Wal-Mart's Supercenters Are Becoming A Major Problem

[DEAD7]

REUTERS/Jessica Rinaldi
A customer pushes her shopping cart past a display at a Wal-Mart Supercenter in Rogers, Arkansas June 5, 2008.
Wal-Mart's supercenters are struggling as consumers increasingly choose convenience stores over one-stop shops.
The retail giant's mega stores suffered a .3% same-store sales decline in the second quarter compared with last year. During the same period, foot traffic for Wal-Mart's U.S. stores fell by 1.1%.
By comparison, Wal-Mart's smaller-format stores, or Neighborhood Markets, generated same-store sales growth of 5.6% and traffic increased by 4.1%.
"I think convenience is where the consumers have been looking, [especially] if you look at the Baby Boomers," Wal-Mart CFO Charles Holley said on a call with reporters Thursday.
The Neighborhood Markets are about one-fifth the size of Wal-Mart's supercenters, and they are located in urban centers — where incomes tend to be higher — while supercenters are typically located on city outskirts.
The Markets are devoted to three of Wal-Mart's strongest categories: Groceries, pharmacy, and fuel.
Groceries account for 56% of Wal-Mart's sales, and research shows that consumers no longer buy food and beverages at one-stop shops.
"In the 1990s and the beginning years of this century, the greatest threat to supermarkets and grocery stores came from supersized 'one-stop shopping' venues like supercenters and warehouse clubs," the market research firm Packaged Facts wrote in its most recent annual report on emerging grocery trends. "Today the threat is spread out among all retail channels, including drugstores, dollar stores, limited assortment chains, and — the elephant in the room — e-commerce."
On average, consumers shop at five different types of stores to fulfill their grocery needs, according to Deloitte's 2013 American Pantry report.
Consumers are carrying this shopping behavior over to other product categories, as well.
Instead of relying on a single retailer to give them the best value and assortment, "consumers appear more focused on some combination of value and convenience," Goldman Sachs analysts wrote in a recent research note predicting the slow decline of big-box retailers like Wal-Mart and Target.
The rise of online retailers like Amazon has made it possible for consumers to shop and compare prices in a few clicks. Now that an increasing number of retailers are offering free and fast shipping, there are even fewer reasons to step foot inside a physical store.
In response to these trends, Wal-Mart is rapidly expanding its Neighborhood Market locations. But its fleet of 400 is still too small to offset the lackluster sales at its 3,300 supercenters.
That doesn't mean Wal-Mart is going to start shutting down its supercenters, however.
"Supercenters still have one of the highest returns of any [store] format in the company," Holley said. "It would be silly to close a lot of stores with good returns."

 

[Ohene]

baby boomers? i would think that its the millenials that aint fukkin with walmart. Only time i go in walmart is to kill time during my work break and check if there are any hoes in there.

the store is too large, the lines are too long / unattended by cashiers / and the food section is too...dingy

 

[Field Marshall Bradley]

It's a dying business model and won't be sustainable over the long haul. People love convenience or being pampered to when shopping. Everything has to either be quick, or some type of experience.

Dollar Stores offer a lot of the same dry goods and toiletries that Wal Mart does at more convenient locations. People are also becoming more health conscious and are opting to buy their meat from higher end grocers. Once you factor in Amazon for electronic purchases, etc...its gonna be a wrap for super centers.......

 

[Field Marshall Bradley]

Only time i go in walmart is to kill time during my work break and check if there are any hoes in there.

This...If I got time to blow(rarely), I'll go in a Wal Mart just to holler at some chicks

 

[Ohene]

then again., I'm somebody who buys everything online if possible from ordering pizza to buying clothes and electronics. I actually just had an interview with WMT's E-Commerce division to be a financial analyst. Didnt get it but dude said the idea is for WMT to be #1; that's their end game to trump Amazon and all them. Meh.

What will that mean for all their leases, real estate and workforce I wonder . If its one thing that Amazon has shown its that the margins in retail e-commerce can be pretty bad if the scale is too large.

 

[Field Marshall Bradley]

then again., I'm somebody who buys everything online if possible from ordering pizza to buying clothes and electronics. I actually just had an interview with WMT's E-Commerce division to be a financial analyst. Didnt get it but dude said the idea is for WMT to be #1; that's their end game to trump Amazon and all them. Meh.

What will that mean for all their leases, real estate and workforce I wonder . If its one thing that Amazon has shown its that the margins in retail e-commerce can be pretty bad if the scale is too large.

All of the supercenters I've seen around my way were built from the ground up. Do they typically own the land that the buildings are built own? I would think they wouldn't mind cutting their workforce in half if they could get their e commerce side up and going. They're a strong enough player to get a piece of the online pie. The competition between them and Amazon could be a great benefit to the consumer as far as fair pricing is concerned.

 

[Ohene]

All of the supercenters I've seen around my way were built from the ground up. Do they typically own the land that the buildings are built own? I would think they wouldn't mind cutting their workforce in half if they could get their e commerce side up and going. They're a strong enough player to get a piece of the online pie. The competition between them and Amazon could be a great benefit to the consumer as far as fair pricing is concerned.

I would imagine that they typically own Land/Buildings too (balance sheet confirms it)...maybe only lease in marquee malls or something ($2B in capital lease obligations). Both Amazon and Walmart offer a value proposition of low cost and that battle could be something serious. Amazon's margins are already tight so adding Walmart to the mix would fukk shyt up. That drone technology to me is what would set them apart though. Walmart as it stands would probably partner with a UPS/Fedex type of company and I've learned from working for another big box retailer that delivery costs especially for appliances and large items can be serious if you dont charge much. On top of that Walmart would need more storage space. Amazon it looks like would offer quicker delivery at a fraction of the cost though. This would also limit customer service and administrative costs. I'd have to see
a breakdown of Walmarts revenue to opine if its worth it for them but what do i know
Hmmm....

 

[Brown_Pride]

bottom line is the lines are too long. 20 registers, 4 cashiers, 30 minute wait. FUk that.

 

[Black Hans]

yeah, Amazon got me like to most retail stores.

 

[Truth200]

 

[WeSeeIt]

Fantastic, albeit upsetting, documentary. Watched it a few years ago. Wal-Mart is a pariah on society. And they know exactly what they're doing.

 

[El negrito de tejas]

fukk a walmart I only shop at HEB in Texas

 

[newworldafro]

bottom line is the lines are too long. 20 registers, 4 cashiers, 30 minute wait. FUk that.

I use to think that ..... then I discovered

....... In and out ....

 

[TLR Is Mental Poison]

Walmart is

If I need food I will go to a supermarket where it is fresher

Electronics... Amazon Prime

Clothes

Cant think of anything else

They missed the e-commerce wave... their website sucks Now they are slaves to all that real estate... theres nothing u can use a Walmart Supercenter for... except maybe an Amazon distribution warehouse

 

[88m3]

It's bad for small businesses but more than that it's a place I leave with the feel that eugenics wouldn't be so bad.