C. Penney, Kohl's, and Target, which has had particular success with its lines from Isaac Mizrahi and Liz Lange. Wal-Mart is now gunning for a hipper milieu with George, the No.1-selling British apparel brand that Wal-Mart landed when it bought its parent, U.K. retail giant Asda, in 1999. Wal-Mart also stocks the Mary-Kate and Ashley line, licensed from the famed Olsen twins. Look for the retail giant to start sprucing up its clothing displays and marketing these brands more heavily as it reinvents its fashion sense.
Snave's additional commentary:
So O.K., when is enough of this enough? How many more merchants and vendors will large outfits like Wal-Mart have to buy or put out of business before they are satisfied? All of them? Maybe there should be some limits.
Media ownership is now concentrated amongst a handful of people. Should stores and businesses be the same way?
What will the next 20 or 30 years hold? Should the U.S. eventually let Wal-Mart own and run just about everything? They'll be major players in the banking industry soon, and it sounds like maybe they could be rich enough to buy or start their own oil company. They continue to make inroads in the fashion industry. They've introduced their own electronics line... when will they introduce their own line of automobiles and undercut the auto industry? When will they start manufacturing and selling home appliances?
Maybe Wal-Mart will make enough money that it can get into manufacturing large quanities of big-ticket items in earnest. Of course their factory employees wouldn't get to unionize... but there would be lots of factories in which they could work. They could get hired by Wal-Mart (for lower wages, and without benefits) after Wal-Mart puts their factories/companies out of business. They could run just about all our factories and hire just about all our factory workers, and produce just about all our consumer goods. Doesn't that sound like the next worst thing to just having all of that stuff run by the government?
http://www.msnbc.msn.com/id/6451543/
Forbes.com: Wal-Mart's next victims
by Penelope Patsuris
The world's largest retailing machine is always looking for new worlds to conquer. Here are 5 that look particularly vulnerable, including banking and electronics. When Toys "R" Us said in August that stiff competition from mass merchant Wal-Mart Stores was making it consider exiting the toy business, the news struck fear in the hearts of retailers everywhere. After all, Toys "R" Us pioneered the "category killer" concept that's now employed by big-box specialty stores like Best Buy, Home Depot, and Bed Bath & Beyond. The notion of creating giant specialty stores that cater to a particular product segment has become a staple of the U.S. economy. But Wal-Mart, the antithesis of a category killer with aisles stocked with a vast spectrum of products, is posing a dire threat to this way of business. Wal-Mart had sales of $259 billion for fiscal 2004, ended Jan. 31, ranking it as the world's largest retailer. That sheer size has vaulted it to the No. 1 spot in categories as disparate as food, apparel, jewelry and home furnishings. For fiscal 2005, Wal-Mart plans to add 310 new stores and 30 new Sam's Clubs to its stable of 3,625 locations. Oppenheimer retail analyst Bernard Sosnick expects that by 2010, Wal-Mart will have 3,000 supercenters, up from 1,600 this year, and total company sales of half a trillion dollars.
That kind of growth will make Wal-Mart No. 1 in plenty of other product categories soon enough, and it will put an even tighter squeeze on existing players in arenas that Wal-Mart already dominates, like apparel and food. With a lion like Wal-Mart on the loose, no store is ever safe, but here we've identified five categories that that look particularly vulnerable to its looming threat.
Consumer electronics
Wal-Mart is the second-largest consumer electronics retailer in the U.S. behind Best Buy, but it won't be for long. This spring, it rolled out a private-label electronics line, ILO, which thus far includes low-priced 42 inch plasma TVs, LCD monitors and DVD recorders. That move put electronics stores large and small on notice, as have Wal-Mart's efforts to boost its brand partnerships, introducing Sony and expanding its relationships with Panasonic and RCA. Says retail analyst Howard Davidowitz, "They are going to fry Best Buy's brains out."
Banking
The superstore has been trying to get into banking for five years, but its efforts to buy banks in California, Oklahoma and Canada were thwarted by regulators. Wal-Mart has a ready-made market at hand: 20% of the 100 million customers that come through its doors weekly don't have bank accounts. The chain already offers financial services such as check cashing, bill payment and money orders, and it boasts 28 Wal-Mart Money Centers, which are operated by SunTrust Banks, as well as hundreds of other in-store bank branches. The company says it has no plans to get into retail banking, but industry sources say Wal-Mart is still pushing this agenda quietly and is expected to take another run at banking again.
Pharmacy
Wal-Mart ranks fourth in the pharmacy business, behind giants Walgreen, CVS and Rite Aid, according to the National Association of Chain Drug Stores. But it is upgrading its profile, rolling out a handful of 24-hour pharmacies in August. Pharmacies are low-margin propositions, and people with health insurance who pay only co-payments aren't price-sensitive. That could put a kink in Wal-Mart's strategy of squeezing supply chains to push down retail prices. But for the shoppers who don't have insurance, many of them its customers, Wal-Mart's brand of competitive pricing would be just what the doctor ordered.
Gasoline
Gas pumps are a huge traffic driver for Wal-Mart. There are 1,555 stations on Wal-Mart properties, 300 of which are operated directly by Wal-Mart's warehouse arm Sam's Club and the rest by third-party vendors like Murphy USA. Launched in 1996, its pumps already have a 3% share of U.S. retail gas sales -- the 10th largest in the U.S. As Wal-Mart's share grows, the only question is whether Wal-Mart will oust its vendors and go it alone. Independent gas suppliers are growing as the oil giants spin off their refineries, which makes that kind of a move plausible, and the sheer number of Wal-Mart locations makes it an appealing partner. Says retail analyst Kurt Barnard, "The volume they could offer would be of enormous interest to refineries."
Fashion
Wal-Mart may lead the apparel market, but it does so with the sale of mundane items like underwear, socks and sweatshirts. Analysts say that Wal-Mart is losing sales of fashion items to companies like J.C. Penney, Kohl's, and Target, which has had particular success with its lines from Isaac Mizrahi and Liz Lange. Wal-Mart is now gunning for a hipper milieu with George, the No.1-selling British apparel brand that Wal-Mart landed when it bought its parent, U.K. retail giant Asda, in 1999. Wal-Mart also stocks the Mary-Kate and Ashley line, licensed from the famed Olsen twins. Look for the retail giant to start sprucing up its clothing displays and marketing these brands more heavily as it reinvents its fashion sense.
Snave's additional commentary:
So O.K., when is enough of this enough? How many more merchants and vendors will large outfits like Wal-Mart have to buy or put out of business before they are satisfied? All of them? Maybe there should be some limits.
Media ownership is now concentrated amongst a handful of people. Should stores and businesses be the same way?
What will the next 20 or 30 years hold? Should the U.S. eventually let Wal-Mart own and run just about everything? They'll be major players in the banking industry soon, and it sounds like maybe they could be rich enough to buy or start their own oil company. They continue to make inroads in the fashion industry. They've introduced their own electronics line... when will they introduce their own line of automobiles and undercut the auto industry? When will they start manufacturing and selling home appliances?
Maybe Wal-Mart will make enough money that it can get into manufacturing large quanities of big-ticket items in earnest. Of course their factory employees wouldn't get to unionize... but there would be lots of factories in which they could work. They could get hired by Wal-Mart (for lower wages, and without benefits) after Wal-Mart puts their factories/companies out of business. They could run just about all our factories and hire just about all our factory workers, and produce just about all our consumer goods. Doesn't that sound like the next worst thing to just having all of that stuff run by the government?
5 Comments:
It's basically a Southern fried version of Stalinist centralized planning. You know, the type of economy the right-wing pundits love to hate so much.
Wal Mart is beginning to put those who love free market unregulated business in a weird position. They don't mind the fact that workers are losing wages and benefits, they see that as "higher productivity". They don't, however, like to see other big businesses start to go under. I just wonder what it'll take for people to realize that we need more than just WalMart to have a successful economy. Citizens need to wake up and stop shopping at Wal Mart. And pigs will fly when that happens.
My wife and I still shop at Mall-Wart for some items. We are on a fairly tight budget, and we feel as if we are being held hostage, to an extent, by their lower prices. We can actually save money by shopping there. We do like to patronize local merchants, but when the bucks are low, we know where to go.
At least the Waltons haven't built their "Wal-Mart Superstore" or a "Sham's Club" here yet. The Superstore is in the works though. Once that happens, our local Albertson's, Safeway and Shop-n-Kart groceries will take a hit, as will one of our several oil-change places, several haircutters and maybe an optician... and who knows who else.
I'm rapidly getting to the point where if I know I can get what I need somewhere else, I go there instead of to WallyWorld. Our community needs the money more than the Walton family does. Having lived 35 of my 47 years in this isolated town of about 13,000 people, I know quite a few locals. Those who own small mercantile businesses and who are in direct competition with Wal-Mart are definitely feeling the crunch.
When Bush and Cheney bemoaned how much small businesses were going to be hurt by a Democratic administration, I think Kerry or Edwards should have mentioned more about the problem with concentration of too much power in the hands of a few, and used Wal-Mart, oil company mergers and the media as examples... and about how this is something that really hurts small business in the US.
I understand the low prices of WalMart make it very attractive. But it's hard to save that money when you know how high the price is going to be when they kill the town. Right now, there is something like over 250 empty WalMart buildings across the country. And although many of those stores have been replaced with Superstores you still have all this unoccupied land with an empty shell there. It makes me physically ill to shop at WalMart. It's not because I'm an elitist who doesn't understand "middle America", but because it just makes me so sad to see people working with no benefits, no union representation, little chance for promotion (especially women), and little prospect for a new job because their old job has left town. I don't mind paying a couple extra dollars to get better, quicker service and to keep my local economy healthy. It's better than paying tax dollars to subsidize the building of a WalMart Superstore.
I've always been a guy who liked to shop. But I do think I would be willing to change my lifestyle somewhat if it would help me avoid shopping at Wal-Mart. Spend a little extra with the local merchant...think of it as the good karma rebate system.
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