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WalMart on downhill spiral to crash

Motley Fool: U.S. shoppers are abandoning Wal-Mart

The most alarming statistic at home in the U.S. comes from falling same-store sales. This measures how sales are growing location by location and any healthy retailer is looking to grow same-store sales at or faster than consumer spending grows because that shows increased market share locally. Overall sales can be increased by increasing store count, but if same-store sales are falling then the return on each store will drop, something well see in a minute.

Is Wal-Mart in serious trouble?
Wal-Mart's traditional supercenter business model is clearly showing major signs of weakness both in the U.S. and overseas. If the retail giant can't adapt to new competition like online, specialty, and local retailers there's a real chance the company is in danger of heading down a downward spiral we've seen so many retailers go down before.

Wal-Mart's high returns are falling like a rock
The most startling evidence of Wal-Mart's decline comes from Wal-Mart itself. Each year, the company provides a return on investment calculation for investors, which measures the profit Wal-Mart makes from the money it invests in stores, inventory, and other infrastructure.

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Since Walmart is a big outsourcer I don't have a lot of sympathy

It appears their outsourcing to China business model may be affecting the income of their customer base to such a degree that it is defeating their purpose.

You Wanna See a Death Spiral?

Why not raise the minimum wage? Then more people can collect unemployment at a higher rate.

What do you think? http://consequeries.com/

White Front

White Front
Montgomery Ward
Circuit City

Retailers who rely on low prices and high volume, always fail in a recession. The margins just can't handle a drop in volume. It must be a living nightmare for the executives. They get squeezed.

Exceptions might be somewhere like Denney's, if they've paid off the mortgage, because other eateries who have to pay rent, will fail faster.

What do you think? http://consequeries.com/

Another competitor

Costco. They don't have the same selection as some places, but in general it's decent quality. Walmart can't compete with their prices and service.

Amazon is great for specialty items that you want reviews for, but they won't ever be able to replace your weekly shopping trip. It'd cost them too much to sort and ship it to you.

All the hate towards Walmart...

Not aimed at the OP or anyone specific.

But many here are advocates of "the free market." And Walmart is a result of the market deciding what is the preferred method of the shoppers; not some robber-barron scenario.

Free market you say...

When a large % of a company's revenues are derived from customers spending gov't transfer payments (EBT, etc.) are these revenues really private? Is It really outcompeting other businesses or is it being perpetually bailed out? If these same factors and myriad other gov't interventions are evident throughout a majority of the economy, is the economy still the "free market?"

When people voluntarily choose to shop at Walmart...

When people voluntarily choose to shop at Walmart, that is "the market determining the chosen model."

If people had to be forced or coerced to shop there, that would be different. We are all free to choose where we shop.

Isn't it ironic...

The so-called "robber barons" of the 19th century actually competed in something very close to a "free market" while WMT today is heavily subsidized as described above, even if indirectly, by the gov't. The company even instructs its employees to sign up for bennies so as to keep wages down. WMT would be a shadow of itself without those (and other, I'm sure) indirect subsidies. Ain't fascism grand!

Walmart is expanding.

The corporation is getting set to enter another segment of retail in a big way. Small "WalMart Express" stores are going to open in the thousands over the next couple of years. Rather than super stores, these will be small "Dollar" type stores. I don't think you need to worry about WalMart dying any time soon.

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson

egapele's picture

I have been in one of those

built directly across the street from a Mom & Pop grocery store. Believe it or not, the Walmart Express was failing & the Mom & Pop store had a full parking lot. Well over half the meat at the Walmart Express had reduced stickers on it, the vegetables didn't look fresh and most of the customers were outside at the gas pump and didn't even come in the store.

thanks funny

since that is what they used to be more like when Sam Walton ran the show and made the company big.

back to the roots

Walmart is slowly going to

Walmart is slowly going to lose out unless they change their strategy.

Their prices aren't that good, the shopping experience is terrible, and they don't offer a good selection.

I can find what I'm looking for on Amazon, read reviews, pay nothing for shipping, and I don't have to burn gas or wear out my vehicle to do it. I've bought spices, batteries, pants, even peanut butter on Amazon: everything you'd think I'd need to leave the house for.

Walmart is done if they don't innovate, and they're still running like the Internet doesn't exist. For 1991, Walmart is a killer business model. For today, they're a dinosaur with high overhead.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.


Also author of Stick it to the Man!


I have total respect for Walmart.

To me they simbolize the superior businessman winning in a market. They have created a business model that works. I do not believe they are out winning government favors (please correct me if I am wrong with some good evidence). Simply put, they are better than the rest; and I like that.

As for their financial reports, we can all agree that financial reports are a bunch of crap. Because government regulation through coporate and personal income taxes complicates things so much, companies will adapt their financial reports to either simplify their taxes or find ways to pay less of it. Thus the reports that come out don't mean much. Any normal company will have two sets of books, real and legal. Just because the government says that your factory has depreciated and is worth nothing doesn't mean that it is actually worth nothing.

They get a huge chunk of revenues from EBT, etc.

Without it, they and the entire economy would be gone overnight. As it stands now, taxpayers should get WMT dividends.

You are talking about their past

Today it is all about money. When I worked at a Wal-Mart distrobution center I heard so many stories from truckers about Mr. Sam Walton. He was a man to admire. One trucker told me that Mr. Walton, at 70+ years, kicked him off his own truck and unloaded it himself because the trucker was moving too slowly. Many stories about Mr. Walton getting his hands dirty and doing what was right.

I worked there till after Mr. Walton died and I can tell you there was an immediate change in the place. We'd get bonuses, up to 75 cents per hour worked in a quarter, for meeting and exceeding production goals. Constant cookouts (all you could eat, choice cut, and charcoal grilled steaks; damn Ray could grill a steak) and all sorts of perks keeping the place happy and busy; nobody slacked. A few weeks after we got a new boss, were informed we didn't deserve any of the bonuses we'd ever gotten (in a warehouse wide speech), and basically saw little if any bonuses thereafter. I was there for a few more months before I moved to go to college and the place was just sad. Production quotas skyrocketed as did write ups for failure to hit production goals. Yea, not gonna be sad if that sorry ass company goes under.

Gov't will bail them out

if need be. They could start giving food stamps preferred status at Walmart, or any number of things to boost earnings. Also noticed Walmart is over here in China, so they somehow magically have access to markets that only the big boys can get into. Don't think they'll be going down any time soon.

At least not near a the

At least not near a the stores around me. Everytime I go in the two walmarts near me they are packed. In fact the one I go to most has only had the number of people that visit increase over the last couple years.

To climb the mountain, you must believe you can.

The same here, Wal Marts are packed.

Maybe this is an article about K Mart and Sears.

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They lost what little business

I still did with them when I bought a six pack they tried to get my wife's Id who had nothing to do with the transaction. If they want to push the bogeyman police state garbage they can keep their products. I sent them an email to this affect and they did not respond so I guess they think are doing fine.

if wal mark goes

So does the country. In this day and age Cheap was so in. Till that got expensive. Next big thing.
Welcome to barter town. Can I hear one one one red cent. sold.

this may

not be good info..I am well familiar with walmart and its numbers ..as of today the lead assertion is to be questioned..

All Walmart has to do to save itself - start accepting BitCoins!


Leges sine moribus vanae

Unless I don't know how to

Unless I don't know how to read a balance sheet, that article is wrong. Walmart has been at 3.5% operating margin for years and hasn't really changed. Can someone confirm?

And from what I understand, 3% operating margin is barely sustainable and you gotta be pretty big and have your model down pat. Any little blip in consumer behavior and the business starts failing. 7% would be friggin terrific for a company like Walmart.