Walmart observations

arizonaguy
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Re: Walmart observations

Post by arizonaguy » March 24th, 2019, 6:15 pm

Alpha8472 wrote:
March 24th, 2019, 5:01 am
Walmart is closing 9 stores including 1 Supercenter and 7 Neighborhood Markets. The Supercenter is in Lafayette, Louisiana.

I would suspect that the Louisiana store is closing due to shoplifting. I have friends who work for Walmart and the propaganda that Walmart tells them makes it seem like the situation is dire. All employees must combat shoplifting or else your store is next to close. This has led to fear and panic for the sake of keeping their jobs. If losses from shoplifting are too high your store will close, even if the store is packed with customers day and night.

Walmart is planning to open less than 10 new stores in the next year. This insane obsession about closing stores even if busy is illogical.

Walmart has a metric. If the store has too much loss due to shoplifting, the store will close. They don't care if it is a high volume store or if the store is the only discount store for 100 miles around.

The company needs to combat shoplifting of course, but closing down a store with no competition is stupid. Just because a store is less profitable than the company prefers makes no sense. The business will lose money from the loss of potential sales and customers will be very upset. For example, even years later Oakland, California residents still talk about their Walmart closing. That was the closest store to San Francisco. There is no Walmart in San Francisco. People have to drive 40 minutes away to find another Walmart. This is insane.

Walmart needs to stop focusing on closing down stores and start opening new stores in profitable middle class areas. There are plenty of cities that do not have any large discount stores.
I actually don't think Walmart has really gone off the rails. In the current retail environment closing less than 20 - 30 stores a year (with their massive store fleet) is perfectly normal and acceptable. I also think that only opening up 10 new stores this year is also acceptable as they're probably prudent to wait for the dust to settle in the Sears/Kmart, JCPenney, Shopko, etc. "retail apocalypse". In addition, they have been using a much larger percentage of their capital budget in recent years
towards their online / digital business, which can probably pay dividends for them later on.

I'm not convinced that the Neighborhood Market concept was ever really a winner for Walmart (and in many cases it makes little to no sense). In many cases the Neighborhood Markets simply divert traffic that was intended for a Walmart supercenter anyways (and Walmart loses out on the general merchandise impulse shopping of those customers). The 2 Arizona stores that are slated to close are both within 2 to 3 miles of Walmart supercenters and are located in former supermarkets that had been vacant for years prior to Walmart moving in (the Marana location is 2 to 3 miles from two different supercenters and is across the street from a Target and a Fry's, the Chandler location is a former Bashas' that is a stones throw from the Bashas' distribution center and is in an area otherwise devoid of any retail). Walmart would've been better off creating a "flexible format" store like the smaller Targets which have a curated selection of their entire merchandise assortment as opposed to opening up small, unimpressive supermarkets which don't even have the same selection or service departments of their supercenter stores.

I do find 2 actions of Walmart to be quite curious though (although it has nothing to do with the closures):

1.) Free grocery pickup.
2.) Returns at the doors of the store.

The way that the grocery pickup is being pushed it appears that it has the potential to divert customers from the store (thus incurring the expense of the "personal shopper" while at the same time removing potential impulse purchases). Walmart built its success on having a "full" supermarket that drew shoppers to their general merchandise. Grocery pickup seems to be the new Neighborhood Market in the sense that it creates a disconnect between grocery shoppers and Walmart's general merchandise departments. It seems that if it is only attracting Walmart's current core customers it's a money losing proposition. The only way I figure that Walmart's plan for free grocery pickup is supposed to work is that Walmart is hoping to target a higher demographic of shopper who would shop elsewhere (and thus isn't going to purchase anything from the GM side of the house at Walmart anyway). I'm just not sure that these customers are being drawn to Walmart over competing services at conventional supermarkets or Amazon Prime Now.

Returns at the door of the store also seems like a befuddling plan to me. Customers making returns may never end up making it into the stores, eliminating potential purchases of "impulse" buys.

If/when Walmart receives some return on investment from its recent digital investments, I think we could see store construction resume. It won't ever be more than 20-30 supercenters a year (and may be coupled with 20-30 supercenter closures a year) and the newer stores will probably not be much over 130,000 square feet but it is likely to happen at some point. Walmart really doesn't need any more stores. It may simply need different locations (and possibly to prune most of its Neighborhood Markets).

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Re: Walmart observations

Post by wnetmacman » March 24th, 2019, 6:38 pm

Alpha8472 wrote:
March 24th, 2019, 5:01 am
Walmart is closing 9 stores including 1 Supercenter and 7 Neighborhood Markets. The Supercenter is in Lafayette, Louisiana.

I would suspect that the Louisiana store is closing due to shoplifting. I have friends who work for Walmart and the propaganda that Walmart tells them makes it seem like the situation is dire. All employees must combat shoplifting or else your store is next to close. This has led to fear and panic for the sake of keeping their jobs. If losses from shoplifting are too high your store will close, even if the store is packed with customers day and night.

Walmart is planning to open less than 10 new stores in the next year. This insane obsession about closing stores even if busy is illogical.

Walmart has a metric. If the store has too much loss due to shoplifting, the store will close. They don't care if it is a high volume store or if the store is the only discount store for 100 miles around.

The company needs to combat shoplifting of course, but closing down a store with no competition is stupid. Just because a store is less profitable than the company prefers makes no sense. The business will lose money from the loss of potential sales and customers will be very upset. For example, even years later Oakland, California residents still talk about their Walmart closing. That was the closest store to San Francisco. There is no Walmart in San Francisco. People have to drive 40 minutes away to find another Walmart. This is insane.
The Lafayette store that is closing is store #534. Its original location was a Woolco that opened in 1983. The current location opened in the mid 90's, and was upgraded to a massive Supercenter in 2000.

I moved to Lafayette in 2000. This store sits along the Evangeline Thruway. This section is Lafayette's poorest. It divides the community. In the early 60's, a mall, Northgate Mall, was built in this area with Montgomery Ward and JC Penney. The mall was successful for a good while, until Lafayette started shifting south and the oilfield began failing in the 80's. Acadiana Mall was built to the south, and took JCP later. The population shifted, and the lower income residents filled this area. Northgate Mall, and the surrounding area began to fail. This store was still profitable until 2 years ago, somehow. It was the largest Supercenter in the state, and did a tremendous volume.

Then store 7301 opened 4 miles north in Carencro on I-49 north. Carencro is a newer, sleeker store. Because of Walmart's changes in policy and offerings, this store didn't need room for the butcher, it doesn't have a full bank of regular checkouts. 534 only had regular checkouts, where 7301 has 12 self checkouts. 534 has a huge, oversized garden center, where 7301 has just enough room for everything Walmart offers. 534 has an 8 bay Auto Center, where 7301 can only service 3. It's a very efficient store, and profitable. While I've seen folks walk out with merchandise, it's not nearly to the level they did at 534. 7301 is also safer outside, as the local police patrol the lot regularly.

Now, with 7301 in place, the profits (and traffic) that were keeping 534 afloat were no longer there. It has operated at a continuous loss since. A vast majority of that loss is due to both internal shrink and shoplifting, which have long been out of control at this store.

When it was announced that the store was closing, you'd have thought someone killed their dog. You see, 534 is serviced by Lafayette's public transportation system. 7301 is not. So a good amount of the store's traffic came from bus riders and walkers. Now, they have to go across town to 2938 or 531. Both are 5+ miles away. 7301 won't have public transportation; the closest a bus gets to that store is 2 miles south. Additionally, 402 (Breaux Bridge) and 415 (Broussard) have cannibalized more business than this store could handle.

Essentially, it's believed around town that Walmart opened Carencro with the express purpose of killing 534. And it worked.
Alpha8472 wrote:Walmart needs to stop focusing on closing down stores and start opening new stores in profitable middle class areas. There are plenty of cities that do not have any large discount stores.
If you open more stores without killing the dead weight, you're Kmart, in a nutshell. You have to cast off unprofitable stores or one day that's all you'll have. And almost every major US city has Walmart now.

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Re: Walmart observations

Post by wnetmacman » March 25th, 2019, 6:53 am

arizonaguy wrote:
March 24th, 2019, 6:15 pm
I actually don't think Walmart has really gone off the rails. In the current retail environment closing less than 20 - 30 stores a year (with their massive store fleet) is perfectly normal and acceptable. I also think that only opening up 10 new stores this year is also acceptable as they're probably prudent to wait for the dust to settle in the Sears/Kmart, JCPenney, Shopko, etc. "retail apocalypse". In addition, they have been using a much larger percentage of their capital budget in recent years
towards their online / digital business, which can probably pay dividends for them later on.
Absolutely. Walmart is one of the most stable companies around, because they've always stood over the till, so to speak.
I'm not convinced that the Neighborhood Market concept was ever really a winner for Walmart (and in many cases it makes little to no sense). In many cases the Neighborhood Markets simply divert traffic that was intended for a Walmart supercenter anyways (and Walmart loses out on the general merchandise impulse shopping of those customers). The 2 Arizona stores that are slated to close are both within 2 to 3 miles of Walmart supercenters and are located in former supermarkets that had been vacant for years prior to Walmart moving in (the Marana location is 2 to 3 miles from two different supercenters and is across the street from a Target and a Fry's, the Chandler location is a former Bashas' that is a stones throw from the Bashas' distribution center and is in an area otherwise devoid of any retail). Walmart would've been better off creating a "flexible format" store like the smaller Targets which have a curated selection of their entire merchandise assortment as opposed to opening up small, unimpressive supermarkets which don't even have the same selection or service departments of their supercenter stores.
I have a better example. In two cities near me, both with 18,000 and 30,000 residents, a new Neighborhood Market was opened not entirely far from a very profitable Supercenter. Neither location makes sense. In Opelousas, LA, they simply opened next to the only large competitor in town, simply because they could (and because the DC is just north of town). In New Iberia, LA, the NM is less than a mile from the Supercenter, but across the bayou, so to speak. It just doesn't make sense, and I feel that most of the NM stores are this level of redundant.
I do find 2 actions of Walmart to be quite curious though (although it has nothing to do with the closures):

1.) Free grocery pickup.
2.) Returns at the doors of the store.

The way that the grocery pickup is being pushed it appears that it has the potential to divert customers from the store (thus incurring the expense of the "personal shopper" while at the same time removing potential impulse purchases). Walmart built its success on having a "full" supermarket that drew shoppers to their general merchandise. Grocery pickup seems to be the new Neighborhood Market in the sense that it creates a disconnect between grocery shoppers and Walmart's general merchandise departments. It seems that if it is only attracting Walmart's current core customers it's a money losing proposition. The only way I figure that Walmart's plan for free grocery pickup is supposed to work is that Walmart is hoping to target a higher demographic of shopper who would shop elsewhere (and thus isn't going to purchase anything from the GM side of the house at Walmart anyway). I'm just not sure that these customers are being drawn to Walmart over competing services at conventional supermarkets or Amazon Prime Now.

Returns at the door of the store also seems like a befuddling plan to me. Customers making returns may never end up making it into the stores, eliminating potential purchases of "impulse" buys.
Free grocery pickup is a gimmick. Many working parents don't have the time to bring all the kids to the store, and it's spurred all the competition to do the same thing. Based on what I'm seeing at my local stores, it's immensely popular.

The returns at the door are twofold: it keeps someone at the door since they've eliminated greeters, and it stops the hassle of the service desk staffing problem.
If/when Walmart receives some return on investment from its recent digital investments, I think we could see store construction resume. It won't ever be more than 20-30 supercenters a year (and may be coupled with 20-30 supercenter closures a year) and the newer stores will probably not be much over 130,000 square feet but it is likely to happen at some point. Walmart really doesn't need any more stores. It may simply need different locations (and possibly to prune most of its Neighborhood Markets).
Walmart is gunning strictly for Amazon now. Target and Kmart are blips in the mirror. I don't see much major construction happening, except maybe re-purposing some inner city low profit stores into fulfillment centers. And that has already begun.

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Re: Walmart observations

Post by Super S » March 25th, 2019, 7:29 am

Walmart is far from the only retailer that does returns by the doors. I can think of many stores that do this. Target, Kmart, Costco, most supermarkets, nearly all large stores with the exception of Kohl's. And JCPenney which clogs up their cashiers with returns constantly because they do not have dedicated customer service desks..

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Re: Walmart observations

Post by kr.abs.swy » March 25th, 2019, 9:20 am

Alpha8472 wrote:
March 24th, 2019, 5:01 am
The company needs to combat shoplifting of course, but closing down a store with no competition is stupid. Just because a store is less profitable than the company prefers makes no sense. The business will lose money from the loss of potential sales and customers will be very upset.
This is exactly what they should do. Management needs to set profitability targets. If stores don't meet the profitability target, then that needs to be addressed by changing operations, repositioning the store, waiting out the lease, or closing the store. If there is no chance that the store is going to meet profitability targets and there is no strategic reason to keep the store open, then it needs to be closed. This is exactly what management is paid to do. Are you seriously advocating keeping open a Walmart that doesn't meet its hurdle just to avoid losing sales and making customers upset, even if Walmart isn't making much money on those potentially upset customers? If the sales are barely profitable, what's the point? Market share doesn't pay the bills. And meanwhile you are blowing your resources on a loser store instead of using those resources to grow elsewhere (or increase your dividend). You can go out of business overnight chasing unprofitable sales (constantly recurring 100% Shop Your Way points rebate schemes for purchases at Sears/Kmart? Give me a break). A company that doesn't generate an adequate profit (and to be absolutely clear I am talking about a profit that allows it to earn its cost of capital, not just a positive net income) will lose faith of investors, thus losing access to capital to grow, and will eventually get bought, go out of business, or attract the interest of an activist investor. In today's world, "eventually" isn't even going to be that long. Look at what happened to Family Dollar -- which was profitable at the time that it was forced to go up for sale.
Alpha8472 wrote:
March 24th, 2019, 5:01 am
Walmart needs to stop focusing on closing down stores and start opening new stores in profitable middle class areas. There are plenty of cities that do not have any large discount stores.
I literally cannot think of a single city in this state, or any adjacent state except California, that needs another large discount store. With the exception of some states like California where there are extenuating factors, Walmart already blankets this country with stores. With few exceptions, a significant portion of the sales from any new domestic Walmart store will simply cannibalize sales from another Walmart. Just opening a few hundred stores each year because that is what you have always done is insane. The opportunities for Walmart would be in urban areas where land is expensive, zoning is complicated and resistance is high. They probably figure that they just aren't going to get an adequate ROI.

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Re: Walmart observations

Post by kr.abs.swy » March 25th, 2019, 9:26 am

arizonaguy wrote:
March 24th, 2019, 6:15 pm

The way that the grocery pickup is being pushed it appears that it has the potential to divert customers from the store (thus incurring the expense of the "personal shopper" while at the same time removing potential impulse purchases). Walmart built its success on having a "full" supermarket that drew shoppers to their general merchandise. Grocery pickup seems to be the new Neighborhood Market in the sense that it creates a disconnect between grocery shoppers and Walmart's general merchandise departments. It seems that if it is only attracting Walmart's current core customers it's a money losing proposition. The only way I figure that Walmart's plan for free grocery pickup is supposed to work is that Walmart is hoping to target a higher demographic of shopper who would shop elsewhere (and thus isn't going to purchase anything from the GM side of the house at Walmart anyway). I'm just not sure that these customers are being drawn to Walmart over competing services at conventional supermarkets or Amazon Prime Now.
I have seen raves on social media from a friend who appreciates not having to drag her kids through Fred Meyer because she can use ClickList. Your points about losing impulse sales are legit, but the gratitude of parents and people who are in a hurry is probably priceless -- even if this is difficult to quantify.

My experience shopping online through the Safeway/Albertsons platform (with which we have had good experiences, by the way) is that it is more difficult to compare prices online than it is when you are looking at a shelf, so you might get some higher margin sales that way also. My sense is that if you are shopping online, you are more likely to just buy things from your purchase history, whether or not they are on sale.

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Re: Walmart observations

Post by Alpha8472 » April 30th, 2019, 4:39 am

My local Walmart has stopped restocking fish. The fish tanks are empty. Has this happened at any other Walmart?

There was always demand for fish since Walmart was one of the cheapest places for fish. The fish looked not so great since there was so much death and neglect. However, a friend of mine who works at Walmart said people loved to feed their carnivorous fish the goldfish from Walmart.

Walmart sold a great variety of fish. However they did sell plecos which start off as an inch and a half but grow up to 2 feet. My father bought one as a tiny cute fish several years ago but now it is pushing 2 feet. That thing now takes up the whole tank. The lifespan is 20 years.
Last edited by Alpha8472 on April 30th, 2019, 11:44 pm, edited 1 time in total.

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Re: Walmart observations

Post by pseudo3d » April 30th, 2019, 10:01 am

arizonaguy wrote:
March 24th, 2019, 6:15 pm
Walmart built its success on having a "full" supermarket that drew shoppers to their general merchandise.
Their "full" supermarket even by 1990s standards is extremely limited. They scrapped full meat counters years ago, there's no seafood counters, very few sushi counters, delis are low-end and are not universal, and merchandise mix is very downscale and directed toward low-income consumers, with large displays of generic products, limited SKUs (the coffee selection is one such area), and no international foods that aren't part of their shopping demographic. This isn't to say that Walmart's grocery section should be avoided entirely, as I found that their cereals are very cheap compared to the markups that H-E-B puts on General Mills cereals.

And of course, Walmart's choice in having limited grocery selection made the stores cheaper to build and more profitable. A chief problem of the Super Kmart stores that were being built is that they were more expensive to build and had more upscale features, which meant them nice places to shop in but not enough to save the chain, and from reading some old articles Kmart had a difficult time actually convincing customers that their dowdy chain was a place to buy things like fresh produce and lobster.

At my own local Walmart, the renovation largely reformatted the Electronics department into an "Entertainment" department, clustering the books, video games, and DVDs into that section, but actual electronics are pitiful. There's a few iPhone accessories and cable modems but even as far as speakers were concerned, all I could find were underpowered Bluetooth speakers. There wasn't anything with a 2.5mm jack, standards for audio equipment everywhere.
kr.abs.swy wrote:
March 25th, 2019, 9:20 am
I literally cannot think of a single city in this state, or any adjacent state except California, that needs another large discount store. With the exception of some states like California where there are extenuating factors, Walmart already blankets this country with stores. With few exceptions, a significant portion of the sales from any new domestic Walmart store will simply cannibalize sales from another Walmart. Just opening a few hundred stores each year because that is what you have always done is insane. The opportunities for Walmart would be in urban areas where land is expensive, zoning is complicated and resistance is high. They probably figure that they just aren't going to get an adequate ROI.
The local Walmart in my area is consistently packed even when the college students are gone. With Target's abbreviated selection, the only other place to get anything is larger grocery stores, which are alright on pharmacy/HBA items like toilet paper but fall apart on hardlines and softlines alike. At least places like Michigan have Meijer (or Fred Meyer to the northwest, at least until recently), which provide an alternative.

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Re: Walmart observations

Post by rwsandiego » April 30th, 2019, 7:22 pm

Alpha8472 wrote:
April 30th, 2019, 4:39 am
My local Walmart has stopped restocking fish. The fish tanks are empty. Has this happened at any other Walmart?

There was always demand for fish since Walmart was one of the cheapest places for fish. The fish looked not so great since there was so much death and neglect. ...
I thought you were referring to fish as in "seafood," which I recall Dominick's selling from the tank when I was a kid and Treasure Island selling when I was an adult shopping there.
Alpha8472 wrote:
April 30th, 2019, 4:39 am
However, a friend of mine who works at Walmart said people loved to feed their carnivorous fish the goldfish from Walmart....
Then I read this and realized you were not referring to seafood!
Alpha8472 wrote:
April 30th, 2019, 4:39 am
Walmart sold a great variety of fish. However they did sell plecos which start off as a inch and a half but grow up to 2 feet. My father bought one as a tiny cute fish several years ago but now it is pushing 2 feet. That thing now takes up the whole tank. The lifespan is 20 years.
My folks had three of them that grew to about a foot long before they realized new home was needed. They ended up contacting a shopping mall that had a huge fish pond (complete with huge fish). The mall was happy to give the fishies a new home.

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Re: Walmart observations

Post by storewanderer » April 30th, 2019, 8:05 pm

I recently visited the Wal Mart in Reno, NV on Kietzke Lane. As previously reported back in December there are Lot Cop cameras all over the parking lot, the store cut off 24 hour operations, and it closes the non-food entry at 8 PM.

There are a few more changes in this store now. The hair cut (Smart Cut?) tenant has closed and the space is covered and for lease. The medical clinic in the store has also closed. The Wendy's inside has cut hours no longer offering breakfast and has new chairs that appear to have come from Wal Mart, perhaps rejects from a Wal Mart break room renovation. Example: https://www.stackchairs4less.com/FD-BHF ... gJ1pvD_BwE

Anyway the store did get all the self checkout upgrades last year and my observation is this is a very busy store. It also seems very well stocked and clean. So I am a bit confused as to exactly what is going on with this location. The tenants have not closed in any of the other area Wal Marts.

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