Is Wal-Mart finally hitting a Brick Wall?

[tamias6]

According to...

This artcle

Wal-Mart is planning to scale back the number of new super centers to be built next year and the coming years due to market saturation, merchandise, missteps, and sagging sales performance at existing stores.

So are these the beginning signs that Wal-Mart has has gotten as big as it will ever get or is this just merely a bump on a road to even higher levels of power, glory, and, domination?

[suburban george3]

I think WalMart has reached critical mass in the United States. There are foreign markets that it can compete in, but they've not always been successful (they had a miserable failure in Germany.) In the US, all WalMart can do is try to scrape up additional sales by eating into existing stores market areas, and many communities are trying their best to keep the retailer out.

WalMart isn't the company Sam Walton founded, I'd say that they've reached their peak. If the working and lower middle class continues to be pressured by increasing energy prices, you'll see same store sales continue to fall (as they did in April.) WalMart's foray into upscale merchandise has also been a failure.

The largest retailers seem to have a 30 year shelf life at the top, WalMart's decline should begin within the next 5-10 yrs. IMO.

[snoogit]

I think WalMart has reached critical mass in the United States. There are foreign markets that it can compete in, but they've not always been successful (they had a miserable failure in Germany.) In the US, all WalMart can do is try to scrape up additional sales by eating into existing stores market areas, and many communities are trying their best to keep the retailer out.

WalMart isn't the company Sam Walton founded, I'd say that they've reached their peak. If the working and lower middle class continues to be pressured by increasing energy prices, you'll see same store sales continue to fall (as they did in April.) WalMart's foray into upscale merchandise has also been a failure.

The largest retailers seem to have a 30 year shelf life at the top, WalMart's decline should begin within the next 5-10 yrs. IMO.

[Snowguy716]

There aren't that many Wal-Marts in Minnesota, either. We have a lot more Target stores, mostly because Target is headquartered in Minneapolis.

But I agree. Wal-Mart has saturated itself in the market and the problems will start to mount up. Over time, since it built so many stores in such a short period of time, they will begin to fall apart at the same time and need to be fixed/rebuilt costing the company major money while new revenue won't be coming in to pad the profit margin.

Their stigma as being cheap has hurt them as well, and I believe people are turning away from Wal-mart despite higher energy costs.

The same exact thing happened to K-Mart, and the Wal-Mart execs should have known that. K-Mart had over 2000 stores by the 1980s and only has 1500 today with pitiful sales when compared to Wal-Mart.

I honestly think Target is taking the right approach by setting itself apart from the rest of the market through more upscale offerings and a more modest expansion program which will mean lower year-to-year repair/maintenance costs. Target's better reputation also means that it won't be subject to declines in sales due to certain stigmas that plague Wal-Mart.

[suburban george3]

5-10? its starting now.

Walmart really has only conquered 49 states... Only Michigan is really some-what free of Wal-Marts. (they really play second, even third fiddle to Kroger and Meijer)

Wal-Mart's last gasp is a massive expansion of super-centers into Michigan, which BTW has actually been failing.

[kayman]

There aren't that many Wal-Marts in Minnesota, either. We have a lot more Target stores, mostly because Target is headquartered in Minneapolis.

But I agree. Wal-Mart has saturated itself in the market and the problems will start to mount up. Over time, since it built so many stores in such a short period of time, they will begin to fall apart at the same time and need to be fixed/rebuilt costing the company major money while new revenue won't be coming in to pad the profit margin.

Their stigma as being cheap has hurt them as well, and I believe people are turning away from Wal-mart despite higher energy costs.

The same exact thing happened to K-Mart, and the Wal-Mart execs should have known that. K-Mart had over 2000 stores by the 1980s and only has 1500 today with pitiful sales when compared to Wal-Mart.

I honestly think Target is taking the right approach by setting itself apart from the rest of the market through more upscale offerings and a more modest expansion program which will mean lower year-to-year repair/maintenance costs. Target's better reputation also means that it won't be subject to declines in sales due to certain stigmas that plague Wal-Mart.

[snoogit]

True there are signs of it starting... however I believe they will mitigate that for a while. I predict that in the 5-10 yr time line is when you'll start to see large numbers of their US stores start to fail and maybe even the commencement of shuttering them.

What will all these communities do with 75,000-250,000 SF abandoned commercial monsters??

[tamias6]

Nothing in this world would satisfy me more than to step foot into a former Wal-Mart supercenter that was converted into a Meijer. But then your talking to a loyal Meijer fan when it comes to my personal shopping preferences.

True there are signs of it starting... however I believe they will mitigate that for a while. I predict that in the 5-10 yr time line is when you'll start to see large numbers of their US stores start to fail and maybe even the commencement of shuttering them.

What will all these communities do with 75,000-250,000 SF abandoned commercial monsters??

[wolverine]

Schools, and Municipality buildings?

seriously an abandoned Walmart would make a great indoor public pool, or sports facility.

maybe if the small community has an old school building thats too small for its current use, it might be a good iddea to convert a walmart into a highschool or in the case of some communities, into an all in one school district.

[snoogit]

They could be dismantled and have the concrete and steel recycled for the construction of new buildings.

[tamias6]

Many years back, a vacant K-Mart on the NW side of Grand Rapids, MI, was converted into a power strip mall. The building's front was pushed back by 20 or so feet to increase parking capacity. Then the building was widen out by about 100 feet. The resultant space was subdivided into tenant spaces each measuring from 5000 to about 30,000 sq. ft. Currently Linen n' Things/ Petco / Soccer Mom type of national chain stores inhabit the power strip mall.

If conditions are right perhaps some vacant Wal-Marts can be convert in this manner.

Perhaps, but then you're talking about a massive (and expensive) clean-up. If these 10,000 pop and smaller communities who've been decimated by a Walmart do see the Walmart's leave, then perhaps there are some reuses that wouldn't be as cost prohibitive. In some of the larger areas, you would probably see a new Box retailer come in, or in the case of some old Malls see them refitted as shopping centers and other venues.

In any case I'm sure there are communities that when Walmart leaves will be left with a large rebuilding project if they want the community to survive.

[wolverine]

I surprised I forgot to mention this, my cousin's wife's brother takes vacant big box stores and converts them to warehouse space or lease portions as storage space for individual people. I know he's used the vacant Builders Squares when that chain went out aswellas a few best buys when they were moving to larger spaces. Most of the tenants are temporary, but they make good money off of it. When the warehouse is no longer viable, they tear it down, which does the community a huge favor since the vacant land is more valuable. Really saving these places isn't practical as some people might think, unless they exist in a market where new big box stores are high in demand.

[Lowerdeck]

Around my area, there was a K-Mart that closed about 12 years ago. It was the anchor for a old shopping plaza that was dying out. About two years ago they started to redo the plaza, and they got Price Chopper supermarket to move in to be a replacement anchor.

It all really depends on what and when some new chain decides to expand territory. Price Chopper has been fairly dominant in central Mass. and upstate New York, now heading south(east)ward into Conn.

[Captain Worley]

I've always thought that abandoned big-box store would make great indoor amusement parks. Put in Laser Tag, electric go cars, Putt-Putt golf, batting cages, and a small roller-coaster.

[tamias6]

A former 200,000 sq. ft. Wally World converted into a gigantic Lazer Tag battle field would be something I would have to check out.

I've always thought that abandoned big-box store would make great indoor amusement parks. Put in Laser Tag, electric go cars, Putt-Putt golf, batting cages, and a small roller-coaster.

[Neo]

True there are signs of it starting... however I believe they will mitigate that for a while. I predict that in the 5-10 yr time line is when you'll start to see large numbers of their US stores start to fail and maybe even the commencement of shuttering them.

What will all these communities do with 75,000-250,000 SF abandoned commercial monsters??

Perhaps there can be some renovation done so that public school systems can use the building? I know that locally in Charlotte there is a huge need for classroom space and you could no doubt gain a huge amount of it from one of these mammoth stores.

[dxartist]

I remember there was a huge Sam's Club on Nations Ford Road about 7 years ago in Charlotte. The club was relocated somewhere else (don't remember where), but the building was subsequently converted for city government use or something like that.

[neon9]

Schools, and Municipality buildings?

seriously an abandoned Walmart would make a great indoor public pool, or sports facility.

maybe if the small community has an old school building thats too small for its current use, it might be a good iddea to convert a walmart into a highschool or in the case of some communities, into an all in one school district.

[cocothief]

This is only a bump in the road for Wal-Mart.

I think their growth will slow a bit, but its not anywhere near ending. Talking about there being massive numbers of abandoned Wal-Mart Supercenters around in a few years is crazy talk.

Almost all of the empty Wal-Mart buildings around are there because the store relocated and expanded somewhere nearby.

K-Marts, well we all know how they fared.

Wal-Mart has made some poor decisions recently, but to say they are a company in decline is just wishful thinking.

[suburban george3]

Isn't the roof on these flat roof big-box stores one of the first things to go?

[cowbreath]

Wal-mart's atmosphere is crazy and will never forget the shareholders when it comes to expansion and increasing its bottom line. I think about 10 years ago Wal-mart began looking more inward as it was an established chain with great power and presense already. It competes with Target heavily with the crowd that usually shops at Walmart and is losing middle class power to them while retaining lower class buying power. Probably will continue to see some confusion internally on figuring out who they want to be now. For some time they were the crusaders of a free market cheaper economy, serving the lesser-served class of consumers and providing flexible, change-oriented work ethics within their home office towards how they expand and diversify and place their products.

They have much room to grow in foreign markets and still in the US they have many possibilities of growth especially in the same way that real estate prices always go up. They have a very strong customer base looking for one-stop shopping still. I think as long as price is a deciding factor over quality (for some non-standard product areas) it will continue its presense.

Unfortunately for them, they have become so big they have to be world-conscience and become an ethical example. They probably have close to 1.5 million employees worldwide now if not more. If they start viewing the quality of products as to what improves the quality of lives then things will change. Prices may be affected a lot as our gas prices increase (and energy prices will increase as well with more people to provide for) and if legalization of illegal immigrants turns into shipping them out. Also their target audience will become increasingly difficult to reach as more competitors arise using the same model. One thing is for sure, if one company is bound not to become top-heavy and slow it is Wal-mart and they will keep fighting as long as Rob Walton is around.

[monsoon]

Walmart got to where it is today because it spent great deals of money in the 80s & 90s to develop an information system that lets it keep inventory costs to an absolute minimum, accurately predict demand for certain items down to the store level, and restock stores at a moment's notice. Because of this they were able to knock off the two long term leaders in this market, Sears and Kmart and while Target has made some in-roads in the higher end of this market, I don't think they will ever make much dent in Walmart's bread and butter business.

[suburban george3]

Had Wal-Mart built stores like the one they've opened up from me from the beginning, I may have actually shopped there more on occasion. I had the misfortune of going to that store last night and was surprised. It had a much more "airy" and "open" feel. Displays weren't strewn everywhere, shelving was upgraded, display fixtures were of a higher grade. The flooring was stained concrete and wood-look. Signage was upscale and the paint was a beige, neutral color. Lighting was also not as intense as older stores. It was a much more pleasant experience.

However, I would still pass it by to go to Target.

[tamias6]

Wal-Mart, like any fast growing empire, is locked in a vicious cycle. It aggressively grows to enhance its wealth and power. But the bigger it gets, the more costly it becomes to maintain itself. Therefore it needs to grow even more which only increases the cost to stay afloat. Eventually this vicious cycle can only lead to destruction as there is a point that growth can no longer be sustained. The Roman Empire reached this point when its military and infrastructure were finally stretched beyond their limits as the empire's boundaries became too big to maintain. Soon after that the empire began its decline. In Wal-Mart's case it's efforts to built more stores is meeting ever increasing resistance from local communities. Also there is the fact that it will eventually run out of new markets to tap into which I think is beginning to happen. Also the shear size of the company makes it very slow to react to an ever changing world as evident by its failed attempt to appeal to more affluent consumers. Without growth and bogged down by its own red tape, it will not be able to properly fund and effectively administrate its own massive girth. There is only one direction from that point. Down.

This is only a bump in the road for Wal-Mart.

I think their growth will slow a bit, but its not anywhere near ending. Talking about there being massive numbers of abandoned Wal-Mart Supercenters around in a few years is crazy talk.

Almost all of the empty Wal-Mart buildings around are there because the store relocated and expanded somewhere nearby.

K-Marts, well we all know how they fared.

Wal-Mart has made some poor decisions recently, but to say they are a company in decline is just wishful thinking.

[wolverine]

The mini amusement park/lasertag concept sounds like a great idea. Alot of nice open space for that stuff.