Could Walmart's Big-Box Stores Disappear in Our Lifetime?

Before you go, we thought you'd like these...

Abandoned Walmart store"In our lifetime we will see the last Walmart (WMT) discount store disappear," says John Rand, director of retail insights for Kantar Research in Massachusetts.

It's a bold forecast -- and one that may even seem far-fetched given the behemoth retailer's 50 years of history and more than 50% market share in many parts of the United States.

But what he's actually predicting is that smaller Walmart stores and even non-retail businesses will replace the big discount stores we're familiar with.

And there are already signs that the big-box store, while perhaps not headed for extinction, will indeed morph into something very different than we're familiar with.

Walmart's Dilemma: Radical Change or Gradual Demise

It will be tough, for sure. After all, it's not easy for a $220 billion company to completely re-envision the way it does business.

Gary Giblen, an independent retail analyst, admits that Walmart could "lose some of its luster over the next few years." He also points out that Walmart has become sloppy in executing big changes, which is "inevitable for an organization... after so many years of such explosive growth." Case in point is Walmart's slowness to develop a strong presence online.

Despite these fears, Walmart's leaders are optimistic that they can shift the business and position the retailer for long-term success. They are already testing a radical new concept -- downsizing stores, literally, by dramatically shrinking the square footage of new stores.

Smaller Is Better

The first 10 Walmart Express test stores opened last year, and more test stores will open later this year. One-tenth the size of the typical Walmart discount store, these Express stores are a combination of food, pharmacy, and convenience stores -- targeting customers more inclined to visit a smaller bargain store like Dollar General (DG), Family Dollar (FDO), or Dollar Tree (DLTR).

Sponsored Links

These Express stores are cheaper to build, less expensive to run on an absolute basis, and make it easier for customers to quickly find the items they're looking for.

And they're profitable.

Yet despite this being a viable way to reinvigorate domestic growth, Walmart's leadership team is hesitant to fully embrace the new concept.

Charles Grom, an analyst at Deutsche Bank, says Walmart is "the only retailer out there continuing to open up big box stores, which leads me to think they're not paying enough attention to what the consumer needs."

One explanation for the slowness may have been Walmart's recent focus on international growth. But, necessarily, it looks like the company is now going to set its sights back on its more profitable domestic market.


Turns Out the Grass Isn't Any Greener Abroad

Walmart's Mexican business has long been held up as one of the superstars of its international segment (last year Mexico generated roughly 21% of its foreign sales growth).

Could Walmart's Big-Box Stores Disappear in Our Lifetime?

A man was thrown in jail after trying to steal socks from a Walmart store in Exton, Pa. But it seems socks weren't the only article of clothing he needed, as he was buck naked.

Store surveillance footage caught the 6-foot-4, 300-pound man walking around the store in the buff. No word on why the man was nude or what style of socks he tried to lift.

AP Video below slide show.

Plenty of people use Walmart as their drugstore -- but not all the drugs being sold there are found in the pharmacy department.

A janitor found a "shake and bake" methamphetamine lab in the women's restroom at a Walmart store in Boaz, Ala. The custodial worker discovered a Nestle water bottle and five empty packets of pseudoephedrine -- the makings of the psychostimulant drug also known as "the poor man's cocaine" -- in a bathroom stall.

Curiously, the pseudoephedrine wasn't a brand sold at Walmart, so the chemists couldn't have gotten it in house. But apparently, they thought Walmart would make a good meth den.

At a Walmart in Lexington, N.C., a man loaded his cart with $476 worth of merchandise that included a vacuum cleaner and a microwave oven. He then tried to pay at the register with a fake $1 million bill, insisting to the cashier that it was real. (The largest U.S. bill in circulation is $100 -- not even close.)

Store staff called the police, and the man was charged with two felonies: attempting to obtain property under false pretenses, and presenting a phony document as a legitimate form of payment.

A shopper looking for a new wallet at a Walmart store in Falmouth, Mass., discovered 10 human teeth in the zipper compartment of the billfold he was about to buy. One of the adult teeth had a filling, according to police. Save for its toothy contents, the wallet appeared new, complete with merchandise tags.

In one of the more creative attempts at shoplifting, an 18-year-old man outfitted in a cow suit swiped 26 gallons of milk from a Walmart in Garrisonville, Va. The man was seen crawling as he exited the store in an effort to emulate an ambling bovine.

The cow impersonator was at least generous with his dairy loot: Witnesses told the sheriff's deputies that he was handing out the stolen milk jugs to passersby outside the store. Law enforcement officials later caught the milk thief at a nearby McDonald's.

A man was glued to his seat -- literary, in the men's bathroom at a Walmart store in Elkton, Md. In what appeared to be an April Fool's prank that went way too far, the 48-year-old victim got stuck to a toilet seat smeared with glue and couldn't get up.

The man called for help and emergency workers tried in vain to unstick the man. Eventually, they gave up and unbolted the seat from the toilet, then took the man to the hospital with it still attached to him. There, the seat was removed from his ... er, seat. The man was said to have suffered only minor injuries to his derriere.

To conclude with an episode that is equal parts strange and sweet, Wayne and Susan Brandenburg first met at a Walmart in Brunswick County, North Carolina, when Susan was a cashier and Wayne was a shopper.

Love blossomed, and when the time came to tie the knot, the couple opted to exchange their wedding vows where their courtship began. In front of family and friends, the Brandenburgs said 'I do,' in the layaway section.

Youtube.com Video below slideshow

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION
That success was tainted when the Mexican bribery scandal was brought to light. If Mexico's track record of success was solely because of bribery, perhaps the Walmart concept isn't as translatable into other countries as Walmart's management team believes.

In fact, Walmart's international business is struggling even beyond Mexico. According to Bloomberg, "Walmart is losing market share in Brazil and China. It has no retail stores in India. And in Canada Walmart is about to clash with Target (TGT)."

Brian Sozzi, chief equity analyst at NBG in New York, bluntly remarks, "The international business has not lived up to expectations. It's not what it needs to be to offset what's happening in the U.S."

Walmart's Future Rides on This

Walmart has two strikes already -- it can't compete online and is struggling globally. Now the only real opportunity for the retailer to continue to grow is through its Express stores.

It's up to Walmart's leadership team to step up to the plate. If they whiff on accepting the Express store model as the main driver of growth, John Rand's prediction might be even more prophetic -- and Walmart will disappear altogether.

For more information on the death of Walmart, click here for a free copy of The Motley Fool's research report on this trend. Motley Fool analyst Adam J. Wiederman owns no shares of the stocks mentioned above. Motley Fool newsletter services have recommended creating a diagonal call position in Walmart Stores.

Read Full Story

People are Reading

The Latest from our Partners
1 - 3 of 15