Walmart recently announced that they do not expect a significant increase in sales for the rest of the fiscal year. In October, they announced an expected 3-4% growth in sales for every year for the next three years. Walmart's CFO Brett Biggs stated that this could be caused by the number of store closures and the impact of a stronger US dollar. Over 250+ Walmart stores closed in January which resulted in thousands of employees being laid off. Walmart's issues do not have a good effect on their competitors either because of the quickly changing retail market. Similarly, Macy's announced they will be closing around 60 stores in early 2016. The retail business has shifted from in-store shopping to more online business from companies such as Amazon. This past week, Walmart announced a 12% increase in online sales over the past year. As a result, they are trying to obtain a larger share of the online retail market and will put much effort into increasing online sales further. This increase of attention to online shopping may result to more store closures in the future.
http://www.businessinsider.com/walmarts-struggles-signal-retail-shift-2016-2
This is scary for Walmart, but more scary for its competitors and other retail stores alike. Nowadays, everything is becoming more digitalized, which substantially decreases in-store sales and possibly affects many jobs due to that reality. It is becoming more and more convenient for shoppers to just order their products instead of spending their time physically shopping. The retail store is slowly diminishing in value and mind to the consumer, which is bad news for all retail stores.
ReplyDeleteagreed. It is concerning that a significant number of jobs will be lost to the more convenient online store. I do believe that the market will be able to adapt though. Working at warehouses or delivery could be a replacement job for the lost jobs from closed retail stores. If retail stores weren't losing so much business to their online companions, i don't think this situation would be concerning. Having to close a few stores based on the rise in value of the US dollar or lowered demand for goods is simply how the market works.
ReplyDeleteIt's been mentioned on this blog before that Walmart is struggling as more and more people turn to exclusively buy online rather than physically visiting the retail locations. This creates a new problem for large retailers such as Walmart and forces them to adapt to new economic conditions and trends. This is not isolated to Walmart, as it is indicative of a major shift in consumer spending.
ReplyDeleteIt will be interesting to see how retail makes the shift to online sales, i.e. how they will gain the competitive advantage over the internet rather than in stores. These businesses might not be doomed if they find a way to transition to where the consumers are.
ReplyDeleteIs it possible that these declines are related to Walmart's recent introduction of higher wages? Walmart invested $2.7 billion into employee salary and wages and Chief Executive Officer Doug McMillon seems to think this is the problem.
ReplyDeleteWalmart's online sales also equate for about 3.2% (2015) of their total sales, which is the lowest among most major retailers. Walmart will have to play catch up if they hope to catch up to other online retailers such as Amazon.
I think if any company will be able to make the transition from retail stores to online shopping it's Walmart. While amazon has a big presence on the online market, Walmart bases its ability to succeed by providing customers with "Everyday low prices". Walmart is able to minimize its operating costs better than many firms so making this transition I believe will be fairly easy for them compared to other firms.
ReplyDeleteI think if any company will be able to make the transition from retail stores to online shopping it's Walmart. While amazon has a big presence on the online market, Walmart bases its ability to succeed by providing customers with "Everyday low prices". Walmart is able to minimize its operating costs better than many firms so making this transition I believe will be fairly easy for them compared to other firms.
ReplyDeleteI agree with Michael 100%. Walmart should certainly be able to utilize their predatory pricing strategies in order to be successful in the online marketplace. Although, a lot of people think of Amazon as the premium online retailer. It will be interesting to see how Walmart will compete in the online marketplace.
ReplyDeleteOnline stores obviously could save a large portion of stores. Walmart does not need a place as large as before also, they could cut employees to save the costs. I believe that it is the tendency that more and more retail stores would transit to online stores since the online shopping is easier, more convenience and more costless. If the cost reduce, I believe that Walmart could offer more discount for the online customers.
ReplyDeleteLooking at the situation with Walmart and comparing it to Amazon it is questionable if they will be able to compete with amazon. Amazon has very good prices and is very convenient. Amazon only being online they have learned how to manage their costs. Walmart will not have that ability yet as they don't focus only on online. Walmart will need yo do a lot of cost cutting in order to compete in the online industry.
ReplyDeleteA major thing that is keeping retail stores alive is the instant gratification of having a good, where as when you order something online you have to wait. However the advances in the shipping process have made it possible for people to get a good they ordered online in the same day in some cities. It is almost impossible to compare Walmart and Amazon but I think that Walmart will be able to adapt very easily as compared to some other retailers that have to make the shift to online retail.
ReplyDeleteOnline shopping is taking over. People prefer convince. Walmart's retail sales will suffer a bit, but I predict that their online sales will increase significantly.
ReplyDeleteIt's crazy to think that retail is such a large part of the job industry and online shopping is now contributing to tons of employees being laid off.
ReplyDeleteIt's crazy to think that retail is such a large part of the job industry and online shopping is now contributing to tons of employees being laid off.
ReplyDelete