Damn you Wal-Mart…

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Dave

Dave is a part-time blogger that writes about whatever suits him at the time.

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  1. Avatar zic
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    says:

    Open a new store, loose money on it until you force the local competitors out of business, and then the shopper’s have no choice.

    The bigger they come, the harder they fall.

    But I do predict a fall.Report

    • Avatar Dave in reply to zic
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      says:

      I don’t think this is just happening in the new stores they open. I live in New Jersey not too far from NYC. Wal-Mart has been here for a good 10 years or so.

      They’d get crushed if they tried that here, especially given the presence of Target, Kohl’s, BJ’s and Costco. Those are the “local” competitors. As far as the mom and pop businesses, it’s a bit different in my neck of the woods. Because the big box retailers are located a good 10 to 20 minutes from the downtown areas, the downtown areas thrive pretty well. That may also be driven by demographics.Report

      • Avatar Mark Thompson in reply to Dave
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        says:

        Dave – I might be wrong on this since I have avoided malls like the plague ever since I stopped working at one, but the sense I’ve gotten around here the last few years is that the downtown areas around here have very much been making a comeback, while the shopping malls have been suffering and the big box stores fight each other tooth and nail. It seemed like the hit to the downtown areas around here originally came from the rise of the shopping malls, which were new at a time when the downtown areas were starting to decay (e.g., downtown Somerville was just incredibly depressing beginning in the late 80s right through the entire 90s). But that decay seems to have forced the downtowns to modernize, and they seem to be doing significantly better these days.

        But that’s just my perception – as I said, I avoid malls like the plague. For that matter, I tend to avoid Walmart because it’s such a PITA, opting instead for the other big box stores when I need such general items.Report

        • Avatar Mad Rocket Scientist in reply to Mark Thompson
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          says:

          From what I’ve seen, downtown’s have been working to create better mixed use space, and install better parking, so the area is attractive to live in, & come to.

          I was surprised to learn that in a town I used to live in, back in the 50’s, each neighborhood had a small commercial retail area that served the neighborhood. Then the city (for whatever reason) rezoned the retail areas to strictly residential. Now they are starting to realize the error, as neighborhoods are more places where people sleep, but not really live & form communities.

          They are struggling to change that.Report

        • Avatar Kazzy in reply to Mark Thompson
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          says:

          Mark,

          I’d venture to guess that some of that is economy driven. I know the malls in my ol’ neck of the woods have been suffering, somewhat, but that is because they largely deal in “luxury” items. Downtown areas have more “essentials”… grocery stores, pharmacies, etc. So buying trends are going to favor the latter in a down economy. Couple that with improvements to the shopping experience and it doesn’t surprise me that malls are becoming increasingly innovative with their space (though time will tell if these innovations work).Report

        • Avatar Dave in reply to Mark Thompson
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          says:

          But that’s just my perception – as I said, I avoid malls like the plague.

          What, you don’t like that whole mess by Bridgewater? You nihilist!!!

          I might be wrong on this since I have avoided malls like the plague ever since I stopped working at one, but the sense I’ve gotten around here the last few years is that the downtown areas around here have very much been making a comeback…

          All of this is dependent on the geographical regions and the underlying demographics, but yes, in some areas, that is very true. As far the areas near where I live, the downtown areas suffered as a result of the general economic conditions. I’d see this by way of increased number of vacant storefronts (most have since been re-leased). I moved back out here in 2001 so I never witnessed any of the issues you mentioned in Somerville, but what you saw with your own eyes you wouldn’t surprise me. My guess is that a lot of the development would have been somewhat correlated to the overall economy and the construction boom (predominantly in residential) prior to 2007.

          My downtown areas do have certain retail uses that compete with the big boxes (toy stores, sporting goods and hardware stores to rattle off a few), but given the distance from the big box competition and the customer profile in our region (anywhere from middle income up…), people can afford to pay a little extra to not have to put up with the hell of Route 22.

          while the shopping malls have been suffering…

          What Kolohe mentioned below is pretty accurate, especially after the downturn started. The very best malls in the country (i.e The Mall at Short Hills) are doing fine. Sales volumes at these malls took the biggest hit after 2008, but they were the first to recover. Mid-priced malls will do pretty well but have to compete with the big boxes. Where mid-priced malls really run into trouble is where there was overbuilding. This is where the demolition or demallng Kohole mentions happens.

          For low-price point malls, unless there isn’t a Wal-Mart within 50 miles, it will be fine. Otherwise, forget it. The sales in a single Wal-Mart location can (and often do, to the best we know) exceed the sales volume of an entire mall (including the department stores). The economics don’t work for malls in this environment. While most Wal-Mart’s are now owned and occupancy cost numbers are very hard to come by, it is our guess that Wal-Mart’s real estate occupancy cost is somewhere in the 1%-2% of sales range (which it would be if it leased space).

          Therefore, if mall stores in a low-end mall are $200 per square foot (and I’m being generous, some go towards $100 per square foot before they implode and die off). In order for tenants to maintain a 2% occupancy, a tenant would have to pay a rent of $4 per square foot all in. There is no way in hell that a landlord can operate an enclosed regional mall for $4 per square foot let alone make any money at those levels. I’m going through some older comps that I have and I’m having a hard time finding numbers less then $8 to $9 psf in operating expenses in lower quality mall. You’re completely screwed.

          It seemed like the hit to the downtown areas around here originally came from the rise of the shopping malls, which were new at a time when the downtown areas were starting to decay (e.g., downtown Somerville was just incredibly depressing beginning in the late 80s right through the entire 90s). But that decay seems to have forced the downtowns to modernize, and they seem to be doing significantly better these days.

          Absolutely, especially for people that lived farther away from the downtown regions. It was just as easy to drive to the mall. The same goes for the big box retailers like Wal-Mart. They had the same impact.

          It seems like Somerville had some signficant changes which led to the decay and the large scale vacancies. It’s hard for that stuff to get rectified right away, especially if the buildings sit in historical districts. That tends to make redevelopment a bit tricky and the regulatory requirements could keep developers away for any number of reasons.Report

  2. Avatar Jaybird
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    says:

    (Insert disclaimer that I never shop at Wal-Mart here.)

    (Insert story about unpleasant experience at Wal-Mart here.)

    Here’s my question: how does Wallyworld advertise on television? During Tax Prep Season, there were commercials to get your taxes done at Wal-mart but I don’t know that I’ve seen a Wal-Mart commercial in years… do they still make them? What’s the general thing that they’re selling? Is it people talking into the camera about how great it is to shop there? Is it a disembodied voice explaining how much money you can save on Kraft Dinner? Surely they are trying to address the unpleasantness at Wal-Mart by deflection, misdirection, or sheer enthusiasm…

    How are they trying to lie to us on the telly?Report

    • Avatar trizzlor in reply to Jaybird
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      says:

      Wal-Mart may be lot of things but they’re not dumb, so their ads typically feed the American desire to get a deal: A disembodied Smiling Yellow Face careens through an idyllic Wal-Mart store, leering at already low prices until, one by one, they systematically lower themselves further. Periodically, we flash to a small cast of Wal-Mart employees and shoppers who respond with a mixture of terror and delirium at the sight of such wanton price-cutting, but they are clearly secondary characters in this story, so minor that The Yellow Face does not even appear to see them at all. At no point in time is an actual product or purchase ever shown. Indeed, the Wal-Mart where our story is set has somehow been scrubbed of any identifying brands and appears only to stock blurry, multicolored plastic containers of various sizes. Clearly, the point is that big numbers are being turned into little numbers, and we should just be damn happy that – for now – it’s not the other way around. In the final scene The Yellow Face rises like a beaming sun over the Wal-Mart logo and the motto – “Always low prices. Always” – is read from off-camera; the second “Always”, splashed across the screen in red, somehow looks ominous.

      Here’s an example.Report

      • Avatar Kolohe in reply to trizzlor
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        says:

        Nah, they’ve changed their marketing strategy since then. The commercials over Christmas was of not-Mike Rowe (but trying to be) interviewing happy people in Walmart (but definitely not peopleofWalmart) on how awesome the deals they were getting on specific items like teevees and clothes.Report

        • Avatar Jaybird in reply to Kolohe
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          says:

          Just Folks. Good Deals.

          Don’t see it as crappy customer service. See it as unpretentious.Report

          • Avatar Dave in reply to Jaybird
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            says:

            Don’t see it as crappy customer service. See it as unpretentious.

            That’s not mold. It’s an organic supplement.Report

          • Avatar Mike Schilling in reply to Jaybird
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            says:

            Like the Dick van Dyke episode where they invest in the discount shoe store. Laura’s upset at how rude the salesman is, but eventually learns that unless the service is poor, customers don’t believe they’re getting a deal.

            Favorite joke:

            Laura: I like these, but they’re a litte tight.
            Salesman puts a broom handle into the shoe and stars tugging at it.
            Laura: Don’t you have a shoe-stretching machine?
            Salesman: At fancy-shmancy stores, they have a stretching machine. Inside it, there’s a broom.Report

  3. Avatar Will Truman
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    says:

    Well, I can’t say that I’m too sympathetic to Walmart here. It might be a PITA for Walmart shoppers (and I’ll admit that I am one, when I go to the “city”), but WM has never been a convenient place insofar as checkout lines go. They’re often understaffed and their staff is so often (through no fault of their own, I would wager) poorly prepared and trained. But… it’s open late, it’s ubiquitous, and I can get a wide variety of goods all under a single roof.Report

  4. Avatar North
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    says:

    Well I live in Minneapolis so of course I am rooting for Target. Reading the article it looks like Walmart is harvesting the whirlwind after pummeling their labor force for a long time. I feel not a jot of sympathy.Report

    • Avatar Just Me in reply to North
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      says:

      Walmart’s in the Twin Cities are the worst. No room for expansion, wanna be super centers.Report

    • Avatar Kolohe in reply to North
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      says:

      In the Target closest to me, though, I’m finding the same decline in cashier availability and overall store cleanliness and organization, over what I remember Back in the Day.Report

    • Avatar Dave in reply to North
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      says:

      Reading the article it looks like Walmart is harvesting the whirlwind after pummeling their labor force for a long time.

      Interesting. So you think there’s enough consumer sentiment against the company’s labor practices to have a negative impact on business? It’s an interesting point to explore. I’m skeptical if only because 1) they’ve been at it for so long and 2) for many of Wal-Mart’s customers, it may be the only place for them to go. I’m speculating a bit on (2) but those are my thoughts.Report

      • Avatar James Hanley in reply to Dave
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        says:

        I’d guess that–if anything–it’s not consumer backlash against Wal Mart’s labor practices, but consumer preferences changing to where they decide that competitors’ prices are close enough to Wal Mart’s that the decisive factor in where to shop becomes superior customer service elsewhere.Report

      • Avatar Kimmi in reply to Dave
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        says:

        2) is not in evidence, based on wallmarts own documentation.
        people go to the family dollar because it’s cheaper.Report

        • Avatar Dave in reply to Kimmi
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          says:

          If I recall, dollar stores are generally much smaller than the 200,000 plus square foot supercenters and don’t offer anywhere near the number of items.

          I’d love to review any documentation you’ve come across. Is this information in their public filings?Report

          • Avatar Kimmi in reply to Dave
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            says:

            *nods* maybe a few years ago. But they were definitely losing money near the end of months because people had run out of enough money to afford walmart stuff. (they’re probably not saying that the folks headed over to family dollar, as you don’t speculate on filings. but family dollar/dollar tree might have it).Report

          • Avatar zic in reply to Dave
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            says:

            Whole different business model.

            WalMart controls their supply chain.

            DollarStore deals in stuff the that couldn’t get sold, either to another retailer or that a retailer couldn’t sell to the public. Also a lot of stuff shipped overseas to see, and then reimported because it didn’t sell.Report

            • Avatar Kimmi in reply to zic
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              says:

              hmph.
              I like woot better, for stuff that couldn’t sell. (they just had some AWESOME shun kaji knives selling for a third of the retail price…)Report

            • Avatar Will Truman in reply to zic
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              says:

              This. Because of this, Dollar Store has inconsistent inventory, which makes it unsuitable as a Walmart replacement.Report

              • Avatar James Hanley in reply to Will Truman
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                says:

                But dollar stores are now setting up shop in very small towns, like my 1,300 resident home town. It takes my mom 20 minutes to get to WalMart or Meijer, 3 minutes to get to the Dollar Store, which she has to pass on the way to Wal Mart. So why not stop in and see if they have the scrubbie sponges she needs to clean her sink when she just realized she was out of them than go all the way into the big city?Report

              • Avatar Dave in reply to James Hanley
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                says:

                Dollar stores will do well in places like that given the right inventory. To me, there’s nothing worse than going to a big box store for a handful of items unless it’s really late and no one’s there.Report

      • Avatar North in reply to Dave
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        says:

        I’ll elaborate. I don’t think this is necessarily consumer sentiment exactly or at least not the way I think you’re reading me.

        With Walmart with have a place that has operationally been kidney punching employees for ages. Their corporate culture is to hire as few employees as possible, do that part time retail screw you dance on them and generally treat them like crap. Their managerial culture is to minimize labor costs first, worry about store conditions second. Their employees are stretched thin and have zero incentive to give two craps about the state of the store. This is all stuff that would require a lot of reconfiguring to change corporately.

        Meanwhile Walmart isn’t just competing against Mom&Pop stores any more. Target has been nailing down the higher end big box retail. Kmart and the dollar stores are direct competitors at price levels (though both are inferior in ubiquity and product availability). So Walmart is facing smarter competitors and their consumers have changed.

        The consumers still care about low prices but what good are low prices if the store is a wreck? How bad can it get before joe/jill consumer says “I don’t care is the sponges are five cents cheaper at Wal-Mart, I can sometimes get em at the dollar Store or I can pay 25 cents more and not feel like I’m gonna get typhoid from the shelves at Target. I’m outta here.

        Long story short sounds like Wal Mart is getting bit by their constrained labor capacity. They may need to revisit that and I have no sympathy that they are. They did it to themselves. It’ll be very interesting to see what will happen when unemployment drops and their employees have some actual options.Report

  5. Avatar Kazzy
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    says:

    Growing up in the shadow of Manhattan and then Boston, Wal-Marts were something I always heard about but never went to. One day, in college, a buddy and I decided to venture out to Quincy, Massachusetts to see one first hand and see what all the fuss was about… see what a “Supercenter” really was.

    It was… underwhelming. It felt like Target on steroids but worse. We were underwhelmed. “People go crazy for this?” we thought.

    Living where we live now, there is a complex of big box stores just around the corner… Target, Best Buy, Wal Mart, Home Depot, BJs. We regularly frequent the latter two, sometimes hit up Target, rarely go to BB, and only go to Wal Mart when we absolutely must. I just hate the shopping experience there. They have 30 cash registers but only two people are working them. I can never find anything I’m looking for. And, frankly, I don’t buy most of the things that target sells. Perhaps this is me being snobby, but I have no interest in their food products… I’d never buy meat or produce from them and what boxed or canned goods we buy we get from BJs next door. A lot of their other stuff is cheap… I don’t mean that disparagingly… it’s low cost and generally low quality. You get what you pay for. At this time in my life, we try to make a point of buying quality… spending a bit more to get something that will last… because we have the luxury of disposable income (for now). As such, Wal Mart has pretty much nothing to offer us.Report

    • Avatar Will Truman in reply to Kazzy
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      says:

      Back when I lived in Colosse, the only time I ever went to Walmart was when I wanted something at three in the morning. Otherwise, with so many options, why go there? I had a bit of a snobby attitude about the place, to be honest.

      Then I moved to Deseret, where it was the only place open after 10 or 11. That was critical for me because I worked an hour commute each way and my time was limited. Oh, and I was also poor, so the prices – while not crucial – were helpful. Once I got in the habit of shopping there, it became a more regular thing. Once you’re used to being able to pick up a belt while shoppig for groceries, it’s seductively convenient. And before long, you do start knowing where everything is. At just about any Walmart in the entire country (seems to break down into about three or four different configurations. Figure out which, you can find what you’re looking for).Report

  6. Avatar Jeff No-Last-Name
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    says:

    I guess it’s time for them to hire another set of undocumented workers…Report

  7. Avatar Stillwater
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    says:

    I had an interesting talk with my favorite Home Depot checker-outer the other day. She said that she had been “downsized” from full time to part time status. Apparently, HD is going aggressive on eliminating all their full time employees (benefits cost money!) and employing only part-timers. In her case that meant not only a benefits reduction, but an hours/wk reduction. From 35+ to under 28 max. She got hit by both ends of the stick.

    As a consequence, the local HD is a friggen mess. Maybe “more messy” is accurater. I’ve been a HD consumer for quite a while now, but this most recent layoff is making me realize that paying a little bit more (not a big deal) and going out of my way to shop local is prolly the right thing to do.Report

    • Avatar Dave in reply to Stillwater
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      says:

      As a consequence, the local HD is a friggen mess. Maybe “more messy” is accurater. I’ve been a HD consumer for quite a while now, but this most recent layoff is making me realize that paying a little bit more (not a big deal) and going out of my way to shop local is prolly the right thing to do.

      I shop locally. Anything I typically need from Home Depot I can get from my locally-owned family hardware store. The store has been in business for fifty-years and the big boxes won’t put a dent in it. Good for them.Report

      • Avatar Stillwater in reply to Dave
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        says:

        We’ve got a few of those around here, too. Old time hardware stores, lumber yards, paint places, etc, that have survived because they provide great customer service (which means treating employees well) and great products. I used to shop at them all the time, then convenience (damned convenience!) caused a shift in my shopping patterns. The big box stores are always located right on my way to somewhere else. I don’t even think their prices are any better, really. Now I have to wean myself of the convenience. It’s like shaking a bad habit.Report

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