The Era Of Giant Chain Stores Is Over — And They've Ruined America

[FarCenter]

The older generations responsible for all that may be done for, but the momentum has now turned in the opposite direction. Though the public hasn't groked it yet, WalMart and its kindred malignant organisms have entered their own yeast-overgrowth death spiral. In a now permanently contracting economy the big box model fails spectacularly. Every element of economic reality is now poised to squash them.

Diesel fuel prices are heading well north of $4 again. If they push toward $5 this year you can say goodbye to the "warehouse on wheels" distribution method. (The truckers, who are mostly independent contractors, can say hello to the re-po men come to take possession of their mortgaged rigs.)

Global currency wars (competitive devaluations) are about to destroy trade relationships. Say goodbye to the 12,000 mile supply chain from Guangzhou to Hackensack. Say goodbye to the growth financing model in which it becomes necessary to open dozens of new stores every year to keep the credit revolving.

Then there is the matter of the American customers themselves. The WalMart shoppers are exactly the demographic that is getting squashed in the contraction of this phony-baloney corporate buccaneer parasite revolving credit crony capital economy. Unlike the Federal Reserve, WalMart shoppers can't print their own money, and they can't bundle their MasterCard and Visa debts into CDOs to be fobbed off on Scandinavian pension funds for quick profits.

They have only one real choice: buy less stuff, especially the stuff of leisure, comfort, and convenience.

http://www.businessinsider.com/scale-implosion-2013-2

[sadbear]

1. I think that last sentence will make for a better world in the end.

We don't own our stuff anymore...

[Shampoobra]

2. They're also running out of space to store all this crap

It was exciting at first, when DVDs dropped to $10, then $5, and then even less. But a lot of people are living in smaller spaces than before the crash, and are having to be much more selective about what they put on their shelves (regardless of the price). So when they do have money to spend on movies and games, they're more likely to spend it on digital downloads.

[msongs]

13. at the swap meet yesterday musta been dozens of people dumping dvds for $1/$2 - most Ive never heard

of. thousands of them. wonder how much they all spent to buy them new?

[Ikonoklast]

3. Boy, does this guy not understand the supply chain in the least.

When diesel prices increase, I get a fuel surcharge to compensate for the increases.

When fuel prices were at their highest in '07/'08, I had record gross revenues only surpassed by last year's gross.

And just how does the writer believe distribution from manufacturer or producer to distribution center to retailer get accomplished? All of those products ride almost exclusively on eighteen wheels, or they go nowhere. Even rail is dependent on final delivery of retail product by truck.

And as far as shipping costs from China to this country, does he even realize just how cheap it is ship a loaded shipping container halfway around the world? It's pennies per hundredweight.

And where is this economy "permanently contracting'?

If it was, not only the big-box retailers would be taking a huge hit, but so would every other retailer on the planet.

Walmart is revenue plateauing because they have a rather stagnant, mature business model with lower-priced and lower-overhead competitors nipping at their heels, taking market share from them from below.

Other shoppers that shopped Walmart during the downturn but were used to frequenting upper-scale retail venues are slowly returning to those retailers.

And their core demographic is spending less because of depressed wages...they're broke.

Walmart will either need to find people with money willing to buy shoddy merchandise, or upscale both their products and clientele in order to survive.

Growth will not solve these problems for Walmart, growth will exacerbate them.

[naaman fletcher]

7. Yup.

He somehow missed that when fuel prices go up truckers increase their per mile charge to compensate

[Sherman A1]

9. Precisely

And apparently there were no chain stores prior to Wal Mart arriving on the scene and importing from China based upon my reading of this piece. Chain stores will change, the distribution channel will change, retailing will change and it may be a shock to the author, but it always has, is currently and always will be changing.

[bhikkhu]

18. Definitely true - "the one constant is change", as they say

In my small city, the downtown was vibrant with family-owned and owner-operator businesses for about 50 years. Then two big malls opened up "out in the sticks", which wound up sucking the downtown dry and becoming their own new business center of town. For about 40 years.

Then W-mart opened up here and the internet hit, and the mall stores (most of which were chains and franchises) have been struggling for over 10 years. There's still plenty of vacanct property and "deferred maintenance" around from the impacts, and now W-mart is struggling...who knows. I'd say things will eventually settle into to some stable arrangement, but when has that ever happened?

[Buzz Clik]

17. +1

[reACTIONary]

19. Thanks... Good to have some common sense and genuine insight (nt)

[A HERETIC I AM]

32. It always amuses me when people speak about the trucking industry....

that clearly have no idea how things really operate.

Stay safe, IkonoKlast.

[Evasporque]

35. People that criticize economy of scale's doom

have lost sight of cultural significance of what was lost as "big box" retail became the de facto retail mechanism for the "necessities" of life.

Prior to "Big Box" stores there was catalogers with brick and mortar anchor stores and local independent retailers that sourced merchandise locally and from abroad in many of the same places the catalogs sourced.

Catalogers were the first step to big box domination. Prior to mailorder most of the necessary goods of life, clothing, footwear, furniture, tools and food were created and sold locally. There always was a place for luxury items and mechanisms to deliver those. As such our society, our towns and cities were built around these basic transactions.

When big box comes in and replaces all those local sources and industries it kills the local economy and folds the society into a bigger economic and cultural existence. In doing so we lose much of what built this nation in the first place.

We can achieve balance...but not before we realize that it if inherently unfair for corporations like WalMart to dominate the retail landscape because they can undercut local prices.

I speak of this from experience in seeing my family who were retailers in rural communities vanish after 150 years of providing basic necessities to their local communities. (we even see this in our own cities where retail districts have crumbled).

We have lost more than just a few shops. We are gaining it back slowly but people need to realize there needs to be a balance for us to thrive.

[kenny blankenship]

4. businessinsider or clusterfucknation?

Sounds like someone is channeling James Kunstler.

I see now: it IS Kunstler. Now sporting some 'stache. Must be prepping his insulation layers for the long Peak Oil Winter. Doesn't he know we're going to be frolicking in tar sands soon?

[Doremus]

15. Exactly my initial thought. nt

[A HERETIC I AM]

33. James Howard Kunstler majored in THEATER in college.

Which qualifies him completely to comment on all things economic.




He's a nitwit.

[L0oniX]

5. Fuckin super Walmart can't keep shit in stock ..always have to go somewhere else to get everything.

Those morans can't use a computer to keep track of stock to know when to order replacements. Forever out of shit.

[jollyreaper2112]

6. Cost of shipping is artificially low these days

Why did pepper used to cost more than its own weight in gold? How much does the cost of shipping have to go up until local producers now have a comparative advantage? That is the big question. You might still ship semi conductors from Asia but not garlic.

[mrmpa]

8. The dichotomy of my recent shopping trip.....................

I needed new shower curtain rings (broke 2 of the old ones), where do I go? Walmarts, cost $1.17

I needed new bras, where do I go? Not Walmarts. Macy's (which is almost everywhere), they have a sale buy 2 get 1 free, good quality, have a $10 off shopping pass, cost is $22 per bra.

[Generic Brad]

12. Or $11 per...

Well, you get the idea.

[mrmpa]

22. LOL!!!! eom

[Why Syzygy]

16. Macy's

is the best for bra shopping.

[Yo_Mama]

10. That's really stupid

Wrong on so many counts that it is hard to enumerate them.

To name a few - small retail generally has slightly higher to significantly higher delivery costs. Retail chains may be closing overbuilt stores, but that does not mean you can open up in their place - the money to support a store isn't there. It will be replaced by online shopping.

Declining per capita wage income favors big chains with their economies of scale over small shops. Small shops are going out of business like gangbusters, as are mom and pop restaurants. Who wins in these times? The huge chains, like McDonalds. They crank up their value menu and mop the floor with the competition. Business shifts from higher cost venues to lower cost venues when spendable incomes decrease.

Truckers at this point already cranked down during the last recession. They do not have significant trucking overcapacity, so the result is that higher fuel prices will result in higher freight charges, not truck repos.

I don't know where the editorial staff dug up this bozo who quite clearly knows not of what he writes. Maybe the editors just wanted a laugh riot in the comments or something. Maybe they ran a contest to find the stupidest person out there.

[Ikonoklast]

14. Capacity in the trucking industry right now is close to equilibrium.

Carriers shed capacity at a record pace from 2008 until late 2010, early 2011 when they reached a point that was profitable (or just not losing money).

Tens of thousands of trucks were sold off. Drivers were laid off or not hired. They have not been replaced.

Right now in this industry carriers are still loathe to put on capacity, no matter how much the shippers are whining about rates.

Any uptick in freight volume works in my favor as a partial contract/spot market carrier, it means I get higher rates.

[Evasporque]

31. typical response by someone who embraces "economy of scale"....

It is not sustainable....see my response below...people fail to understand that culturally big box retail has destroyed much of America. Our locallized micro-economies found in rural areas have been destroyed.

America went from being a balance of consumers and producers to only consumers. The balance has been destroyed by greed and low price promises.

Economy of scale...IS UNSUSTAINABLE.

[KamaAina]

11. The past tense of 'grok' is 'grokked'

'groked' sounds like something Ahh-nuld would do.

[djean111]

23. Yep. I always hated that word, really, artificially childish and awkward and forced, but -

if someone is dumb enough to think using a word from an older science fiction book is somehow hip, then they should spell it correctly.
The article lost credibility right there, and then it was all downhill.

[dmallind]

36. Credibility? Kunstler? That's a laugh

He's nothing but a purple-patch reverse Cassandra. Everything he predicts is wrong, but all the idiot doomer sheep keep on believing him that the Dow will collapse next year (really this time!) and we'll be back to barter and rat stew the year after.

[McCamy Taylor]

20. Hate WalMart, but love Target. WalMart stacks stuff up in the aisles so high

I am afraid something is going to fall on me---it did fall on my mother---and I can never find anything and no one in the store will make eye contact or answer questions and their buyer is the worst.

Target, on the other hand, has clear aisles, friendly employees, a great buyer and no one I know has ever been injured in one. However, as far as I know, Target uses the same sweat shops that WalMart and Ralph Lauren use, so I can't say that they are any less morally reprehensible, they are just better places to shop.

[Curmudgeoness]

21. I don't see it. Every chain store in my area is booming.

Parking lots are packed. Walmart packed. Kohl's packed. Target packed. Lowe's packed.

Our mall is not packed. Our locally-owned small stores are not packed.

So when will we see this change?

[Iwillnevergiveup]

24. Yup, and restaurants are packed, too

Recession? What recession?

[Curmudgeoness]

25. GOP talking points.

They have to keep everyone thinking that there is no recovery, or Obama will look good. Can't have that!

[chervilant]

26. Wow!

"...phony-baloney corporate buccaneer parasite revolving credit crony capital economy"!!

Well said!

(With global climate change promising to destroy crops and diminish potable water, the next few years should highlight the insanity of rampant consumerism.)

[SheilaT]

27. Fabulous! Have they all closed already?

When do I get to go to the "Going Out of Business" sales?

[Le Taz Hot]

28. A Must Read.

Great article. This sentence really made an impact with me: "America made itself hostage to bargain shopping and then committed suicide."

Thank you for posting.

[raouldukelives]

29. It's nice to dream. nt

[Evasporque]

30. The "Economy of Scale" is unsustainable...

Yet is a cornerstone of American economics...economists, financial people and business laugh in my face when I say that but year after year our country decays in both our economic and cultural significance.

Our communities suffer because of giant retail. Local ownership has been destroyed and local economies have been overshadowed. Money that once stayed in the community thanks to small owner retail centers is leaving the community and it has essentially the same effect as a economic depression in a micro-economic scale. Money becomes scarce unemployment goes up as consolidation of retail transactions are confined to a ever growing giant mega retailer.

[quaker bill]

34. If it happens, it will be pretty quick

Wal-Mart is sustained by a massive logistics infrastructure. This has inherent costs that have been made up by shaving the margins of their suppliers. The mass model on which big box runs requires fairly consistent sales. The inventory has to turn over at a decent clip. The longer anything stays on the shelves, the more it costs, as workers and mortgages are paid, somewhat regardless of sales. There is a point in sales volume where the whole thing goes pear shaped and becomes an economic loser.

Once it turns that corner, things will decline really fast.