Hitting the Wal(Mart)...  

The news hasn't been especially good for Walmart recently. First there is that messy business of the bribe problems.

The world’s biggest retailer, Wal-Mart Stores Inc., says it is likely that it will incur a loss from bribery probes into its operations in Mexico and other countries.
The company has been dealing with allegations that surfaced last April that it failed to notify law enforcement that company officials authorized millions of dollars in payments in Mexico to speed up getting building permits and gain other favors. The Foreign Corrupt Practices Act forbids American companies from bribing foreign officials. [More]

But a larger issue (and Jan brought this up recently) is they seem to be doing a lousy job at, you know, selling stuff in stores.

During recent visits, the retired accountant from Newark, Delaware, says she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics.
The cosmetics section “looked like someone raided it,” said Hancock, 63.
Wal-Mart’s loss was a gain for Kohl’s Corp. (KSS), Safeway Inc. (SWY), Target Corp. (TGT) and Walgreen Co. (WAG) -- the chains Hancock hit for the items she couldn’t find at Wal-Mart.
“If it’s not on the shelf, I can’t buy it,” she said. “You hate to see a company self-destruct, but there are other places to go.”
It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers. In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart stores, a 13 percent increase, according to filings and the company’s website. In the same period, its total U.S. workforce, which includes Sam’s Club employees, dropped by about 20,000, or 1.4 percent. Wal-Mart employs about 1.4 million U.S. workers. [More]

I think this could be a tiny first hint of wage inflation, which has been absent for a looong time. It will struggle against our seemingly intractable unemployment problem, for sure. And unemployment benefits are clearly ramping down, adding urgency to more job-seekers.

[Source]

But it may be those forces will not be enough to attract workers to Walmart anymore. Maybe it will take better management and wages.Who'd have guessed?

Some of the stiffest competition, especially in rural areas, comes from "dollar-stores". While this may not pose a big volume challenge, it does dent the invincibility image of the behemoth retailer.

But there could also be a general weariness of "Walmartness" as well as a growing realization that the same prices with better service can be available elsewhere. I know Jan has shifted an amazing amount of "grocery" purchases on-line, and she's not alone. My son has diapers delivered cheaper than he can buy in stores.

The big shift in retailing may occur in this way - product by product. And nothing is harder to overcome than a customer sense of vague dissatisfaction borne from restless boredom.

Why staying home...  

Is a smart idea.  Unless (as is often the case) your family /friends make Black Friday shopping a social event that contributes to your holiday festivities, you could save money staying home and cleaning the gutters. (I don't want to talk about it)

What the professor has determined with a complex computer algorithm for consumer electronics, others have found through less scientifically rigorous means for other products, including clothing and toys: despite all the ads that suggest otherwise, the lowest prices tend to come at other times of the year.

In the case of toys, stores actually offer the steepest discounts in the weeks immediately following Thanksgiving because they want to unload the inventory not swept up on Black Friday, said Dan de Grandpre, who has tracked deals for 15 years at Dealnews.com.

“Toys have a very short shelf life,” he said.

“On Dec. 26, they’re not really useful to retailers anymore, so they have to get rid of it and start slashing prices early in December.”

And it is a precise window of opportunity. In the week or so before Christmas, toy prices shoot back up, Mr. de Grandpre’s tracking shows, as last-minute shoppers come stampeding for Barbies and Lego sets and stores are less desperate “because they’ve been able to reduce their inventory.” [More]

I also wonder if the recent steep slide in corn prices won't bring rampant machinery sales to an abrupt halt, much as it did this summer when we didn't know what we had in our fields. I think we are much more sensitive to such exterior phenomena than before, maybe because we are buying a lot of stuff we could postpone or even do without, rather than badly needed equipment.

I think this is brilliant...

Both economically and socially.

Jan does not, but I'll bet she uses it.

(via sullivan)

Maybe only a few dozen...

If you have ever paused to wonder when looking down the breakfast cereal of cracker aisle in the supermarket if such extravagance of choice is economically efficient, you may have sensed a future trend. Maybe we're going to have our choices narrowed somewhat.

Wal-Mart is not the only one doing this, according to Dibadj. He says leading drug store chains, including CVS and Walgreens, grocers such as Kroger (KR, Fortune 500), and Wal-Mart's rival discounter, Target (TGT, Fortune 500), are also looking to simplify their store shelves.
In good economic times, product variety is a must for retailers. But in down times, when shoppers aren't buying much, variety can be a burden.
"Wal-Mart's a little fed up," said Lora Cecera, retail expert and partner at strategy consulting firm Altimeter Group. "I think the feeling is that as these companies keep extending their [product] lines, it's only causing confusion for shoppers and not really driving them to buy more products."
As a consumer, she asked, "Do I really need to decide between 15 different types of toothpaste when I go to a store?"
Dawn Willoughby, vice president-general manager of Glad brand for the Clorox Co. (CLX, Fortune 500), agreed.
"On an industry level, we've been talking about simplifying product assortment for a long time," said Willoughby. "If you walk into a Wal-Mart or another large retail chain, there are so many products on shelves that it does make it harder to shop."

 [More]

I think in part this could be a response to a buying public more starkly defined by income. As income inequality increases, Wal-Mart especially has fewer takers for slightly higher-end products.  And as the article points out, more (and essentially identical) choices make shopping harder.

So, a little bit of Psychology, to fuzz up your day, specifically the psychology of choice and of happiness. Two gentlemen, Barry Schwartz and Dan Gilbert, have made these topics more accessible via their TED talks last year. To summarize and synthesize the two: The more choice we have, the less happy we are. When we do get choices, we don’t use them well, and when we make mistakes, we rationalize them to ourselves, but still we worry that we didn’t do the right thing. [More]

Wal-Mart may think it is rationalizing shelf space and profits, but what it could be doing is helping customers enjoy their experience in the store by eliminating a subtle source of stress.  Happier customers spend more.

Living at the mall...

Oddly this idea makes some sense to me (and I'm not alone). While the feasibility could be harder than first glance, why not add residential buildings to overbuilt malls to end up with walking-friendly communities?

The lonely box of concrete plopped in the suburban diaspora, outdated and, in many cases, dying, isn’t quite what Victor Gruen, the Austrian-born Holocaust survivor largely credited with inventing it, envisioned. Instead, the regional enclosed shopping mall was supposed to be a community center—a little bit of downtown and a car-free haven that would include day care facilities, offices, and, perhaps most importantly, residential living components a stone’s throw from the building; the mall was always supposed to have housing nearby.

Perhaps today Gruen would finally be satisfied, because in its newest incarnation, the mall has finally become not just a place to shop, but to live. The mortgage meltdown, shifting demographics and a growing antipathy toward suburban sprawl have caused developers to see malls not as retail dinosaurs but as giant land banks, where going vertical can appease environmentalists, potential buyers and stockholders alike.

It’s happening slowly, but it’s happening all over America, and industry experts expect the trend to grow. If inner cities are starting to see condo projects go rental or remain unsold, and some new suburban subdivisions are settling into modern ghost towns as the foreclosure crisis deepens, the one bright spot in the housing market might just be here: at the mall. [More]

I mean, it's not like we can turn them back into cornfields.

The key factor might be energy prices and/or energy policy that makes suburban car-dependence even less enjoyable.

Just in time for Black Friday...

Some excellent advice on what NOT to buy tomorrow.

TVs that are too big, or too fancy: It's a good time to buy a new TV. In 2007, manufacturers of flat-panel screens ramped up their plants in order to meet what they thought would be huge demand for big TVs during the 2008 Summer Olympics. Thanks to the flagging economy, that demand didn't materialize. Now, says Sweta Dash, an analyst at the market research firm iSuppli, flat-panel manufacturers are swamped with huge inventories. As a result you can find incredible bargains on HDTVs—32-inch sets are going for as low as $399, 42-inch units are $599, and you can get a 50-inch plasma for as little as $798.
But beware. When TVs are so cheap, it's easy to get pushed into one that's too big for your room or offers a higher resolution than you need. Succumbing to either temptation can be harmful to your wallet.
How big of a television should you buy? TV experts offer this handy rule of thumb: Measure the distance in inches between your couch and your TV, then divide by 1.5. The number you come up with is the biggest widescreen TV you should get. For instance, if you sit 6 feet away from the TV—72 inches—you shouldn't buy a screen larger than 48 inches. Anything bigger and you may begin to notice too much detail in the picture—pixilation, scan lines, and other artifacts that you wouldn't see on a smaller set.
You should also pay attention to the resolution of your new TV. There are two main kinds of HD sets: 720p and 1080p. These designations indicate the number of pixels squeezed into the picture. A 1080p screen has almost three times as many pixels as the 720p screen, which salespeople will gladly tell you translates into a substantially better picture, thus justifying the 1080p set's greater price tag.

In fact, 1080p TVs are packed with a lot of extra pixels that most of us don't really need. For one thing, because 1080p signals require a lot of bandwidth, every cable company broadcasts high-definition TV shows in 720p, so you're not getting anything more by watching Lost on a 1080p set. (Dish Network and DirecTV said recently that they'll put out some channels in 1080p, but skeptics say that their signals will be too compressed to look as good as true 1080p images.) And even if you're watching a 1080p video—like a Blu-ray disc—the differences between 720p and 1080p are nearly indistinguishable on TVs smaller than 55 inches or so. Even videophiles have a hard time telling any difference. So if you can get a lower-resolution set for less money, go for it. You won't miss a thing. [More]

I would add my own "don't-go-there's"

• Pets
• Cordless power tools, unless the recipient already has some with the same batteries/chargers
• Slippers
• Ties - unless the recipient actually wears one at work.  (Note: more people are and will be) If possible pair with the appropriate dress shirt.
• Anything with a subscription, or which will add the recipient to a solicitation for a subscription
• Toys that make noise.  (Actually, most kids have waaay too many to begin with, IMHO)

In counterpoint, I would say the Nintendo Wii is an outstanding gift for a whole family, albeit pricey. If you open it in time to entertain the crowd at your house, your holiday can find a different dynamic from the past patterns. Even geezers can play, and a whole crowd can watch and ridicule.

The real question is how black Black Friday will be? 

Is it me or does shopping seem a little lame this year?

Watching Walmart...

Walmart's expansion in graphic detail.  Amazing to see unfold.


[Thanks, Aaron]

Fewer stores as well...

We've heard plenty about the housing slowdown. And the data is starting to become real in the form of layoffs and plant idling. But that's not all that is slowing down in the construction biz.

Retail space demand is being hit by a triple whammy.

And supply is up. This decade's build­ing frenzy produced a bumper crop of new retail space—from McStrip malls built near new McMansions to hip new bou­tiques in the ground floors of hip new Mi­ami condo buildings. But the occupants for new retail space haven't ma­terialized. In the fourth quarter of 2007, the national retail-vacancy rate rose for the 11th straight quarter to 7.5 percent, the highest level since 1996, according to research firm Reis Inc. With new projects coming online—34 million square feet of retail space will be completed in 2008—the rate is expected to climb further to 8 percent. In the parlance of the trade, many chains are simply over-stored. [More]

Now add in the relentless expansion of on-line retailing, and consumer spending jitters, and I think we have a decade or so breather from 1031 money flowing our from shopping malls into our farmland market.

Farmers may take this opportunity to increase their market share of farmland ownership. I hope so. It is farmowners who decide who gets to farm - not farmers.

Walmart has another problem..

I like to watch issues that fall off the radar but still reverberate in the marketplace. One of these could be the melamine-laced pet food debacle that featured the source - China - prominently over and over.

Following recent scares over food contaminated with the banned substance melamine, a number of processors - including Nutracea, Mission Foods and Tyson Foods - have announced that their ingredients are not, or will no longer be, sourced from China. [More]

While we in agriculture observe this sputter of outrage by consumers with mild interest, you can bet your stock option boards of directors are asking where ingredients are coming from. And not just ingredients, perhaps.

This sorry episode illustrates that a global food supply requires honesty and integrity. If China or any other country wants to sell its products on the international market, it needs to make sure that its products are top-of-the-line. Arresting a company manager is not an acceptable long-term solution. [More]

Meanwhile, America's top retailer is so deeply invested in Chinese sources that the cloud over imports could impact sales of all kinds of retail goods.

Most people are not aware of the massive effect that the world’s largest company has on the American food supply. As noted by Charles Fishman in his book “The Wal-Mart Effect,” Wal-Mart is China’s eighth-largest trading partner. In 2004, almost 10 percent of everything imported to the United States from China was imported by Wal-Mart. With the way Wal-Mart pushes its suppliers to do business at the lowest possible cost, systems are poorly regulated and done on the cheap.

The role of China in American products extends beyond pet food and nonperishable goods. The precedent that such imports set can be felt system-wide. According to the Washington Post, “China’s agriculture exports to the United States surged to $2.26 billion last year, according to U.S. figures — more than 20 times the $133 million of 1980,” “China Food Fears go from Pets to People,” Washington Post, April 25. [More]

The impact on Walmart comes at an inconvenient time. As has been pointed out by numerous analysts, Walmart's primary consumer market is the lower 50% of earners, and those are exactly the citizens who have been left out of the prosperity growth in America.

Analysts believe that Wal-Mart has a ready-made market
at hand as 20% of its 100 million customers don't have
bank accounts. The chain already offers financial services
such as check cashing, bill payment and money orders,
and it has 28 Wal-Mart Money Centers, which are
operated by SunTrust Banks, as well as hundreds of other
in-store bank branches. [More]

The persistent reminders of wildly unequal economic progress in the US and the world remind us how national statistics can be a cold comfort, regardless of their positive nature.

This can only get worse...

Thanks to a strange set of consequences, "meatlifting" is now the number one "loss prevention" problem for supermarkets.

Meatlifting is a grave problem for food retailers: According to the Food Marketing Institute, meat was the most shoplifted item in America's grocery stores in 2005. (It barely edged out analgesics and was a few percentage points ahead of razor blades and baby formula.)

Meat's dubious triumph is due in part to a law enforcement crackdown on methamphetamine use. Meat used to be the shoplifting runner-up to health-and-beauty-care items, a category that includes cough medicines containing pseudoephedrine, a key ingredient in home-cooked meth. In 2003, for example, a quarter of shoplifted products were HBCs, while meat took second place at 16 percent. But states began passing laws that require stores to move medicines containing pseudoephedrine behind secure counters. That was enough to cut the pinching of HBCs, which fell by 11 percent between 2003 and 2005.

When ethanol demand raises feed prices and the livestock industry cuts back production, meat prices will likely rise. Too many weird store security scenarios spring to mind as shoppers respond with more theft attempts.

So, more innovation is required in the battle against meatlifting. Meat-sniffing dogs pop to mind, though some shoppers might object to having a Doberman nosing around their crotches in search of stolen steaks. But you know what they say about civil liberties in a time of crisis. [more]

Probably not the best time to bring this up...

Already, four shopping malls in China are larger than the Mall of America. Two, including the South China Mall, are bigger than the West Edmonton Mall in Alberta, which just surrendered its status as the world's largest to an enormous retail center in Beijing. And by 2010, China is expected to be home to at least 7 of the world's 10 largest malls.

It seems we are losing the mall race to China. One thing to keep in mind is while the disparity in come is enormous there, if just 20% are living a "middle class" life that's 260 million shoppers.

Also, suppose China becomes the destination of prestige for American serious leisure shoppers?

[via Neatorama]

Chains we choose...

One of the reason small towns are struggling has been America's love affair with chain stores. While widely derided by cultural critics and generally condemned as cookie-cutter retailing, they also obviously fill some retail need.

You can show people pictures of a Pottery Barn with nothing but the name changed, he says, and they’ll love the store. So downtown stores stay empty, or sell low-value tourist items like candles and kites, while the chains open on the edge of town. In the name of urbanism, officials and activists in cities like Ann Arbor and Fort Collins, Colorado, are driving business to the suburbs. “If people like shopping at the Banana Republic or the Gap, if that’s your market—or Payless Shoes—why not?” says an exasperated Gibbs. “Why not sell the goods and services people want?” [More]

Like the idea of sprawl representing the dream of owning a house, chain stores exist because we want variety and value where we live, not just where others live. And big-box retailing may actually make the pie bigger for local businesses.

My theory is chain stores likely have a shorter business half-life than one-off establishments simply because the ubiquity will over time make them unfashionable - even lame. The Gap is struggling with this curse right now.

In other words, if we let them consumers will solve this problem with free choices.

[via aldaily]