Several weeks ago I posted an article showing a dramatic increase in online store sales while brick-and-mortar stores show declines. For those who missed my article click here:  http://bit.ly/2moKyhF

I ran across an article from the Affluent Christian Investor with a very dramatic chart showing the market value of retail companies over the past 10 years.  We already know that Amazon is valued at more than Walmart in the marketplace. Sears has lost over 96% of its market value, and I would be surprised if they survive another 12 months without filing bankruptcy likely taking Kmart with them.

Throughout history technological changes have altered our society and influenced how businesses are conducted. The Industrial Revolution of 1760-1840, despite some challenges, helped many families move away from very small farms where life was a daily struggle to earn a regular wage. While historical accounts remind us that life was still difficult, over all it improved life substantially for millions.

The mass production revolution of 1900 altered our manufacturing process. Automobile factories could manufacture a car in about one and a half hours from component parts.  Frigidaire made refrigerators while many other manufacturers adapted the assembly line method of production. The result was the ability to deliver more goods to consumers at lower cost.  Additionally, workers earned a consistently higher wage working in factories.

You’ve heard that “a picture is worth 1,000 words.”  In the case of department store sales, it is true. Woolf Street posted a chart that helps us visualize their predicament. (See chart below.) In 2004 retail store sales surpassed department store sales, and the trend has accelerated. Clearly this trend is not going to be reversed.

When I was in international trade, we quoted business on an extremely thin margin.  An old joke went something like this:  “We may lose a little on every shipment, but we’ll make it up on volume.” Sometimes following a strategy of low pricing with little or no profit may be wise.  In the shipping business for example, if you land a large airfreight account at no profit; you are often able to negotiate lower rates with airlines. While you may not make money on your big account, you’re improving the margin on other business.

A recent article in the New York Times (http://nyti.ms/2gDOStz ) highlighted the plight of many American cities that are struggling to pay future retirement benefits as promised. The theme of the article was Dallas, Texas. This city, one of the fastest growing cities in America, will be unable to pay future benefits as promised. The difficulty has been that for generations, cities have promised future benefits for retirees rather than raising their wages.  Within the next decade these bills come due.