Motley Fool: Walmart Is Falling Apart Before Our Eyes

[one...two...tree 2,762]

For most of the past five decades, Wal-Mart (NYSE: WMT ) has been the retailer competitors feared most and as a result it made for a phenomenal investment for its shareholders. But Wal-Mart has begun to lose its cache with consumers and major holes are starting to form in its business.

Interestingly, Wal-Mart has hidden its financial problems from the headlines because challenges are different around the world, masking themselves in the overall picture. But when you dig between the headlines you can see a company in serious trouble and could be the latest in a long line of leading retailers to go from boom to bust in the blink of an eye.

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.

Below, I've built a table that shows year-over-year changes in same-store sales at U.S. Wal-Mart and Sam's Club stores compared to the growth in consumer spending on goods.

The problem for Wal-Mart goes far further than just cyclical swings in retail or a weak economy. Wal-Mart has long been able to lure customers with one-stop shopping and low prices, but consumer trends are now working against that core strategy. For cost conscious shoppers, lower prices can often be found online and more affluent consumers are choosing style and quality products over one-stop shopping. This can be seen clearly by the growth in online retailers like Amazon.com as well as specialty retailers like Williams-Sonoma , Lululemon, and Michael Kors, among others.

Foreign failures don't help the problem
Here's where Wal-Mart's story gets really interesting. Sales in the U.S. are beginning to struggle, but overseas the company's profitability is in downright freefall.

http://www.fool.com/investing/general/2014/05/17/walmart-is-falling-apart-before-our-eyes.aspx

[Mark88 183]

Not to forget their massive failure in Germany, where they had to completely pull out from the market.

http://www.huffingtonpost.com/david-macaray/why-did-walmart-leave-ger_b_940542.html

[Karee 4,190]

Good riddance. I hope they take McDonalds with them to Bankruptcy court.

[spacebot 0]

That's a lot of jobs. (Even though the pay is peanuts.)

[The Nature Boy 4,224]

Don't think Walmart is falling apart by any means, but I will take a slow down

I hate shopping there

[Peikko 1,575]

Walmart caters to the throw away sector. It's sells things that are cheap because they are the lowest caliber available. The problem is that it takes the same amount of energy to make shoddy, flimsy products as it takes to make a product that will last a lifetime but consumers have been taught to value the new and shiny not the long term well built item. You do get what you pay for. Take a look at furniture these days, none of it is made to last. The skilled cabinet makers would be ashamed of what we produce now. No one is going to be able to find a Chippendale in their attic in a 100 years time.

[spookyturtle 9,465]

I've found that many of Walmarts prices have risen, and in some cases are even higher than other retailers. You have to be a knowledgeable shopper and know your products and prices. Walmart has the best prices on razor blades and some over the counter medication. Some of their food items are more expensive than they are at the local supermarket chains. Others are much cheaper. Know what you're buying and you can save money. That is if you can get through the store without having a meltdown weaving your way through endless crowds of overweight, mindless idiots walking around in a daze and blocking three aisles while they stare off into space.

[Karee 4,190]

All I care about is their prices on Sudafed, batteries, and boxes of matches.

[mota bhai 2,675]

This is strange, but I've been meaning to order a product online for a while and was intending to do it this evening. Walmart was one of 5 vendors that sold it online (the others were Target.com, Amazon.com, Babysrus.com and Overstock.com). I read this thread and decided to buy it from Walmart.com. Who said VJ threads have no impact?

[Peikko 1,575]

This is strange, but I've been meaning to order a product online for a while and was intending to do it this evening. Walmart was one of 5 vendors that sold it online (the others were Target.com, Amazon.com, Babysrus.com and Overstock.com). I read this thread and decided to buy it from Walmart.com. Who said VJ threads have no impact?

Buying online is cheating yourself out of the pleasurable experience of visiting one of their friendly stores. Shame on you!

[mota bhai 2,675]

Buying online is cheating yourself out of the pleasurable experience of visiting one of their friendly stores. Shame on you!

I did elect to pick up in store so I get to stand in one of those delightful lines.

[Boiler 45,464]

and pay sales tax.

[Peikko 1,575]

You do know that any eligible sale in the US is liable to sales tax don't you? That it's not always applied at the point of the sale does not magically mean that there is no liability. You may get away with it most of the time but it's actually owed, like it or not.

I did elect to pick up in store so I get to stand in one of those delightful lines.

Good man!

Edited May 19, 2014 by The Truth™

[mota bhai 2,675]

and pay sales tax.

All the major e-tailers started charging NJ residents sales tax a few years ago

[Boiler 45,464]

Never been to Delaware?

Walmart in CO collect c 8%, delivered to where I live 3.9%.

YMMV