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Mar 21
2017

The Picture of Retailing

Posted by: Steve Marr

Tagged in: Untagged 

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.

 

Investors vote with their money and investment dollars. Walmart is essentially breaking even while even Target is down 20%. The chart shows these significant declines.

chart-size-of-amazon

http://bit.ly/2nNymHP

Here’s a way to gain perspective as you look at these changes.  Take the value of Amazon and buy Sears, JC Penney, Nordstrom, Macy’s, Kohl’s, Best Buy, Target and even Walmart and you would still have $50 billion dollars left over.

Nordstrom, Target and Walmart are better managed in my view, but are clearly not immune to this a major trend hammering retailers in the United States.

Frequently when I shop I go to Amazon to read reviews and gain information that I need. I can click through to buy something with free delivery because I am an Amazon Prime customer.

The last time I went to Sears was to buy an appliance that wouldn’t ship well. Besides, it required installation and I wanted a service contract.  In my view Sears would be wise to market this aspect to other services. They have not. As I have written before, retailers must find unique ways to market to customers and compete with online retailers. Walmart is developing a competitive online presence which helps their overall sales.

Amazon is the master at marketing using customer data.  When you are the customer, you receive buy it again messages.  Additionally ads will pop up driving you to items that you previously browsed.

Online browsing gives customers information primarily through reviews.  When I check out reviews I like those that provide specific information. A “1 out of 5” review with nothing to back up the complaint tells me nothing.  Several weeks ago I was traveling and needed to find a place to eat dinner.  I went online, located several restaurants that looked suitable, and read the online reviews which drove my selection.  Customers do this all time.

King Solomon wrote, “History merely repeats itself. It has all been done before. Nothing under the sun is truly new.” (Ecclesiastes 1:9, NLT) The retail Industry trend has been forming over the past 10 plus years. We see a striking change that continues to devastate the traditional department and even big box stores. However, the trend to do retail business in a different way isn’t new.

Over the years there was a significant trend moving toward larger big box stores because they were able to give customers better choices under one roof. For me I shifted from my local hardware store to the Home Depo and from my local bookstore that never seemed to have what I wanted in stock to Barnes & Noble. Many of the smaller stores went out of business.  While I don’t personally like parts of this trend, I have to accept and embrace the reality. Those in business need to do the same.


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