November 9, 2005

The Value of the Independents

From Don Taylor's Up Against the Wal-Marts: How Your Business Can Prosper in the Shadow of the Retail Giants

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CostCo is the largest warehouse retailer, followed by Sam's.

From the snippets I've read, Mr. Taylor's book is about what small business owners and managers can do to make themsleves the greatest competitors to Wal-Mart and the rest of the big-box chains. It may not often sound like it on this blog, but I am rooting for the independents to grow and prosper. It is their dynamism that keeps Wal-Mart in check... You might also want to check out Boomtown USA for the community angle on the same theme

Posted by Kevin at 7:48 AM

October 21, 2005

Not Wal-Mart's Specialty

The Houston Chronicle presents more evidence supporting my hypothesis that Wal-Mart can only be beaten by increasing affluence:

Kroger, which is still the biggest U.S. grocer, posted its biggest sales gain in five years last quarter, but largely because of heavy discounting. Albertsons, after reporting falling profits in three of the past four years, put itself up for sale last month.

Meanwhile, specialty grocers, such as Austin-based Whole Foods Market, are booming. Upscale stores offer better margins because grocers can charge higher prices. They also offer a broader selection of perishable items, such as produce. At its new "lifestyle" stores, Randalls promises organic fruits and vegetables, more prepared foods, full-service meat counters, and sushi and olive bars.

"They see it as a weakness that Wal-Mart isn't able to duplicate," Hamstra says.

I think Wal-Mart could duplicate this format -- perhaps using a different name entirely -- but at what cost to its other operations? How well can Wal-Mart integrate high-grade with middle-grade produce in one supply chain? Phrased differently, would you eat sushi at a Wal-Mart bar?

Posted by Kevin at 10:43 AM

September 6, 2005

Tesco Interested In Albertsons?

Excellent news for consumers if it is true, Tesco might come state-side with an acquistion of Albertsons:

Though Carrefour may be out, at least one other overseas retailer might be interested. Speculation from across the Atlantic focused on U.K. retailing giant Tesco as a potential bidder. Analysts pointed out that Tesco has been expanding overseas as it seeks fresh revenue streams. The chain has already proven it can compete with Wal-Mart in Europe.

More broadly, Bishop said the floating of Albertson's on the market is indicative of a sector under siege.

Posted by Kevin at 2:19 PM

September 1, 2005

Independents vs. Big Boxes

Consumer Reports' September 2005 issue ($ubscriber-only) reports on a 6000 person non-representative reader survey asking about price, quality, and service at independent stores and big boxes when shopping for small and large appliances.

The results are not flattering to Wal-Mart -- or any other chain besides Sears:

Sears was the only major retailer that matched the independents for product selection, service, and checkout for small appliances, and served readers nearly as well when buying large appliances....

Costco is the only store that excelled in price without compromising quality, which helps explain its high reader score. But that appeal was offset by subpar service and checkout, and less product selection....

Wal-Mart: not a winner on price. Wal-Mart's tag line is "Always low prices. Always." But compared with other small-appliance buyers, more than twice as many who bought at Wal-Mart said they overpaid. While Wal-Mart sells no large appliances, readers who shopped there ranked small appliances lower in quality than readers who bought elsewhere....

Best Buy and Target: service suffers. Compared with the average for other stores, twice as many large-appliance buyers couldn't find help at Best Buy. Target's small-appliance prices were lower than average, but readers said they got below-average quality. Crowded aisles were another complaint.

Wal-Mart came in dead last, recieving the worst score for Price (3), and Selection, Service, Checkout Ease, and Product Quality (1). But WM can take these data in stride; the readers of Consumer Reports are truly unrepresentative of the US public. And elsewhere CR has noted that Wal-Mart's in-house lines equal or better the quality of name brands for diverse goods from peanut putter to ladies jeans, and from oatmeal to plastic bags.

(The results of the reader survey are summarized here).

Posted by Kevin at 12:54 PM

August 26, 2005

Is Culture Critical?

The Hartman Group's analyses are usually well thought-out and nicely written, if a little on the mystical side. Today's commentary is no exception. In Costco vs. Wal-Mart: Getting Beyond Utility, it claims that Costco has created a cult -- and that this cult gives Costco a long-term advantage:

Because it's precisely the factors that make a business a cult that will give it staying power in the long run. And in this business environment one of the factors that contributes to the cult status of Costco or Whole Foods is that when you scratch the surface you discover that, SURPRISE - it's possible. It's possible for human beings to run successful companies humanly, and maybe that's something a lot of people care about.
This is not a good versus evil debate, or whether one "model" is just, but about which type of company will be successful in the long run. And there is a pretty easy way to figure this out: look at the "culture" of companies that have succeeded and failed in the past.

I just took a short look myself, and found one answer to the question of which models, and which companies, are dominant in the long-run: NONE.

Of course, there are a large number of extremely successful and historically-long lived companies, but there are far more long-term failures than successes, and many newer businesses -- especially in retail -- can inflict some mighty big pain on the once dominant firms. Are those long-term successes -- Sears, Macy's, Hudson Bay, LL Bean, Modell's Sporting Goods, Hammacher Schlemmer, Walgreens (to name a few) -- are these companies that have created a "cult" following? Well, no. They have had ups and downs, but overall they have served their customers well through incredible changes in the marketplace, but there is no cult following them.

There are a large set of people -- me included -- who like clean, quiet, convenient, brightly lit stores that offer wide selction at low prices. But I don't give a fig about culture; I care about competence and courtesy (which is sorely lacking in the closest Target and Wal-Mart stores in my area). And I don't care if you did open your first shop in Williamsburg, VA in 1699 and paid your indentured servants a living wage.

So if Wal-Mart is lacking in this cult status, count me as unconvinced that devastation awaits Bentonville. But if cult status is so important, what does Wal-Mart have to fear?

On the other hand, Wal-Mart has zero mystique. It has adopted a model toward its customers, employees and investors that is based on pure rational calculation driven by the logic of market efficiency. They have been ruthless in running their business according to this logic, and they've been remarkably successful in doing so. The only thing is that if you live by the market, you die by the market. At some point customers, employees and investors might in their own ruthlessly calculating way decide that their involvement with Wal-Mart doesn't serve their interests anymore.
Well, it's also true that if you DON'T live by the market, you will die by the market. And one can honestly write , "At some point customers, employees and investors might in their own ruthlessly calculating way decide that their involvement with [X] doesn't serve their interests anymore", and put substitute your favorite anything for X.

Posted by Kevin at 11:04 AM

August 24, 2005

Target Buys All the Ad Space in The New Yorker

Target has bought all the advertising space in one issue of The New Yorker. This seems odd, given the antipathy of (some/many) New Yorkers toward massive discount stores. Or is their antipathy only toward Wal-Mart as a symbol?

Target has purchased every advertisement in The New Yorker. At first glance, Target and The New Yorker seem like an odd match. (The last time Target pulled off the buy-every-ad gimmick, it was the sole sponsor of an issue of People.) Only recently did the "Bloomingdale's of the discount industry" vanquish Wal-Mart and Kmart to win the hearts and minds of the middlebrow. Moreover, when compared to the modish boutiques that usually advertise in the New Yorker, Target looks rather vulgar; there is no sign at the entrance of Louis Vuitton, for example, that reads "Welcome to Low Prices."

How will this strategy affect Wal-Mart? Will Target get an advantage by appealing to the middle-brow market of New Yorkers? We know from the past that Wal-Mart has been attempting to upgrade its image, in apparel especially, and so the image-reshaping is going on at both chains.

In a Christmas photo op, Michael Bloomberg was seen exiting a local Target clutching a George Foreman grill and a cheese grater, gifts that would surely please one of the gardeners at Gracie Mansion.

That, in a nutshell, is the story of Target's blossoming—making discount acceptable for the rich and famous, and, hence, everyone else. But the appeal Target holds in the minds of the upper crust does not end there. The rich (at least in Manhattan) profess to visit Target because of its social progressivism. Target, they insist, is a more enlightened corporate behemoth. Viewed through the Upper West Side prism in which "enlightened" equals "liberal," there is some truth to this contention. Sam Walton's heirs donate to the GOP, while Target scion Mark Dayton serves as a Democrat in the U.S. Senate. But because Target isn't as large as Wal-Mart means certain bugaboos (a nonunion shop, part-time workers without benefits) are more easily overlooked.

So the major problem with Wal-Mart (for Wal-Mart haters) is that it supports the Republicans and it is large. They will consider shopping at Target, however, even though Target has labour and import policies that are very similar to those of Wal-Mart.

My guess is that if the advertising by Target in The New Yorker works, however that might be defined and assessed, it will initially have the effect of stealing a bit of market share from Wal-Mart, but not much -- after all, what's to steal from Wal-Mart in Manhattan? But in the longer run, in this case perhaps only a few months, if middlebrow elitist-wannabes begin to set foot in Target, the effect might also be to increase the demand for goods at Wal-Mart as well. Once people get the taste of reasonable quality at very low prices, and once they realize that both large chains have similar labour and trade policies, they might be more likely to accept a Wal-Mart in their neightbourhood.

In other words, the effect of Target's buying all the advertising space in The New Yorker might be to let people know that it is okay for the middle and upper classes to shop at large discount chains.

Posted by TheEclecticEconoclast at 6:45 AM

August 9, 2005

Downtown Without Big Boxes

At BoomtownUSA, Jack Schultz has some evenhanded comments about the actual effects of banning big boxes on downtowns:

I related my own experience of strolling around Ellensburg�s downtown early in the morning and not finding a place to get a cup of coffee or a newspaper. I was disappointed to see over a dozen vacant buildings in the downtown. Obviously banning big boxes hadn�t led to a boom in the downtown area. I also was shocked to find their only big box store closed early in the morning. Without competition, they obviously didn�t see the need to be open at odd hours.

Ellensburg has a wonderful potential with their downtown area. It is historic, with wonderful brick and stone buildings. It should be a magnet for the community. It should be an entertainment center with people living in the lofts above the retail shops. But, it won�t become such a place by trying to stifle competition, keeping the big boxes out of the county. It will do so by finding its own niche, building it and developing its own special sense of place.

What he said.

Posted by Kevin at 10:05 AM

July 20, 2005

Old and Busted: Discounts
New Hotness: Always Low Prices

In the WSJ (free link), Janet Adamy writes that grocery stores have recently begun adapting their price strategies to compete with the discounters gobbling up their market share:

In recent months, several regional grocery chains have reduced prices on everything from Kraft macaroni & cheese to Ragu pasta sauce in an effort to lure back shoppers who have defected to discount grocers. In most cases, the stores also stopped offering weekly bargains on items like cereal or yogurt.

For decades, most traditional supermarkets have lured price-conscious shoppers with cheap weekly specials and made up the lost profit by keeping nonsale prices substantially higher....

This doesn't mean supermarkets aim to compete with Wal-Mart on every item; in most stores, the cuts apply to no more than 15% of their items -- typically so-called center-of-the-store goods, like toothpaste and toilet paper

I haven't noticed this in my area, where Giant and Safeway still have big reductions, and Shoppers has never had many of them to begin with.

There is a pool asking where you shop, which also permits comments, like this one:

WalMart since I can use all the competitor ads and get a matching price. That way I get the benefit of various store specials without the time and gasoline costs. That being said, we also shop traditional stores for specialized products or in cases that WalMart produce is inferior.

UPDATE: I should have suspected that Russ Roberts would have something smart to say about this:

Everyday low prices is part of the reason Wal-Mart has crushed lots of chains that were "sales-driven" having booms and busts in sales and having to cope with the customer service challenge that Mr. Dillard discussed.

Posted by Kevin at 10:40 AM

July 19, 2005

Cost Savings from Bank Ownership

WM wants its own industrial bank in Utah.

Discount behemoth Wal-Mart announced Tuesday that it is seeking to establish an "industrial bank" in Utah that would help eliminate third-party transaction costs that the retailer currently incurs from processing of credit, debit card and electronic check transactions in its stores.

According to the company, Wal-Mart receives more than 140 million credit, debit and electronic check payments per month and pays a small fee to process each transaction.

Of course, independent bankers are worried.... as are some lawmakers... and some anti-Wal-Mart activists...

But let's do some back-of-the-envelope math: 140 million monthly x 12 = 1.7 billion transactions annually. Five minutes of research tells me that the average cost is about 10¢ per ACH transaction, which is the approximate amount Wal-Mart pays to its banks. But about about half of that is paid by the bank to the ACH network. Hence, I'd estimate that Wal-Mart stands to avoid paying about 1.7 billion x 5¢ = $85 million dollars in fees annually, because it will be paying them to itself.

The real savings to Wal-Mart will be if it 1) can run its own bank more efficiently than its current third-party bank, 2) can eventually turn this industrial bank into a consumer bank.

In addition, I gather that this will permit a savings in personnel in Bentonville, as will be used as a reorganizing tool in the business process arena...

Posted by Kevin at 2:40 PM

July 7, 2005

Many Cities Have Long Banned RV Parking at WM

In what is a truly pathetic use of local government power, RV camp owners have been using the threat of force to prevent Wal-Mart from offering free overnight parking to RV owners:

"I've only had one problem with parking at Wal-Mart," said Fuller, of Mesa, Arizona, as he loaded bottled water into a motor home in the Wal-Mart parking lot in Emporia, Kansas. "I pulled in around 10 o'clock at night. There were other RVs there, but in the middle of the night, a cop knocked on our door and said we couldn't park there."

James Stover, public affairs manager in Yuma, said the city has a 20-year-old ban on any overnight camping without a permit. Campgrounds are big business in Arizona, he said, and allowing travelers to camp overnight for free does not help the business community.

Woodbury said that's not uncommon in places where the weather is nice year-round.

If Wal-Mart wants to stop RV parking in it's own lots at selection locations, that's fine. But the article implies that in some locations Wal-Mart pushes for local laws preventing the practice (in places like Florida) so that they can use tax-funded police to kick RV'ers out, instead of paying for their own square-badges to do the same...

Posted by Kevin at 1:18 PM

June 8, 2005

Piggly Wiggly's Biometrics

Wal-Mart is not always first in technology:

Continuing its company-wide deployment of biometric technology, Piggly Wiggly's Greenwood, S.C. store went live on its own new payment system yesterday.

The Greenwood launch is the operator�s fifth installation of the Pay By Touch system, which allows shoppers to pay for their purchases with the touch of a finger, eliminating the need for checks, IDs, credit/debit cards, membership cards, or loyalty cards.

You can enroll in this award-winning system by going here.

Posted by Kevin at 9:19 AM

May 27, 2005

Wounded WM?

James J. Cramer says that Wal-Mart's competitors are "feasting off the wounded mass merchant", and he names lots of names:

Where else do shoppers want to go?

Wal-Mart may be the largest seller of CDs in the country, but with Apple (AAPL:Nasdaq) climbing back over $40, it might be good to remember that iTunes is the way the next generation buys music. Don't I know it; why is my daughter babysitting every moment she can these days? She says she's getting 25 songs when she does!

An excellent read, even if just to remind you how competitive retail actually is.

Posted by Kevin at 10:42 AM

SoCal Unionized Grocers Face AntiTrust Charges

Via Progressive Grocer, we find a revenue-sharing agreement between Albertsons, Kroger, and Safeway is alleged to have been harmful to competition.

The agreement was formed to keep any one company from making money at another one's expense, and to fight anticipated United Food and Commercial Workers union efforts to divide and conquer the chains.

According to the terms of the pact, if any of the stores raised their market share above pre-strike levels, they had to share the resulting profits with the other pact participants, with payments based on a 15 percent profit margin. The profit-sharing provisions of the agreement continued until two weeks after the end of the labor dispute.

I don't think having the attorney general go after them is going to solve anything, since tacit collusion will replace the formal collusion.

Posted by Kevin at 9:19 AM

May 19, 2005

NetFlix beats Wal-Mart into Submission?

Reuters is reporting that Wal-Mart has either been beaten or has been successful, but either way in June, Netflix will take over its DVD rental operations:

The online arm of Wal-Mart Stores Inc.,, said in an advertisement on its Web site Thursday that it will shut down its DVD rental service in June and is offering customers the chance to sign up with rival service Netflix Inc.

Walmart Online, in the advertisement that appeared early Thursday, said the company will not accept new members and offered a link to Netflix (Research), where customers can sign up for the DVD rental service at their existing Wal-Mart (Research) rates for one year.

I don't have any further information yet, but I think Wal-Mart has realized that Netflix does this a lot better (cheaper) than Wal-Mart can.

UPDATE: In other words,"You know you must be doing well when Wal-Mart decides they don't want to compete with you." Jason Pearce is pleased,"The good news is instead of leaving my high and dry, they built an easy way for me to transfer my Wal-Mart account to Netflix, movie list and all. Thanks to both parties for making this easy on the customer. I wish more services were like this (e.g. switching cell phone providers)."

Double Viking: "Blockbuster must be kicking themselves for not buying these guys out years ago."

Indeed, (via Life Distilled), Blockbuster wants those Wal-Mart DVD customers really, really bad: "Blockbuster Inc. on Thursday extended a new rental offer to subscribers of online movie-rental company Netflix and, offering two free months of service to customers who switch to Blockbuster Online. It said the subscribers could receive a free DVD rental and that it will offer them the chance to subscribe to Blockbuster Online at the current price they pay for the rival services. "

Kip Esquire: "Wal-mart, like any other successful business, only became prosperous and powerful by giving customers what they want. If and when a business fails to continue doing so, it loses its dominance and its "obscene" profits to others who do a better job of giving customers what they want."

Posted by Kevin at 8:27 AM

May 16, 2005

Small Business Importing from China

Here's one very important view I hadn't really thought of at all:

And that's the next phase of problem for large retailers like Wal-Mart. Large numbers of Chinese factories are setting up warehouses inside U.S., ship their products to the mainland USA, and sell direct to small retailers at low profit margins. Believe me when I say this: When it comes to entrepreneurship, the Chinese entrepreneurs are second to none. With thousands upon thousands of factories in China making products for export, some smarter ones have figured out that it is to their advantage to set up warehouses in the USA so that they can sell in ever-smaller quantities to their U.S. customers. Believe it or not, the Chinese factories are now selling their products directly on eBay from within U.S. borders. We are an importer of products from China and I now see Chinese suppliers in the U.S. who are selling the same products I am importing, at or slightly above my direct container quantity cost with no minimums. How can the likes of Wal-Mart compete with that?

Read the whole thing, NOW!

Posted by Kevin at 2:59 PM

April 17, 2005

Competing with WM: Portsmouth, NH

The entry of Wal-Mart and other big box stores does NOT destroy downtowns, it reconfigures them. A good example is Portsmouth, New Hampshire's RiverRun Bookstore:

Independent-minded - One local bookstore owner is optimistic about the future. RiverRun Bookstore, in downtown Portsmouth, recently passed its third anniversary. Sales are strong, and owner Tom Holbrook believes the store will thrive into the next decade and beyond.

That is good news for Seacoast readers and is somewhat surprising in a business that often seems ruled by, big chain stores such as Barnes & Noble, and retailers that include BJs, Target and Wal-Mart.

Holbrook attributes RiverRun�s success to solid market research, which revealed that Portsmouth needed a bookstore.

"I knew that the reasons other stores had closed were not the usual ones," Holbrook says.

Stroudwater Books went under with its parent company Bookland of Maine. Little Professor closed when its owners decided to move on. Holbrook filled the vacuum with the type of store he feels the downtown needs.

The key is personalized service. More details and a photo here. Mr. Holbrook knows his niche:
And Holbrook adds, "If you know exactly what you want, it makes sense to order it online and have it sent to your door."

Posted by Kevin at 9:23 AM

April 15, 2005

Tesco Outlook 2005

An interesting look at the big players in the UK grocery market for 2005. The skinny. Wal-Mart/Asda is #2, and is likely to stay that way:

Tesco appears to be on an unstoppable march towards victory in the battle of the supermarkets. This week it announced profits of overmore than �2bn for last year � a record for a UK retailer.

The chain�s share price has responded in kind, up 26 per cent since March 2004, outperforming both its sector and the FTSE All-Share. Most analysts had a buy recommendation on the stock a year ago, and continue to do so now. But when the consensus is so overwhelmingly bullish, should investors be wary?

Tesco appears at times to do everything right. Whereas competitors like J Sainsbury or Wm Morrison (which bought Safeway in March 2004) are struggling, Tesco, with a nearly 30 per cent share of the domestic supermarket grocery sector, just goes from strength to strength.

I'll try to do more international blogging in the future.

Posted by Kevin at 9:44 AM

April 12, 2005

A Pretty Small Place for ShopKo

ShopKo is under new ownership. It now prides itself on being the discount store that doesn't want to compete with Wal-Mart and Target!:

He said the company didn't plan to compete head-to-head against Wal-Mart Stores Inc., the world's largest retailer.

"That is not our goal. No one can do that. But we do believe there is a place for ShopKo in the market for people who don't go to Wal-Mart, who don't go to Target," he said.

What can this actually mean for a discount retailer?

Posted by Kevin at 1:46 PM

April 11, 2005

Wal-Mart Helps Revitalize Downtown

Max Borders over at Tech Central Station has an article on Wal-Mart. He says it's all part of creative destruction:

As it often does, Wal-Mart won. And since then, Boone has experienced the Wal-Mart effect. First, some Mom-n-Pop shops in Boone may have gone out of business due to the intense competition. But something interesting has happened: many new businesses have sprung up and they're cooler, more interesting, and more highly specialized than most of the old ones were. Mom-n-Pop have decided to move into more boutique-style businesses -- and not even Wal-Mart can compete with that.

For example, Hands Gallery -- formed c. 1998 -- is an interesting fixture for visitors to the downtown King Street area, offering indigenous art and sculpture for more refined tastes. While taking in the spring verdancy or autumn foliage of the high country, visitors can take jaunts through nearby Blowing Rock and Banner Elk for the utterly zoned and picturesque experience (and, of course, denizens of these planned towns take advantage of Boone's big boxes along highway 321).

But big boxes and all, downtown Boone offers its own home-grown order, complete with quirky restaurants and shops one might have found on the corner of Haight and Ashbury. An eclectic mix of businesses line the main thoroughfare. Earth Fare, an organic foods store, has come to King Street. Older fixtures such as the Appalachian Antique Mall and Mast General Store (retail) have enjoyed continued success and remain favorite establishments for shoppers. You'll even find "Josh," a vagrant everyone in Boone knows, selling poetry and beaded jewelry to passers by.

The question becomes: do we really need small, inefficient and expensive shops to supply us with our shaving cream and plastic laundry baskets? How vibrant is a downtown where such items are being hocked? Since Wal-Mart consolidates these kinds of goods into "big boxes," we, like John Blundell, can get them for dirt cheap all in one place. Charming downtown areas can then evolve into gorgeous window-shopping and restaurant-hopping districts for both locals and tourists. In the meantime, everyone knows where to go to get the bare necessities quickly and at a lower cost.

The Wal-Mart effect is happening all over the country, allowing many municipalities to renew their town centers. In fact, residents able to reduce their day-to-day shopping budgets at Wal-Mart have more money left to spend on the things that make life great and towns charming -- whether it's hand-blown glass or delicious roadside produce grown by local farmers. (Take it from me, no big box can do Silver Queen corn like North Carolina farmers on the side of the road.)

See, Wal-Mart actually helps downtowns not hurts them. In all seriousness, this is essentially correct as many downtowns were destroyed by malls and other factors, not Wal-Mart. The company is actually fairly young and hasn't been around long enough to wreak all the havok laid upon it.

Posted by Bob at 10:55 PM

March 31, 2005

Dealing with a New Supercenter

A new supercenter will be hard on many existing retailers, but will be even harder on all existing politicians. So writes Kenneth Stone in PM Magazine:

So why is there so much controversy about Wal-Mart? This question could be answered in several ways. First, nearly everyone likes a winner. Wal-Mart's financial success has definitely shown the retailer to be a winner. Sometimes, however, winners can be bullies. And some people view Wal-Mart's power as a bit, or a lot, too much....
He summarizes his own research (linked to on the left sidebar), frames the questions facing local officials, and offers eight solid tips to local officials on how to deal with a new big box...

[H/T: EastSouthWestNorth]

Posted by Kevin at 3:23 PM

NetFlix 1, Wal-Mart 0

Dollarwise has a personal comparison:

Similarly, Netflix was clearly the winner in offering DVDs by mail. When Netflix was started it patented its services so that no one could offer the same service immediately. But once the patent expired, Wal-Mart started a similar service. Trust me, I tried both Wal-mart and Netflix but Netflix was far better than Wal-Mart. First of all, the user interface of Netflix is million times better than Wal-Mart online rental store. Second of all, DVDs were slower to arrive from Wal-Mart whereas Netflix was immediate. So the key thing for Netflix is to retain its customers and add more customers.

Posted by Kevin at 9:32 AM

March 25, 2005

K-Mart & Sears to Die Slowly & Painfully?

Businesspundit notes that Wal-Mart will not immediately see a smaller Sears/K-Mart footprint:

To be successful, Kmart and Sears need to find (or establish) a niche and fill it. I don't see them beating WalMart at low prices. I don't think they can beat Target at cheap chic, and they are too big to mess with a small retailing niche.
He foresees a corporate death... and the commenters are not to positive...

Posted by Kevin at 4:18 PM

March 8, 2005

Daniel Akst: WM's stock is not a buy; it's goods are

Virginia Postrel thinks Daniel Akst has WM's number. I dissent (unions play a far bigger role in criticism and I think that the unions will not get to WM, and that WM has already gotten to them), but I'll leave that to another post.

Here, I want to focus on one paragraph in Mr. Akst's Sunday column in The New York Times.

Mr. Akst, who is a fine business commentator and sometime Wal-Mart shopper, wrote that WM shoppers are having it good at stockholder expense:

For several years now, the shareholders, who have more than $200 billion tied up in the company, have not done especially well. Since the end of 1999, Wal-Mart stock is off 23 percent, while Target is up 43 percent and Lowe's is up 95 percent.
Fundamentally, I agree that WM stock has been an underperformer. But Akst does something rather fishy to get his figures. To check this out for myself, I graphed a stock price comparison of Wal-Mart with Target since 1/1/2000, reproduced below. It confirms Akst's numbers -- -23% for Wal-Mart, + 43% for Target:

WMT TGT Since 1-1-00.gif

But why would Akst compare WM's stock price today with the end of 1999? Why not the end of 1998 or 2000?

The answer is obvious once you look at a ten year picture of WM's (split-adjusted) stock price:

WM 10 Year.gif

Notice anything odd? That's right! Akst picked WM's historical high as a baseline. ; he cherry-picked his date of reference to make WM look especially bad! It turns out that very, very few investors will have realized a 23% loss by investing in WM over the past 5 years.

Of course, noting this does not refute the underlying claim of poor stock performance. Since the peak in WM's stock price at the end of 1999, the stock has leveled off and fluctuated in the 50s. I'd say don't count WM stockholders out yet, since a price dip has happened before--between 1993 and 1997--right before WM's stock took off.

WMT Since 72.gif

Still, over the past 10 years, WM's stock has fared pretty well, but not compared to Target:

WMT TGT 10 Year.gif

And for the sake of completeness, here's WM vs. Lowe's (a home improvement store, huh?), which fits Dan Akst's picture:

WMT LOW 10 Year.gif

But why doesn't Akst compare WM to his own preferred warehouse discount center, and one of Sam's Club's main rivals, Costco? Because CostCo's stock price crashed in 2000, and it doesn't fit Akst's story:

WMT COST 10 Year.gif

Also, I'd like to note that WM's stock dividends are far higher than it's rivals, and have increased annually every year since 1974.

WM's 60 cent (1.2%) dividend puts Target [32 cent (0.6%)], Lowe's [16 cents (0.3%)], and Costco [40 cents (0.9%)] to shame.

Posted by Kevin at 4:35 PM

March 6, 2005

Reverse the Order...

We usually think of WM replacing small retailers. Don Boudreaux asks, what if it were the other way around?

Suppose that Wal-Mart today is the only retailer in town, situated (as it typically is) on a large plot of land a few miles from downtown. Tomorrow, smaller rivals open up on Main Street. Further suppose that each consumer truly wants the Wal-Mart to remain open. (Perhaps consumers have become familiar and grown comfortable with Wal-Mart.) But although each consumer truly prefers that Wal-Mart survive, each consumer also chooses to patronize the more conveniently located downtown retailers. That is, each consumer tries to free-ride on what he hopes will be other consumers� continued shopping at Wal-Mart. But with each consumer acting in this way � with almost all of them opting to enjoy the greater personal convenience of patronizing the close-in Main Street retailers rather than suffering the inconvenience of driving out to the Wal-Mart � the Main Street retailers prosper and the beloved Wal-Mart shuts down.
If that sounds implausible or silly to you, think about what the same argument implies to the current situation, when it is WM that is replacing small retailers....

Posted by Kevin at 3:38 PM

March 5, 2005

Coke and Pepsi Lose Market Share -- to WM!

Cott Corporation, a major private-label soda supplier to WM gains against the giants:

Toronto-based Cott, the biggest maker of private-label sodas and a major supplier to Wal-Mart Stores Inc and other big retailers, had another strong year. Its market share grew 0.8 percentage point to 5.5 per cent.

Posted by Kevin at 3:28 PM

February 22, 2005

Predicting the Future of Toys R Us

It seems that WM's brick-and-mortar toy competition will not disappear:

The toy business probably will continue under private ownership, he said. "I don't think they will liquidate it for the real estate. I think there's too much brand equity in the Toys R Us name," Byrne said.

Toys R Us offers many services that competitors don't, he said. "They can be that resource for mom and dad. They have more to offer than the big boxes," such as Wal-Mart, the No. 1 toy seller, and Target.

Those discounters, he said, focus mainly on hit items. "They really are all about moving merchandise," Byrne said. "There are two very different business models, and there's room for both."

The future of Toys R Us, based in Wayne, N.J., is expected to be a concern at the industry gathering, the American International Toy Fair, under way this week in New York.

Posted by Kevin at 8:35 AM

February 20, 2005

Competing with WM by Moving Closer

This guy's strategy worked for a while, at least:

After Wal-Mart came to his town, Tom Reed of Reed's Appliances hit on a surprising business strategy: He moved from downtown Lapeer and set up shop across the street from the retail giant.

"I did it for the uptick in traffic," Reed said. "And I wasn't really competing with Wal-Mart because their (electronic) appliances were low-end and mine are high-end."

But Reed didn't anticipate Wal-Mart razing its store and building a supercenter on the same site. Open since November, the Super Wal-Mart has already hurt the electronics part of his business, Reed said.

"Now, they're carrying the same equipment I do."

So how can a puny David compete with an ever-changing, ever-mightier Goliath?

The rest of the article is superb. Most important is how downtowns are actually changing:
Downtowns aren't necessarily dying, but Wal-Mart and other large retailers are forcing them to transform, said Amy Connolly, director of Howell's Downtown Development Authority.

"Significant categories of businesses are no longer represented downtown: drugstores, small electronics stores, hardware stores and groceries," she said.

Posted by Kevin at 3:11 PM

February 9, 2005

WM Putting Pressure on Mom and Pop Diamond Dealers

Small jewelery stores are not the standard version of mom and pop:

From mine to merchant to customer, the diamond business is changing while it expands like never before--and the Internet is only part of it. Consumers, both men and women, are demanding better stones, often for lower prices, in a wider variety of locations.

Mom-and-pop stores are being squeezed by giant chains like Wal-Mart Stores, now the world's largest jeweler, and Costco, which increasingly sells diamonds over two carats. Department stores, too, are upgrading their jewelry counters. (Jewelry did much better than clothing in many of them over the holidays.)

Posted by Kevin at 11:56 AM

January 31, 2005

Declaration of Independents

Via BusinessPundit and A Penny For, we find an excerpt of Category Killers: The Retail Revolution and its Impact on Consumer Culture. It discusses how one independent bookseller Wild Rumpus Books competes with the big boys:

Competent, creative independent retailers don�t need to use resistance tactics in order to survive. These merchants understand that, to compete successfully, they must provide something that customers can�t get anywhere else. To run a specialty store that successfully competes with category killers, you have to specialize to an even greater degree. Small, independent booksellers are another category of retailers that need to find a niche if they hope to survive....

The problem with many small independents is that they got into the business because they loved books�not necessarily because they loved selling books. One bookseller who both loves books and loves selling books in a creative way is Collette Morgan, co-owner, with her husband Tom Braun, of the children�s bookstore Wild Rumpus Books in Minneapolis. In 1992, Morgan, a veteran of the book business, decided to open a store that would be �something a corporate mind would never dream up and that a large company could never sustain; a place that would sell children a good time along with their reading material.�

We'ver previously discussed independent bookstores here and noted one tangentially here.

Posted by Kevin at 2:29 PM

January 23, 2005 Sells An Original Picasso

Last year, Tyler Cowen noted that Costco was selling some fine artwork:

"non-dignified" intermediaries are entering the market and offering the goods at cheaper prices, thereby separating the artwork from the attached aura of the sale. Let's root for the artwork, not the aura.
Now, Costco has sold an original and authenticated Picasso on
An original Picasso crayon drawing sold this week for $39,999. At Costco....

the Picasso drawing, authenticated by Picasso's daughter Maya Picasso with a photograph of a handwritten and signed declaration provided to the buyer. The Picasso was the most expensive artwork offered on to date, a Costco spokeswoman said.

Last year, Tutwiler [a consignment art dealer] sold another Picasso drawing through Costco for about $35,000. The dealers ship the artworks directly to their customers.

What Costco provides is all the comforts of modern retail:
[L]ike all Costco products, Picassos may be returned for a full refund if the purchaser is not completely satisfied. "We do the same typical Costco guarantee that the artwork is in good condition, that it is authentic, and for any reason whatsoever, a buyer may return it with no questions asked," Roeglin said...
And here's the kicker:
Manny Silverman, owner of the Manny Silverman Gallery in Los Angeles, had only one question about buying art on "I guess I'm just wondering if Wal-Mart can beat their price," Silverman said.

Posted by Kevin at 11:17 AM

Small Retailers Turn to "Guerrilla" Tactics

Great headline and story in the Times Leader:

To differentiate themselves in the mass market, many smaller retailers are employing unconventional quick-hit techniques known as guerrilla marketing.

�The metaphor, of course, comes from guerrilla warfare: What do you do when you�re outnumbered and outrun?� said Orvel Ray Wilson, senior partner of the Guerrilla Group, a competitive-marketing consultation business in Boulder, Co.

For Adriana Molina and Maria C. Sarmiento, that means selling something that cannot be bought anywhere else: colorful custom �Kuma� bears. (Kuma is Japanese for bear.) The toy bears are positioned as art objects.

Molina and Sarmiento, both 35 and originally from Colombia, opened a small toy store called Kuma Central in Miami�s Design District in December.

�We want to create a specialty store that Wal-Mart doesn�t compete with � products you can only find in here,� said Molina, who manages the business. �Toys and art. It�s something you don�t see anywhere else in Florida. All Kuma products are sold at the store and online at

The dominance of Wal-Mart is leading to an interesting new world of commerce... a very strong network of

January 21, 2005

May & Federated to Merge?

More This might be more buzz than anything else... but USA Today seems to be depressed:

Whether or not this merger actually takes place, the possibility serves to highlight a nationwide concern that the department store - as American consumers have come to know and now ignore it - might be going the way of the Oldsmobile.

There are bright spots. The luxury end of the sector - particularly Nordstrom and Neiman Marcus - is going gangbusters. Some discounters, such as Target, are having a heyday. Even one of the industry's middle class - J.C. Penney - is on a roll.

But those are mostly exceptions.

The department store industry is fast becoming an eight-track player in an iPod age. Annual department store sales have declined for the past four years - to a low of $213.9 billion in 2004 from a high of $233.6 billion in 2000, the U.S. Census Bureau reports - even as retail sales overall grew each year.

Posted by Kevin at 10:20 AM

January 17, 2005

Who's the Retailer in India? Not WM

India's very own Sam Walton, Kishore Biyani, closely manages Pantaloon and Big Bazaar:

India�s own Sam Walton (the legendary promoter of Walmart) is quick to seize any advantage. Which is why the denim manufacturer who quit the trade because �it wasn�t creative enough� commands over 1.3 million sq ft of retail space. But even size hasn�t made a difference to Biyani�s vaulting ambitions and he�s on an even faster trajectory of growth. He�s booked over 4.5 million sq ft of space across the country, and will utilise 3 million sq ft by this year�s end in 23 Indian cities....

Even Biyani concedes, �We have a store opening virtually every fortnight; Ihave lost count now of how many I have opened.�

But don�t let Biyani fool you. He keeps a close watch over his empire with the assistance of his two brothers, who are directors in the company.

He might have over 6,000 employees and 300 managers, but the buck stops only with him. Every time a store opens, managers have to rush daily reports for the first 45 days, and it isn�t unusual for Biyani to be fixing any lacunae either over the phone or personally in the store.

Excellent article and personal profile... also, note the Kolkata region... if you can make it there, you can make it anywhere...

Posted by Kevin at 10:21 AM

January 12, 2005

Independent Bookstores Struggle (& Succeed!) Against Giant Chains

The key to making a profit from an independent bookstore is NOT to compete on price with the big chains and superstores, but on service, quality, and experience:

For owners of independent bookstores, their work is often a labor of love. Struggling to compete with super-sized bookstores, discount retailers and the Internet, many neighborhood bookstores have found they are competing in a much broader marketplace than when they opened shop.

�It has been a struggle,� said Jane Stroh, owner of The Bookstore in downtown Glen Ellyn. �But I think it has been a struggle fro all independent businesses in the face of large corporations.�

Stroh, who bought the store in 1997, said her decision to operate a small bookstore was one she made for the joy and love of books.

�If I were looking to make a lot of money, I wouldn�t do it,� she added. An employee of The Bookstore since 1985, Stroh went in with her eyes open, well aware of the complications of competing in the book market.

�The competition isn�t other (independent) booksellers, we work together,� she said. �National chains are certainly competition, but a lot of us have made it through.�

I have a love of independent booksellers, and patronize their stores. I can tell you personally that you DO compete against one another, as well as Wal-Mart.

Posted by Kevin at 8:21 PM

January 6, 2005

Best Buy vs. Wal-Mart

Business 2.0 is profiling the unique sales culture at Best Buy and how it is being tweaked to compete with Wal-Mart. The article is available to subscribers only, but here's an excerpt:

The colder reality is that Wal-Mart (WMT) is coming. About a year ago, the retail behemoth began a massive push into the higher-end consumer electronics that have been Best Buy's most lucrative domain. As always, Wal-Mart is ruthlessly cutting prices -- the same formula that the company, with 2003 sales of $256.3 billion, has used to steamroll rivals in virtually every retail category it's ever entered.

According to the article, Best Buy's approach centers on uptraining "blueshirts" (those people you see on the floor) to focus on providing complete solutions to customer needs as a way to increase the total dollar amount of each sale. Some analysts call the strategy risky--arguing that low-level employees (who aren't paid on commission, by the way)--will not be up to the task.

I give Best Buy a little more credit than that, and Wal-Mart a little less.

As an employee of a high-end audio electronics manufacturer, I wonder how successful Wal-Mart will be in meeting its goals. High-priced electronics purchases are moments to savor for most buyers. The Wal-Marts in Phoenix metro and its suburbs are noisy, crowded, and unpleasant.

And now that I think about it, the last five trips I made to Best Buy I was personally greeted at the door and an associate in the store always asked if I needed assistance.

Posted by Brett at 12:12 AM

January 5, 2005

Hannaford Squeezes Out WM

An interesting letter to the editor in the Augusta, Maine Kennebec Journal:

Elderly people and others who live in the area can safely walk to the Willow Street store without fear of being run down trying to cross the street at the rotary. Unless I am off base, I thought the Hannaford management was all about serving the needs of the public. There is already one super-size Hannaford off Western Avenue. Do we really need two super-size Hannafords in Augusta? Are they trying to run Shaw's, WalMart, and Sam's Club out of business? If there really is such a need for another Hannaford store, why not locate it somewhere else where it makes more sense?

Hugh E. Sipowicz


Actually Hannaford is just as greedy as the rest of us, Hugh. And it would definitely like to run WM out of business.

Posted by Kevin at 11:42 AM

January 3, 2005

Impact of no WM Supercenter Near the White House

Did you know that the closest WM Supercenter to the White House is 48 miles away--in Fredericksburg, VA? That helps explain why in the DC Metro area, WM is not in the top 5 of grocery sales, and in fact is almost completely absent:

At stake for the supermarkets is the $8.2 billion a year that area shoppers spend on groceries. For shoppers it will mean more choice and, the newer chains say, more competition on price and service. For workers, it poses a challenge to organized labor because only Giant, Safeway and Shoppers Food Warehouse are unionized.

Giant Food LLC, with 130 stores, controls 42 percent of the local supermarket business. Safeway Inc., with 107 stores, has 26 percent of the market. Shoppers Food Warehouse Corp. is a distant third with 39 stores and 13 percent of the market. The market figures were compiled by Food World, a Columbia-based trade publication.

The article doesn't even mention Wal-Mart, even though Wal-Mart has been the number 1 grocer in the US since 2002.

Posted by Kevin at 9:40 AM

Texas Grocer Competes with WM

In its sprint to become the nation�s biggest grocer, Wal-Mart Stores Inc. has built hundreds of "supercenters" across the country and, along the way, forced others to dance to its tune.

But in Texas, a private family grocery chain is teaching Wal-Mart a thing or two about the food business.

Charles E. Butt and his HEB supermarkets have found a formula for not only surviving, but thriving in the same markets as Wal-Mart by playing off a simple creed: "We�re the local guy," Butt says.

From Texas-shaped tortilla chips to a special rubbing alcohol for keeping South Texans cool in the sizzling summers, HEB Grocery Co. has made catering to local tastes an obsession that has paid off with growing market share.

HEB�s 304 stores and $11 billion in annual sales are dwarfed by Wal-Mart, which has built more than 1,600 grocery-enhanced supercenters nationwide since 1988. But while HEB is relatively unknown among consumers outside of Texas, it�s providing a blueprint for competing successfully against Wal-Mart that�s being closely watched by the grocery industry. Even as Wal-Mart has spread throughout the state, with 213 supercenters, HEB has held on to market share above 60 percent in key cities, including Austin and San Antonio.

This was originally in the Wall Street Journal, but somebody did us the favor of making it free...

Posted by Kevin at 9:29 AM

November 28, 2004

How a Small Toy Store Competes with WM, Target, and Toys R Us

Absolutely fantastic article in the Lakeland Ledger (FL) about a local small toy store competing successfully with the big boxes:

LAKELAND -- Marchets Toys & Hobbies, a small shop tucked in the corner of Southgate Shopping Center, is a reminder of life before the big-box stores.

There is no intercom announcing deals in the produce and lingerie departments. Customers aren't pushing carts filled with everything from motor oil to Barbie dolls.

Marchets has been in business for nearly 50 years. David Nickels, 38, a Wisconsin native who lived most his adult life in Tampa and worked for the University of South Florida before buying the store, is the fifth owner. He took the toy store's helm three years ago....

The Ledger asks him 5 questions, and lets him answer in detail. Here's the first:

Q. What's the most difficult part of owning Marchets?

A. The hardest thing is carrying things you can't buy at Wal-Mart and Target. About 95 percent of what I have in here is unique.

It's tricky. I bought the business in September 2001, and then we had Sept. 11. The economy was really shaky and then with things like the hurricanes, I missed time because I didn't have power. You're at the mercy of the economy.

Toys "R" Us is having trouble because of Wal-Mart, so you know I'm being affected in some ways. But at the same time, I have no payroll and I don't have to accept shipments I didn't order.

If you're a chain store, you have to carry certain items. Every Wal-Mart has the same merchandise and it's sent to the store automatically. I can control my own money and my own stock. If I don't want to order something, I don't have to.

Read the whole story! Now! What are you waiting for?!

On a recent trip to my alma mater, my wife and I stopped in at Bank Street Books, a wonderful children's bookstore I had no use for as an undergraduate. It has an incredible selection of intelligent books for children, and if you're in the area (112th and Broadway, Manhattan), I'd suggest you stop in.

Posted by Kevin at 10:24 AM

November 27, 2004

Small Businesses Thrive against WM

In retailing the myth is that Wal-Mart makes retail start-ups doomed. This is just not true.

Small businesses can find wonderfully productive niches by learning how be like the early mammals and dance under the feet of dinosaurs

That's Jeff Cornwall, who links to Anita Campell's analysis of a BusinessWeek article that examines the rise of small business. Anita insists:
As it turns out, news of their death at the hands of Wal-Mart was greatly exaggerated...

We could have told them. It's about "the experience, stupid." We've written about that here on Small Business Trends many times.

When buying necessities, consumers go for price. After all, how much pleasure can you get out of buying paper towels and laundry detergent?

But when it comes to other items, consumers want shopping to be an experience. They want the pleasurable sensory experience, fabulous selection and great service that comes from shopping at niche retailers. You can get low low prices at Wal-Mart, but it's not exactly big on atmosphere.

Her inspiration from BW:
Driving these changes in cyberspace, at shopping malls, and on Main Streets are consumers who want more than low prices and name brands. "We see Wal-Mart around for generations to come," says Candace Corlett, principal of consulting firm WSL Strategic Retail. "But we're seeing on a day-to-day basis a shift in consciousness that there are other choices, that it's not always about the lowest price."

Consumers want to be inspired and often desire products that can't be had at discount behemoths. Many retailers are using a strategy popularized by Target -- signing big-name fashion designers to create a special line. Swedish clothing chain H&M's fall lineup includes clothes by Karl Lagerfeld. In a similar vein, Bath & Body Works is selling $25 Henri Bendel scented candles.

Some things just aren't Wal-Mart's bag. Most sporting gear is better at stores that specialize in such products, says Irma Zandl, president of retail consultancy Zandl Group. She notes that young adults she has polled are looking to buy from, a snowboarding Web site. Hot Topic sells a comprehensive array of gifts featuring characters from the foul-mouthed animated hit South Park -- definitely not Wal-Mart's cup of tea.

Posted by Kevin at 10:43 AM

November 26, 2004

Researchers say U.S. Military Personnel are Stupid

Not really. But they did say the military families go to Wal-Mart, even when it is more expensive for them to do so:

JACKSONVILLE, FL -- Researchers say military exchange stores are losing money to retail giant Wal-Mart.

They say military exchange stores are actually about 9% cheaper than Wal-Mart, and there is no sales tax.

Despite the lower exchange prices, many military families still go out of their way to shop at Wal-Mart.

The company says it builds near military bases because so many military families want to shop at its stores.

Some military exchange stores are considering combining back office operations to be more competitive with Wal-Mart.

IMHO, without reading the original report, I'd say that this is not a good summary of the research. Either WM offers goods that the military exchange doesn't, or the measure of savings is incorrect. Simply put, people are not that stupid.

Posted by Kevin at 11:45 AM

November 21, 2004

WM In the News

***Updated 3x***
(here scroll down to *Update 1, 2 & 3*)

Just a quick round up of a few news items concerning or otherwise relating to Wal-Mart in one fashion or another that have come to my attention.

The Los Angeles Times published an interesting article within today's edition of how a WM Supercenter is changing shopping habits in the Coachella Valley, as well as -- for better or for worse -- all the implications such big box stores brings along with it of course: Wal-Mart Effect Moves Into the Grocery Aisle.

Elsewhere, the Dallas-Fortworth Star-Telegram has what is becoming within the news media lately a very common place report of how and why: Stores look to counter Wal-Mart effect over holidays.

In other news, this morning's edition of The New York Post reports (here):

Wal-Mart heiress Paige Laurie got rich off "Everyday Low Prices" � but she allegedly paid top dollar every day to hire a fellow student to do her homework.


Read the entire story, here.

In addition, for more along the same storyline, ...

..., a quick search found that Friday's (November 19, 2004) edition of the St. Louis Post-Dispatch included an article within their sports news section that reported how (here):
[emphasis mine]

The daughter of Blues owner and University of Missouri benefactor Bill Laurie paid her roommate at the University of Southern California about $20,000 over three years to write papers and complete other class assignments for her, according to a report on ABC's news- magazine "20/20."

Elena Martinez said she was Paige Laurie's roommate freshman year at the school in Los Angeles. Martinez said it wasn't long before she was writing reports and papers for the daughter of businessman Bill Laurie and Nancy Laurie, an heir to the Wal-Mart empire. In return, Paige Laurie paid Martinez hundreds and sometimes thousands of dollars at a time.


In my opinion, this particular article (above) from the Post-Dispatch is a must-read (here).

For the complete story as reported by ABC News 20/20 however, make certain to check out [emphasis mine]:

Big Cheats on Campus

Cheating Has Never Been Easier -- Especially for the Wealthiest Students


Student Says Heiress Paid Her $20,000 to Do Much of Her Coursework
[page 2]


... Paige Laurie is a granddaughter of one of the founders of Wal-Mart. Her mother has more than $2 billion. Her father owns the St. Louis Blues hockey team.


Read about it, here (jump to page 2, here).

Of course it would be good to hear from the other side concerning all of this, but they're not talking, so we may never know what truly took place or not.

If this were to prove to be true however, it sounds to me like Elena Martinez and (Elizabeth) Paige Laurie should be trading places as well as fortunes; since the former did a lot of the work and the latter got all the credit as well as the degree as a result and, of which her parents were so proud, private matter or not (of course that will never happen).

By the way, views of the Paige Sports Arena are available, here (the bottom view is a live Webcam view of the outside of the arena) [via chrysanthalbee is me, here (via Yoni @ College Basketball, here)].

While the Webcam shots (both the one frozen in time as well as the live view) are worth checking out, the one that is *most definitely* the item to check out is the excellent image or, rather, an exclusive artist�s rendering of the new facility available on the Phog Blog, here, which nails it perfectly.

As they say, a picture is worth a thousand words and, this particular one is priceless!

*Update 1*

In more current news on the subject and, in what is a rather quick turnaround -- especially given all the non-denial denials from the Lauries and their most loyal supporters, etc.: In scandal�s wake, Lauries give up naming rights for arena [via Columbia Daily Tribune (Tuesday, November 23, 2004); initial heads up (of this first item in this particular update) provided via Phog blog, here].


The family transferred the rights to the University of Missouri, the university announced late this afternoon. The Board of Curators is to meet later to decide whether to change the name and, if so, what to call it.

MU Athletic Director Mike Alden said the Lauries contacted the university today to discuss relinquishing the naming rights.


In addition, from the same article, regarding Paige Laurie's alledged cheating at the University of Southern California:


Paige Laurie graduated from USC in the spring with a bachelor�s degree in communication. USC said Monday it would investigate Martinez�s claims and said there was precedent for revoking an issued diploma.


This is also yet another quick turnaround from USC's previously reported initial stance on the matter.

Read the article in full, here.

The Kansas City Star has a brief article devoted mostly to the developing story at USC, here [requires free registration].

*Update 2*

While doing some blog searching I came across a post on FWNED that includes one of the best pictures so far of Paige Laurie, this one with her sitting with her father, here. Yet the title of the post alone is worth checking it out however.

Then I just came across a recent post blogged by Ami, a free spirit and thinker, whom reports (here):


I tuned into some local news tonight (I'll talk about the reason for that later, when the time is more appropriate), and saw a story about a girl being accused of cheating at USC. I wasn't paying too much attention at first, but the name sounded familiar and the face looked familiar... Paige Laurie... Yes! She was in my class! It was Sarah Banet-Weiser's Children and Media. She was the typical Mercedez-driving, Louis Vuitton-loving, dumb USC blond sorostitute (sorority + prostitute), but I didn't know she was the heiress to Wal-Mart, and she had some sports arena named after her in Missouri. She paid her freshman roommate $20,000 in 4 years to have her papers written and other projects completed. And she graduated with a 3.5 GPA.


Read her post in full, here.

It is certainly a small world, especially within the blogosphere.

Definitely interesting ..., true enough Ami!

*Update 3*

As a final update to provide both a follow-up and closure to this particular news item:

USA Today featured an Associated Press article on its Website Wednesday (November 24, 2004) reporting, prior to it actually becoming official, that: College removes name of Wal-Mart heiress on arena.

On Friday (November 26, 2004), once it was official, the St. Louis Post-Dispatch published an article announcing: Turning the Paige: It's now Mizzou Arena.

*Note*: Made several edits and changes as well as a few additions for the purposes of clarification and readability, along with providing updated as well as related information; added an update with a follow-up of more current news; added update 2 with some good blog finds, etc.; added update 3 to post a final news update: last updated on Saturday, November 27, 2004 at 1:09 PM [EST].

Posted by Morgan at 11:31 PM

November 17, 2004

Sears + Kmart = Competition

In a surprise move, Sears and Kmart unite:

CHICAGO (AP) - The discount retailer Kmart Holding Corp. (KMRT) is combining with one of the most venerable names in U.S. retailing, Sears, Roebuck & Co. (S), in an $11 billion deal that will create the nation's third largest retailer.

The company being created by the surprise combination announced Wednesday would be known as Sears Holdings Corp., but will continue to operate the Kmart and Sears stores under their current brand names.

The combined company is expected to have $55 billion in annual revenues, 2,350 full-line and off-mall stores, and 1,100 specialty retail stores. That will mean it will trail only Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT) among the biggest U.S. retailers.

It looks like Kmart bought Sears, but both boards unanimously approved, so who bought whom doesn't really matter to much.

H/T: Drudge

Posted by Kevin at 10:25 AM

November 16, 2004

Fortunoff to Sell Majority Stake

Fortunoff, an upscale privately-owned retailer in the New York metro area has decided to sell a majority stake, in order to better compete with WM and others:

Fortunoff, the famed furniture and jewelry seller, said late last night it is selling a majority stake to two private investors, making it the latest in a long line of local retailers to give up its independence in an era of relentless competition....

They hope to open two new superstores in the next three years, and are looking at locations out of its New York-New Jersey base. Florida, Pennsylvania and Virginia have been mentioned as possible locations.

Fortunoff started with a single storefront in Brooklyn 82 years ago and grew to be a favorite destination for generations of Long Island and New York City shoppers. The shops - there are now four superstores, plus nine satellite stores offering selected categories of merchandise, including the Fifth Avenue jewelry store in Manhattan - won intense loyalty from customers, who came for the personal service and high-quality goods at discount prices...

But independent, locally based chains selling general merchandise have not been able to survive the onslaught of giant discounters like Wal-Mart. Some of the local chains have sold out to their rivals, often under pressure, and some simply shut their doors, as Swezey's did late last year.

Note: I worked in a Fortunoff warehouse one summer. Good pay. Decent bosses. Outdated computer technology. No discount prices, and I don't really see it competing with Wal-Mart; Fortunoff's service is/was A+.

Posted by Kevin at 10:49 AM

November 14, 2004

Guest Post: Sterling Wright Reviews the CNBC Wal-Mart Special

The following is a review of the recent two hour CNBC special report on Wal-Mart. The author is Sterling Wright, who works for WM, and blogs at

The CNBC documentary talked about the competitve keys that made Wal-mart
unique and the largest private employer in America. Wal-Mart's competitve
edge might be driven by its logistics and information systems; however,
it cuture is the most significant factor. If one visits the Headquarters of
the largest company on the face of the planet, one will find a culture od
thrift. Simply stated, the CEO's office looks exactly the same as the store
managers on the front line.

More importantly, the documentary touched on the fact that Wal-Mart's
culture of thrift also correlates to they way it interacts with suppliers
and competitors. One the main entrance wall of Wal-Mart's heeadquarters
which looks like a gaint factory, you will find wanted posters of the CEO's
of its top competitors. Vendors will also notice that each meeting room has
the golden rule for supplier's, "no gifts accepted!". Wal-Mart has acheived
much of its growth because it walk's the walk of the timely preached lessons
of Sam Walton: "giv[ing] your customers what they want".

Sam Walton focused on building a shopping experience that offered a wide
assortment of good quality merchandise, the lowest possible prices,
guaranteed satisfaction with customers buy, friendly, knowledgeable service,
and convenient hours. The documentary touched on Sam's relentless
efforts. One of his friends noted that he was once on a plane flying to a
meeting, when Mr. Walton spotted a very empty Wal-Mart parking lot. He
immediately "nosed dived" the plane and landed. He went straight to the
store and asked the store manager what "we were doing wrong". The store
manager explained that a local holiday event was going on for 2 hours in
which the entire town participates. He told Mr. Walton not to worry and to
stop back by in 2 hours.

Wal-Mart is successful because of the work ethic culture it built. It's not
unusual to see everyone in the office by 6:15 a.m. Some people even arrive
well before 5:00 a.m. Every Saturday morning, Wal-Mart's management
throughout the world get together at 7 a.m ,going over what's working and
what's not! Even the semi-annual managers' meeting kicks off by 6 a.m.
Simply stated, the documentary touched on the fact that Wal-Mart's hard work
and information gathering and dissemenation techniques are the secret to its

Posted by Kevin at 7:08 AM

November 10, 2004

WM's Next Victims

On this page, Forbes introduces its analysis of WM's next commercial victims, after pummeling Toys R Us:


Of particular interest is how WM is becoming an ever largest retailer of gasoline:

There are 1,555 stations on Wal-Mart properties, 300 of which are operated directly by Wal-Mart's warehouse arm Sam's Club and the rest by third-party vendors like Murphy USA. Launched in 1996, its pumps already have a 3% share of U.S. retail gas sales--the tenth largest in the U.S. As Wal-Mart's share grows, the only question is whether Wal-Mart will oust its vendors and go it alone.

Posted by Kevin at 10:29 AM

November 1, 2004

Competing with WM?

An article that seeks to demonstate that competition is a discovery process actually demonstrates that you must always read the byline:

Donny Lowy, who runs,, a wholesale and closeout business, has been able to see how retailers who take this approach are able to hold on to more of their customers even when they do not offer the lowest prices as compared to other retailers.

�One method for building a one on one relationship with your customers is by having a database of your customers which includes their contact information, buying patterns, and selection preferences. By using this method you can also contact your customers when you have a new selection that matches their needs.�

With the landscape becoming very competitive in some local markets, retailers have also been choosing to join the ranks of eBay members who make a living selling on the online auction site.

�eBay is a great way to reach millions of customers who might live in an area in which either a retailers items are not as available, or in an area for which there is a higher demand for those items altogether.� Donny added.

You can also stay competitive by locating closeouts, liquidations, overstock, and surplus through online search engines such as By adding off price merchandise into your inventory you will be able to work on a higher profit margin while offering your customers prices that they will not be able to find, even in a competitive retailer like Wal-Mart.

But note who is writing this:
Donny Lowy is the author of seven books including Secrets of eBay and The Truth about eBay.

He also owns and manages and

No self-interest here.

Posted by Kevin at 3:43 PM

July 14, 2004

WM on Top of Fortune 500--Again

WM is the largest firm, but not the most profitable:

US retail titan Wal-Mart Stores Inc, with 1.5 million employees, topped the Fortune Global 500 biggest firms last year -- its third straight year -- and British Petroleum took second spot.

Wal-Mart spearheaded a pack of 189 American companies in the top 500, Fortune said on Monday. The discount chain's revenues increased 7 percent last year to US$263 billion and its workforce swelled by 100,000 people to 1.5 million employees.

But Wal-Mart's profits, which jumped 13 percent to US$9.1 billion last year, were not the largest.

Not counting MCI, the number 168 company, which emerged from bankruptcy with a "paper profit" of US$22.2 billion, Texas oil giant Exxon Mobil Corp was the most profitable with net profit of US$21.5 billion.

Citigroup Inc was second most profitable with US$17.9 billion.

Posted by Kevin at 12:56 PM

July 3, 2004

Wal-Mart Attempts to Change its Ill-Fashioned Image Falls Short

It appears that Wal-Mart's attempt to change its ill-fashioned image is falling short, though some within WM would have us believe otherwise.

Wal-Mart's fashion dilemma

The Associated Press
7/2/04 9:12 AM



The Wall Street Journal

Two years ago, Wal-Mart Stores Inc. set out to do what was once unthinkable: get serious about fashion.

The world's largest retailer -- known for being cheap but never chic -- had bulked up its fledgling product-design team and dispatched buyers and designers to Europe for inspiration. Most importantly, Wal-Mart announced it would roll out the contemporary apparel line George, which already had enjoyed a decade of success in the United Kingdom.

Stateside, nervous fashion retailers bristled. With apparel sales already stalled, the industry worried it would be the next victim of the so-called Wal-Mart effect. The Bentonville, Ark., retailing chain is known for dominating nearly every consumer product category it sets its sights on -- from toilet paper to toys -- forcing down prices and flattening competition along the way. As the largest seller of clothing basics, such as jeans, sweats and underwear, Wal-Mart sales already accounted for roughly 25 percent of the U.S. apparel market.

Four seasons out, George, which is targeted to women 30 to 50 years old, is hardly the megahit industry denizens feared. Although Wal-Mart insists sales of the George are ahead of plan this year, apparel suppliers, analysts and observers say sales have been far below what the fashion world was expecting.

"(George) is not flying off the shelves," says Marshal Cohen, senior analyst with NPD Group, a Port Washington, N.Y., market-research firm that tracks apparel sales.


One problem seems to be the fact that:

Not that the merchandise is drab or costly. Sharply-priced George offers Chanel-inspired tweed jackets and flouncy floral skirts, with most items less than $20. The problem, rather, appears to be with Wal-Mart's execution. In-store displays are small and often hard to find. Some feel it has suffered from a lack of advertising in a heavily promotional industry. Others perceive George as less a fashion collection than a gaggle of basics in better colors and fabrics.

"When you launch a fashion brand you should do it with 360-degree support in terms of how it is merchandised and placed in stores and you need to talk about it -- difficult issues for Wal-Mart," says Mandy Putnam, an analyst with Retail Forward, a marketing research and consulting firm based in Columbus, Ohio.

George's wobbly start raises the larger question of whether Wal-Mart's low-price, commodity approach is too restricting for a fashion brand. "Wal-Mart is really known for price," says Todd Slater, an analyst with Lazard, a New York investment bank. "But that is not the primary goal in buying fashion apparel."


Yet, still, one is left to wonder if other factors besides those mentioned in the above referenced article may be contributing to some shoppers habits, particularly among the population of momen shoppers that these fashion are targeted and geared to attract.

Maybe, as big as they are, they can manage to afford to stay both in denial and in business all at the same time.

Who knows?

Read the article in full, here.

Posted by Morgan at 3:14 PM

June 30, 2004

Shaking Up the Big Boxes: The Bigger Picture

Being that I believe the court battle in question really has more to do about the bigger picture and the retail industry across the board, hence less to do about Wal-Mart itself, anyway; I found this Associated Press article from last week (Thursday, June 24, 2004) of interest, because it explores how the:

Wal-Mart Case May Prompt Industry Change [emphasis mine]:

By MELISSA NELSON Associated Press Writer

LITTLE ROCK (AP) - Retail experts say a nationwide class-action sex-discrimination lawsuit against Wal-Mart Stores Inc. could lead to changes within the world's largest retailer and among competitors.

"If the allegations are true, it will very fast lead to radical improvement of the situation. It is absolutely in (Wal-Mart's) best interest to resolve this as fast as possible," said Kurt Barnard, president of Retail Forecasting LLC in Upper Montclair, N.J.

Another analyst noted that those changes may already have begun before the decision Tuesday by a federal judge in San Francisco to grant class-action status to a suit filed three years ago.

The suit originally filed on behalf of six women will now represent as many as 1.6 million current and former employees - the largest private civil rights case in U.S. history. The suit claims Wal-Mart set up a system that often pays female workers less than their male counterparts for comparable jobs and bypasses women for promotions.


Robert Blattberg, director of the Center for Retail Management at Northwestern University's Kellogg School of Management, said the lawsuit will force all retailers to look at whether they are complying with equity laws.

"Most companies spend a lot of time trying to avoid these types of problems," he said. "If these cases start becoming prevalent, it will significantly increase the cost to retailers to track and determine if they are in compliance."

Wal-Mart's size and its staunch opposition to unions make it any easy target for such lawsuits, he said. "They are admittedly anti-union, and the unions like these types of lawsuits because they would like to see Wal-Mart bend," he said.


Yet the most noteworthy portion of the article happen to be found within the three closing paragraphs [emphasis mine]:

But retail experts said negative publicity from the lawsuit is unlikely to hurt the company's bottom line.

"In the long run, it doesn't hurt Wal-Mart because Wal-Mart is Wal-Mart; they are resistant," Barnard said.

"People don't go to Wal-Mart because they love Wal-Mart," Blattberg agreed, "they go to Wal-Mart because they like their prices."

Read the rest of the article, here.

The fact remains that Wal-mart can of course afford to continue fighting this as they have vowed to, even if they should end up losing the actual case in the long run. As far as they are concerned anyway, it is a no lose proposition for them either way the case turns out.

As the article points out however, since this is an industry-wide practice and thus more of a major problem for Wal-Mart's competitors, they are not as likely to fare as well as Wal-Mart is inclined to do and, smelling blood as well as a potential gain of the market share in addition, may change their own practices where they need changing in these regards.

Posted by Morgan at 12:09 PM

June 24, 2004

Aldi Enters Switzerland

Swiss consumers are already starting to see prices fall as the two dominant retailers prepare to fend off Aldi.

Aldi � famous in Germany and elsewhere for offering a narrow range of discounted brands � has applied to Swiss cantonal authorities for a building permit.

The chain wants to open a SFr2.1 million ($1.7 million) branch in Romanshorn, in the northeast of Switzerland.

The plan is part of a strategy to open dozens of new stores throughout Switzerland.

Industry experts believe Aldi, along with its German competitor Lidl, will need to open more than 60 discount supermarkets to break even.

For established Swiss retailers such as Migros, Coop and Denner, the threat of such newcomers has triggered a price war....

Denner, which is Switzerland�s third-largest supermarket chain, last week launched a campaign promising discounts of up to 30 per cent.

Note however, that many folks oppose Aldi because of traffic concerns:

However, many local authorities are becoming increasingly opposed to new developments that increase traffic.

�Everyone is very sensitive to traffic, so local councils are reluctant to approve Aldi-style developments,� said Wangler.

Posted by Kevin at 1:46 PM

June 11, 2004

Chicago Aldermen

Either you set up and protect institutions--like property rights and a court system--and let a free people choose in the marketplace, or you tell an unfree people how to act in the marketplace. Many Chicago Aldermen, seeking a third way, want WM to succeed only so much if they even let it enter the South Side:

Specifically, the ordinance aims to require companies to pay a living wage, provide a minimum level of benefits, remain neutral in union attempts to organize workers and promise not to use their buying power as leverage to force competitors to close up shop.

"The philosophy is to make sure anyone seeking to do business in Chicago contributes to the overall economic well-being of the city," North Side Ald. Joe Moore (49th) said.

"Without it, these businesses could end up costing the city economically with lost businesses and jobs at a faster rate than (places like) Wal-Mart provide.

"It's like the oil barons of 100 years ago. The oil industry got so big and powerful that it resulted in no competition at all."

Mr. Moore should stick to politics, because his economic history is senseless. Other aldermen don't know how to respond:
Ald. Howard Brookins Jr. (21st), whose South Side ward includes the proposed Wal-Mart, said he's skeptical of the proposal to put conditions on business redevelopment agreements.

"I'm fearful it will be another thing that may run business out of the city of Chicago along with the head tax and other things businesses have to agree to come into the city," he said. "Maybe it's good in theory ... but I'm afraid businesses will say it's easier to locate in Evergreen Park, Bedford Park, Skokie and other places along the perimeter of the city and still get (Chicago's) market."

Sir, it's not good in theory; in fact it's bad in the theory, and the theory is bad itself. However, it will give aldermen far more power, control, and "respect" than they have today; maybe that is the real reason it is being proposed?

Posted by Kevin at 10:04 AM

June 9, 2004

5 and 10

Marlene Gelfond fondly remembers the 5 and 10 of her youth:

I miss the three of them. It was always fun to stop in and visit them, roam around for notions, makeup, crayons, pencils, colored thread, hair clips and curlers. And when the wafting aromas of the food counter reached us, we would pull up a stool for a malted milk.

Yes, I miss them very much ... the three dime stores I grew up with in Chicago, Woolworth's, Neisner's and Kresge's.

Posted by Kevin at 8:32 AM

June 8, 2004

John Menzer Interview

The Chinese People's Daily interviews John Menzer, chief executive of WM International. You have to marvel at the mix of national pride, communist propaganda techniques, and an avid support of market-driven expansion and prosperity:

Excited at talking about Wal-mart's story in China, Mr. Menzer described the incredible way Wal-mart has gone through in China since it entered the country in 1996. Starting with a shopping mall and a membership store in Shenzhen, the giant retailer has extended its business into 18 cities in China with 39 stores employing more than 20, 000 people. The great Chinese culture and the Chinese people full of enthusiasm for development have created Wal-mart's best chain stores.
Wow. Also, it sense an impulse towards a buy Chinese so Chinese work view:
As to the question about whether it would keep on its policy of local procurement, Mr. Menzer answered that they buy goods in bulks locally in all countries, including China.
The rest of the article has Mr. Menzer not answering directly any of the questions asked.

Posted by Kevin at 12:40 PM

May 31, 2004

WM has 27% of Toy Market

Independent toy stores not the hardest hit--yet. The Washington Times reprints a UPI story:

Howard L. Davidowitz, chairman of national retail consultant Davidowitz & Associates, estimated Wal-Mart now controls 27 percent of the toy market, the Washington Post reported Monday.

Most of that market share has been taken from big toy stores, but increasingly independent toy stores are losing market share to Wal-Mart, too.

Posted by Kevin at 1:49 PM

May 28, 2004

WM is Top Grocer in Birmingham

Move over Bruno's, WM is at your tail:

Wal-Mart now commands 31.3 percent of the $1.7 billion Magic City market, picking up 4.5 percent during the quarter. Bruno's controls 25 percent, down 2.6 percent from the first quarter.

Jacksonville, Fla.-based Winn-Dixie Stores Inc. also is slipping locally, down 1.8 percent to a 17.3 percent share.

Lakeland, Fla.-based Publix Super Markets Inc., which now operates nine stores in Birmingham, has taken fourth place from Piggly Wiggly with 6.7 percent of the area's grocery business.

Bruno's has been dropping market share real fast:

Bruno's lost 6.3 percent of the market in 2003, while Wal-Mart added 9.2 percent.

Posted by Kevin at 10:51 AM

May 25, 2004

European Expansion

Sterling Wright sends in this must-read article from Progressive Grocer:

Shares in French supermarket groups rose today after Wal-Mart, the world's biggest retailer, announced it wanted to open stores in every European country and would reach this goal through acquisitions and internal growth....

Those rises followed a Financial Times report that Wal-Mart c.e.o. H. Lee Scott was interested in opening Wal-Marts across Europe, and that the retailer's international growth would come from a combination of strategic acquisitions and greenfield expansion....

Right now Scott is in the Belgian capital, where he is scheduled to meet European officials, including competition commissioner Mario Monti, according to the Financial Times....

According to one investment banker, "There is no doubt [Wal-Mart wants] Carrefour. It makes the most sense for them. They can't do anything big in the U.K., and Carrefour gives you not only France, but southern Europe and emerging markets. Both in size and format, Carrefour works better for them than Casino."

This would be an enormous move...

Posted by Kevin at 5:47 PM

May 17, 2004

Overnight RVing at WM

Nationwide, a common practice is to park one's RV overnight in the parking lots of WM. It's safe--with the floodlights always on, and its free (since many RVers are exceptional good customers).

This has caught the ire of campground owners, one of which wants to use local zoning laws to eliminate the competition.

Ian Robertson, a planning consultant with Inukshuk Planning and development, helped draft the city's zoning bylaws in 1997.

"Right now the law says you can't camp on private property," he says.

Robertson says the zoning bylaws are clearly written and easy to understand.

I don't think that RVing=camping under the city code, but one must applaud the ingenuity of Mr. Robertson in claiming that zoning codes are "clear", which is almost never the case.

The park owners are threatening to sue the local governnent unless overnight parking is prevented. However, the local government says it has no authority to regulate overnight parking on private property:

Park owners say it's time for city council to move on the issue.

"We've got another big new store coming and you know it is going to be pretty hard for them to put up signs saying "No overnight Parking" when their direct competition allows it," says Morris Kostiuk, owner of the Pioneer RV park in Whitehorse.

"So the pressure will be on them to allow it and pretty soon we're going to have them parked all over everybody's property just so they can get their business and that's the issue. It is strictly a city issue."

Kostiuk is urging the City to review the B.C. court case then meet with Wal-Mart officials to arrange a ban on the practice.

He says Whitehorse area RV parks will lose business if they don't.

As this is a nationwide practice for WM, this is not strictly a city issue at all. After much debate, an association of local governments declined to pass an ordinance banning overnight parking. In fact, the local government pushing the issue seems to want to use the issue as leverage over Wal-Mart in other areas:
The Yukon government has helped fend off an attempt to ban overnight RV parking at the Wal-Mart store in Whitehorse.

Territorial officials convinced delegates to the weekend meeting of the Association of Yukon Communities in Haines Junction not to pass a motion to stop the practice....

Magnuson suggests Whitehorse overstepped its bounds by asking for specific legislative changes.

He says the territorial government first has to be convinced that overnight parking at the Wal-Mart is a problem.

Magnuson says the government would then decide how to fix it. After his comments, the issue was put to a vote and defeated.

Posted by Kevin at 2:02 PM

May 13, 2004

Earnings at WM and Target

WM and Target not only have their fans among consumers, but also among stock pickers. However, the performance of their stocks is, in my opinion, far closer than the customer experience of their stores.

Earnings per share at Target came in at 48¢, while they came in at 50¢ for WM.

Both Target and WM expect same-store sales growth of 4-6% in May (over last year).

Posted by Kevin at 4:21 PM

WM Donut Wars Anyone?: *Yet Another Update*

It appears that someone at Wal-Mart (WM) headquarters has managed to start what could easily turn into a major mess between competitors Dunkin Donuts and Krispy Kreme Donuts Inc., each of whom are setting up shop(s) inside certain WM stores.

CNN/Money reports that Dunkin' Donuts Set to Open 10 Shops in Wal-Mart Stores

Dunkin' Donuts said it agreed to open 10 shops inside Wal-Mart stores in the next three months, adding to the retailer's growing roster of restaurants in its stores, Thursday's Wall Street Journal reported.

The deal could offer a major boost to Dunkin' Donuts' goal of stretching beyond its Northeast stronghold to have a national market. If the initial test is successful, Dunkin' Donuts, one of the biggest coffee retailers in the U.S., says it hopes to expand to additional Wal-Mart outlets.

However, Dunkin' Donuts, which is part of British spirits company Allied Domecq PLC (AED), could come up against Krispy Kreme Donuts Inc. Wal-Mart Stores Inc. (WMT) already has an agreement with Krispy Kreme to test two of its outlets inside Wal-Mart stores, with a plan to open five more this quarter. Furthermore, Wal-Mart, which has about 3,000 U.S. stores, already sells boxed Krispy Kreme donuts in the main area of more than 500 of its stores.

Wall Street Journal Staff Reporter Deborah Ball contributed to this report.

It will be quite interesting to watch this particular WM sponsored food fight as it evolves.


In addition, via Business Wire -- which came my way via a Google News Alert re: Wal-Mart, is this recent Dunkin Donuts press release:

Dunkin' Donuts to Establish Retail Presence in Select Wal-Mart Stores; Famous Brand Names Join Forces to Open Store-within-a-Store Concept

RANDOLPH, Mass.--(BUSINESS WIRE)--May 13, 2004--Wal-Mart and Dunkin' Donuts, the world's largest coffee-and-baked goods chain, announced today the opening of the first Dunkin' Donuts shop within a Wal-Mart store. The store-within-a-Wal-Mart concept will celebrate its grand opening Friday, May 14, in North Wyndham, Connecticut. The brands announced plans to open ten stores in the next three months in Wal-Mart locations in Connecticut, Massachusetts, New York, Ohio, Pennsylvania, and Vermont.


Prominently positioned in the front of each Wal-Mart, the in-store Dunkin' Donuts shops will look and feel just like a neighborhood Dunkin' Donuts store. Each shop will offer a full menu, complete with Dunkin' Donuts' legendary hot coffee, recently named Best Coffee in America on NBC's "Today" Show. The menu will also include lattes, cappuccinos, breakfast sandwiches and, of course, donuts. Shoppers and Wal-Mart associates will be able to take a break in a comfortable restaurant environment.

For an added treat, some of the Dunkin' Donuts stores will also feature ice cream from Baskin-Robbins, a sister ADQSR brand. Shoppers will also have the option to pre-pay for certain Dunkin' Donuts and Baskin-Robbins menu items at the Wal-Mart registers, along with the rest of their purchases, and have these items ready for pick up at the in-store Dunkin' Donuts shop to take home or to enjoy in the store.

The Dunkin' Donuts and combined Baskin-Robbins will be owned and operated by franchisees and located in markets where Dunkin' Donuts enjoys a strong retail presence. The next in-store shops will open in Walpole, Massachusetts and Monaca, Pennsylvania within a month.


Hmmm, donuts a la mode anyone?

*Yet Another Update*

Two related items with additional information or news tid bits (donut holes I suppose) and, lastly, a little food for thought.

FoxNews: Business
Dunkin' Donuts to Enter Some Wal-Mart Stores in Blow to Krispy Kreme

Thursday, May 13, 2004

CHICAGO���Dunkin' Donuts Thursday said it will open 10 shops inside Wal-Mart stores, helping the world's largest retailer broaden its branded fast-food offerings.

News of the deal could be a further blow to Dunkin' Donuts' rival Krispy Kreme Doughnuts Inc. (KKD), which has already set up shop inside seven Wal-Mart Stores Inc. (WMT)�locations. Krispy Kreme warned earlier this month that the low-carbohydrate dieting craze would dampen profits, and it cut its expansion plans.


Bentonville, Arkansas-based Wal-Mart has been steadily broadening its offerings of fast food in an effort to provide respite to shoppers navigating its vast, large-format stores.

The retailer also houses some 950 hamburger McDonald's Corp. hamburger stands, and it recently entered a deal to offer 100 sandwich shops run by Blimpie International Inc.

In addition, Wal-Mart has about 1,700 of its own Radio Grill and Wal-Mart snack bars, said Sharon Weber, a company spokeswoman. Wal-Mart limits its restaurant offerings to one format per store, she said.

"We really are looking at different formats and different plans to offer our customers," Weber said, adding that it was too early to determine how many total Dunkin' Donuts were planned. "It is important for us that they can sit and relax."

And, finally, some food for thought?

Motley Fool: Our Take
Slam Dunkin' at Wal-Mart?

*Note*: Added more, including excerpts of a (as well as links to) corporate press release, news article and commentary: last updated on Thursday, May 13, 2004 at 7:17 PM [EDT].

Posted by Morgan at 9:50 AM

May 11, 2004

Bailian: WM Meets its Match?

For quite some time now, Americans have been focusing on the transfer of manfacturing jobs to China. While this doesn't really represent what is happening--manufacturing is become so productive that jobs are vanishing, leading to a higher percentage of manufacturing jobs being done in China--it does represent a real shift in economic activity.

And that shift is a dramatic increase in the size and purchasing power of the Chinese middle class. So much so, that they have their own "big-box" stores, 7 of which recently combined into the Bailian Group. And Forbes reports that the Bailan Group is ready to take on its foreign competitors:

Born of a seven-way merger last year, Bailian said in March it aimed to expand sales by 20 percent this year to more than $13 billion, and squeeze into the Fortune 500 circle of the world's largest companies by 2010.

For now, foreign firms maintain a tiny footprint. Sales generated by overseas companies accounted for less than 3.5 percent of retail sales in China, state media have said.

But they are making their presence felt.

Wang said Carrefour, Wal-Mart, Germany's Metro AG and three other unspecified foreign enterprises posted sales of 49.5 billion yuan last year -- equivalent to about 18.3 percent of revenues for the industry's top 30 players.

They ran 1,748 stores, or 16.9 percent of total outlets. ($1= 8.277 yuan)

Posted by Kevin at 8:06 AM

May 9, 2004

Is Walgreens a Threat to WM?

I didn't know that Walgreens was the largest and fastest growing pharmacy chain, and that they perceive Wal-Mart and Target to be one of their main competitors. But if Walgreens competes with Wal-Mart, then Wal-Mart must compete with Walgreens:

�Walgreen[s] shouldn�t be worried" about its rival�s increased presence in Texas, Florida and several southern states, said Hastings, of the New York-based credit advisory firm Bernard Sands. ��Their biggest threat is Wal-Mart and Target stores, not CVS.��

Unlike those two retail giants, however, Walgreen[s] remains focused on the pharmacy business that brought it into being and not on selling every product imaginable. It�s been that way for the last quarter-century since then-CEO Charles Walgreen III decided to sell off side ventures, including its Globe discount stores, travel agency, optical centers, Sanborns department stores in Mexico and Wag�s fast-food restaurants.

The company has flourished for most of its 103-year history despite periodic challenges to its standing atop the drugstore industry. The newest: Mail order drug suppliers. Mail orders accounted for 17.2 percent of drugs sold in the United States in 2003, a figure that is steadily rising.

But David Bernauer, CEO since 2002, downplays the threats and recalls all the previous ones that were supposed to doom retail pharmacies since he joined the company in 1966: Kmart and other discount stores, then food-and-drug combination stores, then deep-discount drugstores such as now-defunct Phar-Mor, and now the mail.

��It seems like in our industry you always have to have some nemesis out there, something ahead that�s just going to decimate you,�� Bernauer, 60, said in an interview at company headquarters in Deerfield, Ill. ��Mail�s going to continue to grow, for sure. But it will top out at some point and not be able to grow any faster than the industry.��

Walgreen is moving to claim its share of the new business, introducing 90-day prescriptions in its stores last fall and announcing it won�t sign new contracts with drugbenefit-plan providers that require members to get maintenance drugs through the mail.

Walgreen also has a wary eye on Wal-Mart, now No. 4 in the pharmacy business and rising, particularly since Walgreen�s own sales of cosmetics and other general merchandise are less stellar than prescriptions.

��We�re always thinking about how do we compete against the Wal-Marts and the Krogers as much as we�re thinking about how do we compete against the CVSes,�� Bernauer said.

The company has a history as an aggressive competitor, pioneering store format changes such as larger and more profitable freestanding sites, drive-thru pharmacies and 24-hour stores. Walgreen has more 24-hour pharmacies than all its competitors combined, adding 266 over the past year.

They sound like a rough competitor.

Posted by Kevin at 7:34 PM