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"Smaller Suppliers Will Go Out Of Business": Hail Mary Time For Wal-Mart, As Vendors Pushed To Brink

Tyler Durden's picture




 

Just last week, we revisited the Wal-Mart vs. vendors saga, noting that in the wake of the retail behemoth’s rather dramatic guidance cut, suppliers finally woke up to what’s going on. 

“Now we know why they have been pushing so hard,"one executive at a major consumer goods supplier told Reuters.

The reference there is to Wal-Mart’s move to squeeze the supply chain for every last penny of savings following the company’s (possibly misguided) decision to implement an across-the-board wage hike for its lowest-paid employees. Paying those who used to make $9/hour $10/hour going forward is set to cost Wal-Mart some $1.5 billion and as we’ve said too many times to count, the commitment to “everyday low prices” means passing rising labor costs on to customers simply isn’t a viable option. But someone has to pay the bill, and that means either i) hours will need to be cut and employees higher up in the food chain will need to be fired, ii) suppliers will have to absorb the cost, or iii) both. 

The assault on the supply chain began with a push to force vendors to plow dollars they would have spent on marketing into savings. Next, Wal-Mart moved to implement new storage fees and finally, the retailer implored its suppliers to make sure and pass along any savings from yuan devaluation.  

At a certain level, this is just econ 101. Massive, sweeping wage hikes don’t occur in a vacuum and as we put it when we first reported that cuts were likely in Bentonville, “one thing that should have been abundantly clear from the start is that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart.”

Still, some of this seems to have caught the market and the media off guard, which is fine with us because we now get to watch everyone play catch-up which means more coverage, more quotes from suppliers, and more evidence that Wal-Mart may have signed its own death certificate with the wage hike. Here’s WSJ with the latest:

At the U.S. chief’s direction, the retail behemoth has already removed about 15% of store displays over the past year, and the average Wal-Mart supercenter—home to around 120,000 products—has about 2,500 fewer items than a year ago.

 

Some of the changes have put Wal-Mart at loggerheads with vendors who worry they will result in tens of millions of dollars in lost sales. But fixing U.S. stores is becoming ever more crucial. Earlier this month, Wal-Mart Stores Inc. surprised investors by predicting that profits would drop as much as 12% next year as it spends heavily to raise wages, boost online sales and overhaul inventory systems. In the wake of the announcement, the retailer’s stock fell 10% in a single day and is on pace for its worst year since 1973.

 

Through fiscal 2017, Wal-Mart will spend $2.7 billion to boost pay for store employees and another $2 billion on e-commerce investments as it attempts to shift from a slow-growing behemoth losing market share to Amazon.comInc. and others into an online powerhouse.

 

Vendors hope Wal-Mart’s big investment in stores and online sales can make the company stronger in the long term. But news of next year’s lower profits sent shudders through the supplier community, where there are concerns that there will be “increased pressure on suppliers to fund their problems,” said one Arkansas-based executive at a large consumer-goods company.

 

Such fears aren’t without basis. In June, for instance, Wal-Mart asked vendors to pay a fee for passing products through Wal-Mart’s warehouses and accept longer payment windows.

 

Several large suppliers have told Wal-Mart flat-out that they can’t agree to the terms—saying the new contracts will increase the cost of doing business and force them to raise prices, according to email correspondence between suppliers and Wal-Mart viewed by The Wall Street Journal.

 

“All of the changes we are asking suppliers to make are to be true to our business model and everyday low prices,” says Deisha Barnett, a spokeswoman for Wal-Mart. “Change isn’t always easy.”

 

A big part of the retread, set by Mr. Foran and Mr. McMillon, involves culling inventory from backrooms, and dropping some products altogether. In a key move that will change the look of the chain’s stores, Mr. Foran is more than doubling the width of aisles—to 10 feet from 4 feet, making it more navigable for multiple carts.

 

According to suppliers and consultants, Wal-Mart has aggressively pruned the stores’ promotional-sales space—the bins, cardboard pallets and stands that sit alongside regular shelves and have long been believed to compel impulse purchases like cookies, soda or a new beauty product. Remaining bins are becoming lower, smaller and more uniform, say Wal-Mart executives.

 

“It’s a lot of pressure on my business because a lot of inventory has come off the floor,” says an executive at a large food company. To make up for lost sales from promotional areas, the company is trying to stock more profitable package types and foods selling well in the refrigerated section of the store, says this executive.

 

Wal-Mart is experimenting with lowering shelves near checkout areas by about one foot to make it easier for shoppers to see around the store. The seemingly subtle change, if rolled out across Wal-Mart’s 4,600 U.S. locations, would wipe out hundreds of millions of dollars in annual sales of gum, candy and magazines, say people familiar with Wal-Mart’s sales models.

 

The store changes may be particularly hard to absorb for companies that sell in a single area of the store. Popcorn Indiana, a privately held company, counts on display space for at least 50% of its Wal-Mart sales, say people familiar with the matter.

 

Over the last year the company has become more dependent on shoppers walking down the regular snack aisle to find its red, tractor adorned bags. The company’s sales will likely fall 15% to $96 million this year, after growing each year since 2009, according to an estimate from Euromonitor International.

 

Behind the scenes, Wal-Mart is also aggressively pressuring suppliers to spend more money to earn a spot on shelves. In June the retailer started mailing out around 10,000 contract renegotiation letters to suppliers asking many to pay additional fees to store their products in warehouses, as well as give the retailer more time to pay for the goods, according to letters reviewed by the Journal.

 

“Smaller suppliers will tell me if they push this out we will go out of business. We can’t afford to give them these allowances” and sell at low prices, says Boyd Evert, a former consultant to Wal-Mart who now owns Harvest Revenue Group, a firm that represents many suppliers in negotiations with Wal-Mart.

So essentially, Wal-Mart is set to push some of its vendors over the edge with the relentless pursuit of savings. Who could have seen this coming, you ask? Here's what we said in April: 

The irony is that while WMT (or MCD or GAP or Target) boosts the living standards of its employees by the smallest of fractions, it cripples the cost and wage structure of the entire ecosystem of vendors that feed into it, and what takes place is a veritable avalanche effect where a few cent increase for the lowest paid megacorp employees results in a tidal wave of layoffs for said megacorp's vendors.

 

Now that each of WalMart's suppliers is forced by WMT management to cut their costs and to be "price competitive", they will either reduce wages of its own workers or, comparably, force their own suppliers to reduce pricing, and so on, until ultimatly the entire economy is gripped in wage deflation.

And while that dynamic is almost certainly playing out across the supply chain, we might have been too optimistic. That is, besides putting pressure on vendors to layoff employees or otherwise cut costs, Wal-Mart is actually in the process of driving some of its suppliers out of business altogether. 

Make no mistake, Wal-Mart may be teetering on the precipice of a terminal decline. As CEO Doug McMillon put it earlier this month, "this is an important time in our history—requiring all of us to think critically about our business."

And while it's far too early to write the obituary, we would note that when we peered into our crystal ball, we saw this...

 

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Mon, 10/26/2015 - 09:32 | 6711631 TahoeBilly2012
TahoeBilly2012's picture

Blue Plate Special of death

Mon, 10/26/2015 - 09:48 | 6711693 Momauguin Joe
Momauguin Joe's picture

Yes, blame the employees. God forbid the Walton heirs have to take in less than $1 million a DAY. 

Mon, 10/26/2015 - 10:14 | 6711760 GMadScientist
GMadScientist's picture

Dead peasant insurance doesn't pay like it used to for the execs, resources need to be drained from somewhere.

Mon, 10/26/2015 - 11:54 | 6712163 Leopold B. Scotch
Leopold B. Scotch's picture

WalMart is a symptom of the deeper  dysfunction of the U.S. economy, not the problem itself.  The business environment created by Congres over the last 75-100 years is to blame, and WalMart is the Frankenstein expresion of a market player adapting to the structure to best bring goods to market.

 

If you don't like it, don't shop there and tell Congress to simplify the business environment in the U.S. rather than make it worse.

Mon, 10/26/2015 - 13:35 | 6712636 PTR
PTR's picture

Influence money for campaign contributions and perks aren't spent for shits and giggles.

Mon, 10/26/2015 - 17:03 | 6713703 Chuck Walla
Chuck Walla's picture

SImplification doesn't pay the graft like complexity does. ie Tax Code.

FORWARD WALMART SHOPPERS!

Mon, 10/26/2015 - 10:15 | 6711769 Bob
Bob's picture

Exactly. 

“one thing that should have been abundantly clear from the start is that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart.”

Seems that little angle was unthinkable for ZH as another way to "make up the difference."  Grubby labor, worthless eaters, etc . . . hell, we can't risk even thinking about the Walmart kids going Galt and taking their wonders elsewhere!

Mon, 10/26/2015 - 10:18 | 6711776 813kml
813kml's picture

This is all about keeping executive stock options at maximum value and not a commitment to “everyday low prices”.

The good news for WM is that they will be eligible for federal bailout if their net income falls below $15 billion/year.

Mon, 10/26/2015 - 11:45 | 6712119 BlindMonkey
BlindMonkey's picture

I thought they were already taking bailout money in the form of SNAP (et al) transfer payments?

Mon, 10/26/2015 - 10:45 | 6711884 11b40
11b40's picture

Exactly....blame the minimum wage employees.

Of course, this is just BS.  Every single one of their competitors has to live with the same wage rules.  How many of them can afford to absorb the increased costs without raising prices?  The answer is none, so all can raise price's together.  Of course, there is one little exception - Costco has always paid their employees substantially more than minimum wage, so they really don't have to raise prices.  Their well trained, motivated, seasoned employees give them the competitive advantage they need to kick SAM'S butt day in and day out, while Walmart fishes for low cost labor dregs that actually cost them more than they can even measure in low productivity and turnover.

 

Mon, 10/26/2015 - 11:46 | 6712071 ThroxxOfVron
ThroxxOfVron's picture

"Of course, this is just BS.  Every single one of their competitors has to live with the same wage rules.  How many of them can afford to absorb the increased costs without raising prices?  The answer is none, so all can raise price's together.  "

 

Exactly.

Maybe the Suppliers should get a clue and do what the Wall-Mart employees did: organize and force higher rates of compensation for what they provide to Wall-Mart.

OR, would that constitute Price Fixing?

IS it only Price Fixing if providers of GOODS do it?

-NOT providers of Labor?

Does it matter if .GOV is the one fixing the price, or Unions, or even Public Sector Unions?

The Legislature can fix prices and force place purchases ( Minimum Wage, Obamacare ) but Manufacturers are likewise prohibited?

IS what Wall-Mart does in demanding lower prices accross the borad from it's suppliers a form of Price Fixing?

IS Price Fixing ONLY Price Fixing if the perception is somehow maintained that the price is fixed higher than is "fair" instead of lower than is "fair"?

WHO decides what is a "fair" price for a good or service?

Are ALL goods and services of like kind really of exactly equal value?

Are ALL employees of equal intelligence, equally productive, honest, congenial, etc..?

 

 

Mon, 10/26/2015 - 13:00 | 6712493 Reichstag Fire Dept.
Reichstag Fire Dept.'s picture

In a "Free Market Economy" there is no price fixing...so, what does that tell you about our current economy?  :(

Mon, 10/26/2015 - 12:13 | 6712257 Icelandicsaga.....
Icelandicsaga...............................................'s picture

You got that right...blame those in competition with Chinese wages, not European wages. Blame those who watched as the US business model became are race to the bottom for 99 percent, while a few made out like bandits, bought govt influence, captured the regulators, pay no or few taxes, leavi g small business out on a tax  and regulatory limb....getting away with monetary and finacial murder ..giving people a SENSE of greater wealth  with massive CREDIT options and cheap crap made in the third world. Then pretend jobs in tech field would replace manufacturing jobs...of course do not tell the rubes they will be replaced by outsourcing and insourcing those high tech jobs. Now we make very little, even our weaponry for most part is made in third world ... the chickens are FINALLY coming home to roost. Sooner or later profit at the cost of everything ends up biting the plutocrats on the ass. But to blame the Wal Mart employees for this happenstance..is ludicrous...this crap sandwich has been long in coming.... the subsidies for corporate America, immigration or regulatory or low ir no taxes, corporate taxes in reality ...amt to 12 % ...small business pays 40  In any event, the giant FUBAR that began in about 1980, or before is coming to an end...my hope is that the short sightedness investor class loses at least one testicle as retribution for their greed blindness and short sightedness.

Mon, 10/26/2015 - 09:49 | 6711695 two hoots
two hoots's picture

About a 1/3+ of the stuff on WalMart shelves is junk.  Unfair/unethical to even offer it and a waste of earths resources to produce it, it keeps people poor.  People are junked out, spent out.  Hate looking at all the junk to find something that "might" be okay.  Best to always upgrade to a better quality (not bells and whistles) for a little more than always taking their cheapest product.  This might work well in a third world or emerging economy but not any longer in a developed economy.  They must adapt.   

Mon, 10/26/2015 - 10:01 | 6711729 CrazyCooter
CrazyCooter's picture

This.

I live in AK. The weather gets nasty in the winter and we need new rugs for our front area to collect mud/dirt (we leave boots by the door). These need to be fabric and washable. Walmart fails to stock this simple item. What they do have is overpriced chunks of carpet or bath mats with petro-chem backing that comes off in the wash/dry cycles and ruins appliances.

This is a very common need here and it is just stupid. But, they won't pay to stock an actual fabric floor rug which is genuinely washable because they have to have the CHEAPEST potential substitute and refused to stock anything else.

Walmarts problem is that they demphasis quality and just stock the cheapest economic substitute. And now that their customer base is tits up broke, they are trying to figure out how they press forward.

Regards,

Cooter

Mon, 10/26/2015 - 10:21 | 6711788 BarkingCat
BarkingCat's picture

I despise that POS company and will raise a toast the day they go under.

I forever refer to them by their true name = China-Mart.

 

and their corporate motto - "Betraying America One Sale At  A Time"

Mon, 10/26/2015 - 10:49 | 6711902 localsavage
localsavage's picture

They aren't any different than any big retail chain.  Try finding a pair of shorts in the winter at a large chain.  The weather here is shorts weather 12 months a year less a few rain days but the stores stock like we live in New York.  It is a management issue and the Ivy League nepotism crew are just a bunch of figure heads sucking cash from the masses so that they can live like kings.

Mon, 10/26/2015 - 13:37 | 6712638 PTR
PTR's picture

Try finding a pair of shorts in the winter at a large chain.  

 

Those aren't stocked at the big boxes until March.

Mon, 10/26/2015 - 14:09 | 6712768 tsuki
tsuki's picture

In my long past youth, one of my teachers made a joke about the Commissar of Bermuda Shorts, who lived in Siberia, allocated the number of shorts to be manufactured that year.  i was reminded of this story when I went into a national chain this year and they had their snowsuits out, an entire rack of them.  BTW, I live in Florida.

Mon, 10/26/2015 - 19:20 | 6714354 StychoKiller
StychoKiller's picture

It's possible to make yer own rugs from rags...

Mon, 10/26/2015 - 09:50 | 6711699 Bunghole
Bunghole's picture

Return to selling AR rifles and 18" shotguns.

Get rid of the 3 box maximum ammo purchase rule.

The neckbeards will thank you.

Mon, 10/26/2015 - 09:34 | 6711639 ihatediscus
ihatediscus's picture

all hail the $15.00 an hour unskilled worker ..........

Mon, 10/26/2015 - 09:53 | 6711708 ToSoft4Truth
ToSoft4Truth's picture

Which unskilled - the plastic crap makers or the plastic crap sellers?

Mon, 10/26/2015 - 11:16 | 6711991 ihatediscus
ihatediscus's picture

Both

Mon, 10/26/2015 - 11:43 | 6711947 FireBrander
FireBrander's picture

"the fallout from a move to spend billions on wage hikes for its meagerly compensated hourly employees."

STFU!

Walmart spent SIXTY FUCKEN BILLION DOLLARS on STOCK BUYBACKS!...but that's ok because the few profit from that...however, a Billion Dollar increase in workers wages...oh fuck, that's the end of the world!

PS> Government, unions, all the bogeymen you can dream up didn't FORCE Walmart to raise wages...THE MARKET FORCED THE INCREASE...and you're unfucken happy with that too! Geesh!

PSS> If you pay higher wages, you should attract better quality employees? Isn't that the old market "Song"? And won't those quality employees be more efficient resulting in HIGHER PROFITS!

Rightwingnuts should be PRAISING Walmart for raising wages...not predicting "it's all over for Walmart"..

Mon, 10/26/2015 - 12:15 | 6712217 Leopold B. Scotch
Leopold B. Scotch's picture

"Government, unions, all the bogeymen you can dream up didn't FORCE Walmart to raise wages...THE MARKET FORCED THE INCREASE...and you're unfucken happy with that too! Geesh!"

 

Uhh, I guess you slept through years of the ever building push by progressives to get  WalMart to unionization?  Ala the efforts at McDonald's?

This was WalMart trying to hold that off for now.

The reality of raising wages  above what the market was bearing is that something has to give elsewhere.

As for share price support via buybacks, when sales are stagnant,  you have to reward shareholders in another way.  You know, shareholders like you in your 401k.

Mon, 10/26/2015 - 18:23 | 6714050 Chuck Walla
Chuck Walla's picture

They raised the wage to crush the little guy. Competitors can't do this. But .gov can sure make them. 

Long Robot Kiosks!

 

When you woke up in bed laying with the big corporations, did you not get any idea that maybe, just maybe, you might have been co-opted, fooled just a little bit?

 

FORWARD SOVIET OF CHEAP CRAP!

Mon, 10/26/2015 - 09:37 | 6711653 thatthingcanfly
thatthingcanfly's picture

"the company has set its sites on..."

Spellchecker won't catch that one.

 

Mon, 10/26/2015 - 09:41 | 6711665 ghengis86
ghengis86's picture

But they got the possessive "its" correct, so they got that going for 'em.

Mon, 10/26/2015 - 10:14 | 6711765 GMadScientist
GMadScientist's picture

I see what they did there.

Mon, 10/26/2015 - 09:38 | 6711659 ghengis86
ghengis86's picture

So is the renaissance of the local business upon us or will we continue to purchase cheap shit from China and give the Waltons a few more billion while they squeeze out the small suppliers to?

Keep your cash local and watch the behemoth eat itself alive.

Mon, 10/26/2015 - 09:58 | 6711718 ToSoft4Truth
ToSoft4Truth's picture

Here in Detroit we have a bicycle manufacturer.

 ‘HAND-ASSEMBLED BICYCLES BUILT FOR URBAN RIDING’

These bicycles start out at $1,000.00.

Wal-Mart bicycles start at $84.84.  – assembled. 

Detroit's poverty rate is 38 percent.

The people cannot afford to buy domestically built bicycles.

Mon, 10/26/2015 - 10:15 | 6711770 ghengis86
ghengis86's picture

In Southern Germany, which was/is more agricultrual and not as 'wealthy' as say Bavaria, there's a philosphy that if you don't have much money to spend on items, you save up and by the best possible item you can afford.  If you need a sweater, buy a 100% wool sweater.  If you need a microwave, buy the best model you can get.  I had one friend ask me, 'what's the point of buying a $5 sweatshirt or a $100 microwave if you're just going to throw it away next year when it's threadbare or when it no longer works and has no warranty?"

It's a different culture/mindset than our throway society.  I get your point though; Jim-Bob making $10/hr can barely scrape together $100 for the WalMart bike, let alonge the $1,000 'made in the USA' rider.  But I bet Jim-Bob has cable, nikes and a 'smart' phone.

shitty what government has done to our money and our domestic manufacturing base...

Mon, 10/26/2015 - 10:38 | 6711853 Manipulism
Manipulism's picture

This is one reason Walmart failed in Germany.

Dirty, shitty places with junk at shelves.

Mon, 10/26/2015 - 13:28 | 6712608 Urban Redneck
Urban Redneck's picture

And yet Aldi & Lidl are doing just fine, despite being shitty places with tons of junk on the shelves (or more realistically bins/pallets/tables, since they're too "cheap" to invest in proper shelving)... Perhaps the politically correct redneck quota monkeys in Bentonville Arkansas wanted to hire a few too many Turks, or not enough goose stepping Aryans.  Or perhaps they simply suffered from typically exceptional 'murican hubris and accordingly invited the wrath the local oligarchs, unions, elected officials, and shoppers alike.  

Mon, 10/26/2015 - 12:14 | 6712248 Leopold B. Scotch
Leopold B. Scotch's picture

Even in the best of times for the U.S., Germany was comparatively poor vs the U.S.  They have always, awlays been for quality over quantity, though.  In that you are correct.   Thought, the U.S. used to build quailty as well, until the erosion of their currency via the Federal Reserve and massive intervention into the market economy via regulation and tax caused a massive shift in quality vs. cost.

But it will all be for naught in Germany.  Socialism has its costs.  Eventually a cost will be Europe as we once knew it as Socialists have flooded in tehe same Islam that has tried to conquer Europe for over 1000 years in a vain hope that Muslim workers will be willing to pay into the social benefits of a bunch of retired ifindels.

Good luck with that, Hans.

Mon, 10/26/2015 - 10:38 | 6711839 silverer
silverer's picture

Over half that $1000.00 goes to permits, fees, insurance, compliance costs and taxes.  I would guess if the playing field were leveled, they could built those bikes here at a profit for far less if true capitalism existed.  Problem is, too many hands in your pockets in a place like Detroit before your feet even hit the floor getting out of bed in the morning.  In addition, part of the money from those $1000.00 bicycles is being used to drop weapons and ammo from helicopters to our trustworthy "allies" in the middle east, and so forth.

Mon, 10/26/2015 - 09:40 | 6711663 Buford T Injustice
Buford T Injustice's picture

Walmart is doomed, their long supply chains will become more expensive over time as labor rates are rising there, soon chinese manufacturers wont need the american consumer market so why will they go through all the trouble to deal with the dollar in the future.  The Walmart concept has proven to be a net negative for Americans, I have personally encouraged competitors that do a great job of Organic groceries like Sprouts to move into our area, they have shown interest which is encouraging.  Last time I was at a Walmart, the credit card machine wouldn't work, all but 2 of the gas pumps were working, the rest were covered with plactic bags out of order, when I asked why everything was in disrepair and requested she get a manager to the register to look at the situation, she just replied "I am a peon here, I can't say anything" as she was sort of terrified of mentioning that the credit card swipe doesnt work.  The sooner Walmart dissappears the better, back to local, local, local!

Mon, 10/26/2015 - 09:43 | 6711673 ghengis86
ghengis86's picture

And for the supplier, WalMart has been an abusive marriage that no one can leave. Sure, you get a ton of sales, but then you are basically their bitch and have to take every price cut up your ass

Mon, 10/26/2015 - 10:53 | 6711904 Spigot
Spigot's picture

Never grant to any retailer more than 5% of your gross sales. This prevents a distributor or retailer from ever being able to force you to do anything.

Mon, 10/26/2015 - 10:03 | 6711736 duo
duo's picture

Wider ailes for the longer lines as only one of the 25 checkout lanes will be open.

They had better move the ice cream freezers close to the check-outs!

Mon, 10/26/2015 - 10:52 | 6711916 Spigot
Spigot's picture

WM already has been refitting its stores: widening isles, moving back walls forward into retail areas, reducing depth of inventory on shelves, reducing variety of brands as well as catagories of products.

The only producers who will be represented in places like WM and Target will be those whose profit margins are extraordinary - IE it costs them virtually nothing to produce, package and deliver their products AND the retail consumer is willing to repeatedly buy these products at prices far higher than their real worth.

Cheese Puffs comes to mind...

Mon, 10/26/2015 - 10:48 | 6711894 Spigot
Spigot's picture

Once hyperinflation kicks in, these 'box stores' will simply evaporate because they will lose their ability to predict profitability (due to inability to track and account for all costs along the chain).

Mon, 10/26/2015 - 09:42 | 6711667 aliki
aliki's picture

1 company is attempting to market to the consumer via their iphone, product from conveyor belt to drone to consumers house

1 company is using less dated brick & mortar stores (which consumer has to burn gas $ to drive too) and is giving in to public outrage that they move employee pay from $7.5 an hour to $15 an hour

gee, i wonder who wins this war

Mon, 10/26/2015 - 09:45 | 6711681 Arnold
Arnold's picture

Battle, battle is all.

Nothing lives forever.

Mon, 10/26/2015 - 10:18 | 6711778 GMadScientist
GMadScientist's picture

1 company depends on the largess of a minority of effete assholes who spent too much on their iphones to afford much else 

1 company has a lock on every redneck in America's EBT card in perpetuity and a slave supply chain from here to China

wonder indeed

Mon, 10/26/2015 - 10:26 | 6711808 Bob
Bob's picture

Interesting that the online seller rarely turns a profit, in spite of the massive advantages they enjoy, most especially not collecting sales tax . . . which, I gotta think, accounts for a significant portion of their price advantage and sales volume. 

How much tax revenue has your state seen pass directly into AMZN pockets?

Mon, 10/26/2015 - 11:18 | 6711998 Almost Solvent
Almost Solvent's picture

I don't know - here in WNY they hit me up with sales tax on the last page before you confirm your order. 

 

I guess they send those amounts to Albany, but that just started about a year ago. Before that Amazon was tax free even here in the worker's democratic republic of little andy cuomo.

Mon, 10/26/2015 - 10:57 | 6711933 Buford T Injustice
Buford T Injustice's picture

Evolution is not an option

Mon, 10/26/2015 - 09:42 | 6711668 gregga777
gregga777's picture

I wonder if Wal-Mart's executives had these actions, to squeeze their suppliers, already planned out before they announced their across-the-board wage increases? Or, are they truly that clueless to have not foreseen the consequences? Hmm…?

Mon, 10/26/2015 - 09:42 | 6711670 Osmium
Osmium's picture

"In a key move that will change the look of the chain’s stores, Mr. Foran is more than doubling the width of aisles—to 10 feet from 4 feet, making it more navigable for multiple carts."

They did that in our local Wal Mart.  Not sure why you need wider aisles when the only people in the store are buying food.

Mon, 10/26/2015 - 09:46 | 6711683 ghengis86
ghengis86's picture

You obviously haven't been to People of WalMart lately and seen the truly massive size of the land whales that shop there. And the scooters; don't forget that after a certain weight, your legs say "fuck it" and are no longer functional.

Mon, 10/26/2015 - 09:51 | 6711704 yogibear
yogibear's picture

"whales that shop there. And the scooters; don't forget that after a certain weight, your legs say "fuck it" and are no longer functional."

Most are on disability but keep stuffing their face.

The Fed wants infinte debt, the government wants infinite spending and these people want infnite food.

What a country!

Mon, 10/26/2015 - 10:18 | 6711780 ghengis86
ghengis86's picture

I know of three people in my company that have had knee/hip replacement surgery and they are all massive specimens of the human race.  You bones and joints aren't meant to carry around an extra 150lbs for three decades.  And they all bitch and complain about their borderline diabetes, high blood pressure and a myriad of ailments directly related to their fatness.  But they all pound diet cokes and wolf down donuts like there's no tomorrow.  Ridiculous...

Mon, 10/26/2015 - 11:29 | 6712037 azusgm
azusgm's picture

After Tropical Storm Allison hit Houston in 2001, the electricity was out in areas near downtown and the medical center. We didn't dare open our refrigerator doors for fear of losing the contents to spoilage. A wave of shoppers hit the neighborhood grocery store. There were no carts available and the checkout lines stretched far back into the store. There was plenty of time for people watching.

A woman of at least 300 lbs made her way into the store. There was a look of consternation on her face the first several times she came into view. When she finally joined the line, her expression was one of pure bliss as she stood there with her sole purchase -- a box of two dozen Krispy Kreme doughnuts.

Mon, 10/26/2015 - 11:36 | 6712066 FireBrander
FireBrander's picture

"electricity was out" + "checkout lines stretched" = does not compute.

You are what you eat for sure...Pick any land whale, examine the grocery cart, and it's PACKED with fast carbs...makes you fat as hell in a hurry.

If you want to lose weight, CUT THE FAST CARBS!

Mon, 10/26/2015 - 11:43 | 6712105 azusgm
azusgm's picture

Generators.

Mon, 10/26/2015 - 09:52 | 6711706 Buford T Injustice
Buford T Injustice's picture

More navigable for giant obese americans.

Mon, 10/26/2015 - 10:06 | 6711743 duo
duo's picture

see above.  The check-out lines are going to get longer and longer.

Mon, 10/26/2015 - 10:42 | 6711868 Questan1913
Questan1913's picture

"In a key move that will change the look of the chain’s stores, Mr. Foran is more than doubling the width of aisles—to 10 feet from 4 feet, making it more navigable for multiple carts."

They did that in our local Wal Mart.  Not sure why you need wider aisles when the only people in the store are buying food.

 

Simple....it is to deceive consumers and analysts....inventory (and thereby costs) is going to shrink drastically.

Mon, 10/26/2015 - 09:44 | 6711676 taopraxis
taopraxis's picture

I've managed to live my entire life without ever going to a Walmart. I think I can survive without them for the duration.

Mon, 10/26/2015 - 09:47 | 6711688 Ghordius
Ghordius's picture

I promised myself I would visit one in Germany, but then they closed there and abandoned this continent

though this walmart website tells me I could visit one in the UK. perhaps I still have the chance to see one: http://corporate.walmart.com/our-story/our-locations

Mon, 10/26/2015 - 10:07 | 6711748 Freddie
Freddie's picture

Aldi kicked Wal Mart's ass out of Germany.  The only thing Wal Mart has going for it is food, illegal aliens and WIC/EBT cards.  Aldi is expanding in the uSA along with their Trader Joe's more upscale food stores.  Aldi is cheaper than Wal Mart on a variety of food.

Tue, 10/27/2015 - 04:33 | 6715648 Ghordius
Ghordius's picture

funny that. the UK is the only european country I know of that uses... EBT cards

Mon, 10/26/2015 - 09:45 | 6711680 Seasmoke
Seasmoke's picture

Clean up in Aisle 666. 

Mon, 10/26/2015 - 09:45 | 6711682 orangegeek
orangegeek's picture

Walmart is getting a beating from Amazon, not salaried employees.

 

Walmart will adjust to improve their online and pound Amazon back down.

Mon, 10/26/2015 - 10:13 | 6711758 GMadScientist
GMadScientist's picture

1/2 right

Mon, 10/26/2015 - 12:12 | 6712245 tsuki
tsuki's picture

I was on Walmart's website and it looks as though they squeezed their design team also. 

Mon, 10/26/2015 - 12:17 | 6712271 migra
migra's picture

Walmart is the new Kmart and will suffer the same fate.

Mon, 10/26/2015 - 09:47 | 6711689 robnume
robnume's picture

Yeah, it'd be a real shame if some of Walmart's ill-educated department and store managers lost their fucking jobs; they could no longer abuse the minions below them on the Walmart 'food chain'. I have, albeit temporarily, worked for this company. And yes, Virginia, Walmart sucks!

Mon, 10/26/2015 - 10:04 | 6711740 Freddie
Freddie's picture

As bad as Wal Mart is - Target is worse.   Here is Gov. Mark Dayton of MN aka scoin of Target (Dayton-Hudson) telling the people of Minnesota that isf they do not like Somalis flooding into MN then they should leave!

http://alphanewsmn.com/2015/10/dayton-to-those-questioning-refugee-reset...

Avoid Target.

Mon, 10/26/2015 - 10:17 | 6711775 Sofa King
Sofa King's picture

I started avoiding Target lately when I noticed how they've started blending their near-expired food products with the later dated stuff. Real bunch of Douche Bags. Nothing worse and coming home to find the Gallon of milk you just bought is about to turn.

Mon, 10/26/2015 - 09:48 | 6711690 MathWins
MathWins's picture

Big companies give their employees a raise or cut pricing, and they go to their suppliers and demand price concessions.  In the end, the big companies look altruistic, and their suppliers pay the price.  Kabuki theater with unintended consequences for small businesses.....

Mon, 10/26/2015 - 09:48 | 6711691 yogibear
yogibear's picture

But Amazon doesn't sell groceries yet. So the fat-carts at China-Mart are still needed.

Mon, 10/26/2015 - 09:52 | 6711707 venturen
venturen's picture

amazon does...plus they just introduced "same day delievery" on lots of items. SAME DAY...heck I can't get to most stores the same day

Mon, 10/26/2015 - 09:51 | 6711701 Not if_ But When
Not if_ But When's picture

To put this is perspective :

A $1 increase in plantation wages has brought this behemouth to its knees and caused a ripple effect impacting dozens and dozens of suppliers.  Which in turn could not only affect higher level Walmart workers and bring a cut back in hours - but also impact employees of the suppliers.  Since supplier margins would be squeezed - probably leading to lost jobs and cutbacks for bottom line reasons.

And they say the financial cost ot Walmart of this pay increase is $1.5 billion?  $2.7 billions through FY 2017?

F*CKING COMPARE $1.5 BILLION TO $700 BILLION IN TARP.  And trillions for you-know-who after that.  Talk about damage and squeezing people.

Mon, 10/26/2015 - 12:01 | 6712200 Elliott Eldrich
Elliott Eldrich's picture

"F*CKING COMPARE $1.5 BILLION TO $700 BILLION IN TARP."

Or the over $4 TRILLION the Fed spent during QE, and that's not counting the additional trillions spent bailing out foreign central banks. But give an extra dollar to the proles, and that is the END OF THE WORLD!

Mon, 10/26/2015 - 09:51 | 6711702 venturen
venturen's picture

small suppliers don't have lobbyists

Mon, 10/26/2015 - 09:57 | 6711715 brown_hornet
brown_hornet's picture

Vacant shops near me aren't so much a factor of Wal-Mart as they are of government over regulation. People would gladly open up and run these stores, even for meager profits, if they didn't have to deal with local, state and .gov.

Mon, 10/26/2015 - 12:00 | 6712191 azusgm
azusgm's picture

The property taxes, especially school taxes, are quite a burden on the local businesses. The tax exemptions for homestead, over-65, disability, and now enhanced exemptions for disabled veterans and surviving spouses cost shift the taxes onto the rest of the taxable base. The businesses don't enjoy the same representation at the polls as the resident homeowners. The exempted homeowners suffer little, or often, no consequences if they vote to pass bond issues while the businesses feel the full brunt. These bond issues truly are taxation without representation for many of the taxpayers involved.

Mon, 10/26/2015 - 09:58 | 6711719 Screwtape III
Screwtape III's picture

I remember when Wal-Mart rolled into Florida back in the day. The company I was working for at the time rolled over on it's back and spread like a cheap $2 whore.

I asked the then management team (none of whom are still there) why we were selling our products to Wal-Mart cheaper that the local companies that had been there from the beginning? Why was Wal-Mart allowed Net 60 - 70 - 80 - 90 day terms when we expected Net 7 payment from ALL our other customers?

The reply? "We can't afford not to play ball with Wal-Mart". Oh, really? What becomes of the business when Wal-Mart is paying Net:120? What about when they never pay? Will that company continue to ship product to Wal-Mart because they "can't afford not to?"

Mon, 10/26/2015 - 11:15 | 6711978 silverer
silverer's picture

I've had people ask me why I don't sell my products through Walmart and Home Depot.  "Wow", they say. "Do you know how much you will sell if your product were in there?".  I told them for vendors, it's a mirage of a legal get rich quick scheme.  I went into some detail with a store employee who was among one of the few people I run into these days that give a damn and pay attention.  He confided in me that if you sell Home Depot a pallet of pails, and the $15.00 an hour employee puts a fork lift through the side of a couple of $120. five gallon pails, it's the vendor, and not the store, that eats the loss.  The next 10 pails that sell bring you back to break even.  Where's the fortune you expected?   They will beat you to death on your price (well, let's face it: they want it for free).  They will kill you with the terms.  Anything returned, no matter what the reason, is eaten by the vendor.  I went into a Home Depot once after buying and installing a hot water heater.  One part was missing: the unit didn't have the small stack at the top that ties to the exhaust flue pipe.  I had managed to use the one off the old unit, so I was just mentioning it to the guy when I was back in the store.  I figured I'd swap them out if I could get the right one, to make sure the height and draft characteristics were correct.  I said "It was an open box, maybe it's on the floor behind where the  unit was."  So we looked, but didn't see it.  So I said, "Well, don't worry, I've got it working".  But he said, "Hey no problem!", and tore open a new box and handed me a collar.  I said "What are you going to do with that unit, now that it doesn't have a collar?"  And of course the reply was "Oh, we'll just ship it back to the vendor".  (Yep.  The whole 40 gallon hot water heater).  I think all those vendors need to take a deep breath and re-evaluate their business models.

Mon, 10/26/2015 - 11:45 | 6712120 atomicwasted
atomicwasted's picture

You will get fucked as a vendor selling to Big Box Retail.  The only question is how.  It's worse if you're captive to Big Box and rely on one major customer for more than half of your revenue.

Mon, 10/26/2015 - 20:26 | 6714637 Chuck Walla
Chuck Walla's picture

I was a vendor rep at Lowes for awhile. Too expensive to actually ship any returns back. Lowes just tells them how much and tosses the stuff to landfill. Truly amazing.

Oh, and they wanted vendors to wear a different colored vest while in the store. (They got quite pissy when these were taken off). They tried and tried to make us free employees. Jeez, I used to piss off their custpomers because I had no idea where such & such a thing was. Even if I did know. If Lowes wants extra help, hire it, don't Shanghai it. They got what they paid for.

 

FORWARD BIG BOX SOVIETS!

Mon, 10/26/2015 - 10:01 | 6711727 Freddie
Freddie's picture

"It's a lot of pressure on my business because a lot of inventory has come off the floor,” says an executive at a large food company.

All those food companies free ride off of EBT/WIC cards, illegal aliens with WIC cards and other free food paid for by middle class tax payers.  Let those food companies eat cake.

80% of the food companies sell some fake GMO-corn syrup lace pretend "food."

Mon, 10/26/2015 - 10:07 | 6711746 Iconoc
Iconoc's picture

Last night, needing AAA batteries, I went to Walmart.  What I found was a package of (possibly) a dozen batteries for almost $11.  After checking Lowe's, next door, I got 36 AAA baatteries for $2 more.   Walmart is not only squeezing their suppliers, but also stupid consumers.  BEWARE!

Mon, 10/26/2015 - 12:05 | 6712213 azusgm
azusgm's picture

Our local Kroger's store is usually in line and often cheaper than Wal-Mart. The shopping experience is definitely better.

Mon, 10/26/2015 - 12:24 | 6712303 migra
migra's picture

You could have got 8 batteries at the Dollar store for one buck.

Mon, 10/26/2015 - 13:05 | 6712513 DosZap
DosZap's picture

"You could have got 8 batteries at the Dollar store for one buck."

 

Yep and they last about 2 weeks also.

Mon, 10/26/2015 - 10:10 | 6711751 Sudden Debt
Sudden Debt's picture

If'you operate on such a small margin you need to go bankrupt.

And raise the price of the products to normal levels. Increase food prices with 25%, and don't forget the farmers also!

Raise prices from the bottom, not the top!

And if they can't survive, let them go bankrupt so 100 smaller businesses can take over and give normal,wages!

It's these giants that destroyed America, never forget this!

Cheap products are pure evil. Buy quality products that last a lifetime.

 

Mon, 10/26/2015 - 10:49 | 6711910 it aint paranoi...
it aint paranoia if they really are out too harm you's picture

"Cheap products are pure evil. Buy quality products that last a lifetime."

 

I bought an Amana microwave back in 1983 when microwave cooking was a relatively new concept. It was inexpensive at that time. It has manual control mechanisms: Timer is a spring clock like all non-electrtic timers.  To stop it, push a manual "open door " button. 

Still works. Not bragging, just saying.


Mon, 10/26/2015 - 12:07 | 6712224 azusgm
azusgm's picture

My mother's 1968/69 vintage Hotpoint microwave was still working fine when she gave it away four years ago.

Mon, 10/26/2015 - 10:11 | 6711752 GMadScientist
GMadScientist's picture

They've always been vampires to their suppliers, it's just that people can't ignore the loud slurping noises as they finish off the victims any longer.

Mon, 10/26/2015 - 10:12 | 6711757 all-priced-in
all-priced-in's picture

I know Amazon is already testing food  -

 

But if they go into food items in a big way it tells me they have run out of other areas for growth. It would be a sign of desparation not a growth opportunity. 

 

Food is a tough business - some items will not travel well by UPS / USPS - local same day delivery is a fucking nightmare and you can't do it unless you charge a really high price.

 

Uber me a pound of grapes, a loaf of bread,  a dozen eggs and a gallon of milk - That will be $85 please.

 

BTW - I bet Amazon is every bit as hard on their suppliers as WM -

 

 

 

 

 

 

Mon, 10/26/2015 - 10:20 | 6711786 GMadScientist
GMadScientist's picture

Fresh food is a tough business, but Americans don't eat that for the most part, so Amazon may have a shot.

I think Amazon can ship a CostCo size order of canned chili as well as the next guy and they have the analytics flex to beat Wal-Mart to a pulp on the low-margin stuff.

Mon, 10/26/2015 - 10:53 | 6711915 all-priced-in
all-priced-in's picture

I understand what you are saying - sounds logical -

 

But if people still need to go to the grocery store to buy the perishable & frozen stuff  - they will also buy the shelf stable items.

 

Most people buy meat, eggs, bread, milk every week -

 

Sure if I am ordering something from Amazon and I see pork and beans on sale I may order them - but the majority of people will still go to the store.

 

Coupons are another issue - Amazon will need to figure out a way to process them - which I guess wouldn't be that hard - but adds a step.

 

Competition is good - it will be interesting to see how this plays out.

 

 

 

 

Mon, 10/26/2015 - 10:54 | 6711921 silverer
silverer's picture

Fresh food is a tougher business than ever, thanks to US laws and regulations, which won't let small farms grow it without government fees, fines, regulations, and interference all the way up to a gun in your face.

Mon, 10/26/2015 - 11:14 | 6711985 FireBrander
FireBrander's picture

Small farms want to be exempt from food safety laws/practices...sorry, NOPE!

I actually had a lady at my door stumping for a candidate and she's was all fucken nutty about regulations destroying her brothers business...long story short...he was in the meat business, regs were costing him money, he wanted to operate free of government oversight.

I told her "I don't know your brother, so I don't trust that he wouldn't put profit over my families safety". She lost it...rightwingnutfuckjob.

Mon, 10/26/2015 - 12:28 | 6712317 migra
migra's picture

I'm about as right wing as you can get but I'll pass on some local farmer selling chicken that is really cat meat or using crazy perticides that he bought in Mexico to save a buck. Just because somebody is a small business owner does not mean they could not be a scumbag as well.

Mon, 10/26/2015 - 15:49 | 6713206 Buzz Hacksaw
Buzz Hacksaw's picture

Let Mr. Market (us) weed out the "scumbag"s. You get to know who they are after a while.

Oh and how is that "regulation" stuff going for us. Have an honest look at any of the alphabet regulators and let us know which one you trust most.

We haven't got a chance at true discovery as long as we have these monsters on the payroll.

Mon, 10/26/2015 - 10:19 | 6711782 rejected
rejected's picture

All the $15 per hour for unskilled, non producers will do is raise prices once Mr. Market discovers there's more fiat out there. All this touchy, feelly  crap is really, really nice except that it won't work. This I would suspect is the normal reaction when going from a producing to a non producing economy. There is a balance which was ignored when the in name only USA manufacturers offshored their production to slave wage countries.  Now we basically have too many people suckling on too few teats. We are now in the death throes trying hard to ignore the obvious. Delusional economics.

The whole charade can only last so long so I guess you should enjoy it while you can. It's over,,,,,,  a good run that was short circuited by the stupid,,, as per usual. Went from a debt free, skilled, hard working nation to debt maxed, unskilled, government serfs in about 30 or so years. Pretty much started once we shifted from a solid gold based system to our present fiat scam system and shifting from a producer / consumer balanced economy to the present mostly consumer economy. 

We'll keep jacking with the currency until the producers figure out the paper isn't any good. At that point the depression really gets going. So,,, again,,, be happy while you can.

Mon, 10/26/2015 - 10:24 | 6711791 Bub Ba
Bub Ba's picture

This is what happens when you build a Walmart in front of Chichen Itza - the Mayan gods rip your heart out and feast on it. 

Mon, 10/26/2015 - 10:30 | 6711824 buzzsaw99
buzzsaw99's picture

don't worry about sam's kids. they got plenty.

Mon, 10/26/2015 - 12:13 | 6712253 azusgm
azusgm's picture

Wonder how much the Clinton Foundation gets from the Walton empire?

Mon, 10/26/2015 - 10:30 | 6711825 Able Ape
Able Ape's picture

Walmart vs Reality - An aging Sumo Wrestler vs. a Giant Bulldozer... Anybody taking bets?

Mon, 10/26/2015 - 10:41 | 6711865 Bub Ba
Bub Ba's picture

I went to Home Depot looking for a pumpkin carvng kit - only one Home Depot had was a cheap breakable 3-piece kids set for $12. 

Went to Target and got the creme de la creme of pumpkin carving kits for $10.  The world is inverting - an economic polar reorientation - and Walmart is the dinosaur.

Mon, 10/26/2015 - 13:43 | 6712659 Urban Redneck
Urban Redneck's picture

"pumpkin carving kit"??? I must have pulled a Rip Van Winkle last night.  Don't you have any KNIVES in your kitchen?

Mon, 10/26/2015 - 10:43 | 6711873 Pumpkin
Pumpkin's picture

Calculated.

Mon, 10/26/2015 - 10:49 | 6711906 kaboomnomic
kaboomnomic's picture

This kind of stores? (A real UP FRONT stores) their days are numbered.

You have better chance of working with UPS/Amazon/DHL kind of works.

Buying things are now went online. You choose via web store. Pays it online. And they delivered it asap.

The sooner you realised this? The better prepared for you to survives in the digital world.

The only one need real employee is the industry that creates. But even this are numbered. I saw japanese created fully automated hydrophonic farms (actually factories are more appropriate).

This is the way of the future.

Your malls, my malls? Are already deserted. Who want to go to a malls. Get stuck for 2 hours just to reach it. Then shop alone, bringing back heavy stuff by yourself, and drive another 2 hours?

Or, you just open your browser (on computer/phones) orders, paid it from phone/PC, and received the goods within 2 hours, at your own doors.

Which one you choose?

I live in 3rd world country. And this already my daily routines. Don't tell me, you who live in DM are still using the "OLD" way???

Mon, 10/26/2015 - 10:51 | 6711912 silverer
silverer's picture

Walmart's biggest mistake is that they didn't raise prices to cover the wage  hikes.  After all, the government and all those pushy groups have been up their ass for years over this.  If people can't afford the higher prices, Walmart should supply the appropriate information flyers at the checkout registers to inform the now bankrupt consumers of which politicians and bankers are responsible for them being so fleeced and broke that they can't afford to shop in one of America's lowest priced stores.  The consumers will also understand how they get punished when a company is coerced and prodded to do "the politically correct thing" by their oh so wonderful leaders.

Mon, 10/26/2015 - 11:15 | 6711987 Vlad the Inhaler
Vlad the Inhaler's picture

Wamart did not raise wage to be PC .  They could no longer attract minimum wage workers.  Higher wages can be offset by either higher prices or lower expenses, one of which is executive compensation.

Mon, 10/26/2015 - 11:18 | 6712002 silverer
silverer's picture

Either way, they have to pay their bills.  If the model no longer works in our economic environment, then the stores will be closed, property sold off, and they will move to the next opportunity (if they can find one).

Mon, 10/26/2015 - 11:23 | 6712018 FireBrander
FireBrander's picture

"Wal-Mart did not raise wage to be PC"

Exactly, $8 an hour was attracting "workers" that resulted in profit declines from fuckups, slowness and VERY NEGATIVE customer "experiences" due to poor hygiene and shitty attitudes.

Hire me at $20 an hour and I promise you I can do the work of three $8 an hour Wal-Mart employees.

Mon, 10/26/2015 - 12:31 | 6712333 migra
migra's picture

Costco pays that and you still get some shitty employees, but a lot less when compared to walmart.

Mon, 10/26/2015 - 13:29 | 6712611 Vlad the Inhaler
Vlad the Inhaler's picture

Costco's starting pay is $11.50 an hour, and the average employee there earns $21 an hour, not including overtime.  Walmart is $9 an hour.  "About 44 percent of Wal-Mart's hourly staff turns over each year. That's a lot of people, because the company employs 2.2 million workers worldwide. Hiring replacements is a costly and time consuming process.  HBR estimates the full cost of “replacing a worker who leaves is typically 1.5 to 2.5 times the worker’s annual salary.” 

Mon, 10/26/2015 - 12:18 | 6712274 azusgm
azusgm's picture

Wal-Mart gets plenty of applicants. The pool diminishes greatly once the drug screen reports are received. At least that is what occurs here.

Mon, 10/26/2015 - 11:07 | 6711955 Buford T Injustice
Buford T Injustice's picture

Forgot to mention, a cust. svs. clerk at a local walmart said specifically the fed gov has setup an office in the back of a nearby store, it was hush hush and nobody really knew what was going on in that area or why it had been setup, this coincided with the sudden appearance of the bosch facial recognition cameras.  Coincidence?

Mon, 10/26/2015 - 12:32 | 6712340 migra
migra's picture

where is the store????????? I"m calling BS.

Mon, 10/26/2015 - 11:11 | 6711972 NoWayJose
NoWayJose's picture

Interesting to compare this with the other article on empty malls. A lot of malls have been reduced to clothing stores and cell phone kiosks due to online sales. We are likely seeing a similar thing with Walmart - as they discover that many departments in their stores can no longer make money. I think we will see Walmarts start shrinking in size and concentrating on just a few profitable departments. Does anyone really go into Walmart to buy paint these days?

Mon, 10/26/2015 - 11:18 | 6712000 FireBrander
FireBrander's picture

Retailer denial is FINALLY starting to fade around here. Even small shops will match online prices from true competitors; they don't advertise it, but they'll do it if you ask.

I was searching for a snowmobile part, called the local powersports shop, and before the call ended, he let me know they'd match anyone's price, even online...that shocked me as these types of stores are famous for sky high parts prices.

Mon, 10/26/2015 - 11:12 | 6711974 PoasterToaster
PoasterToaster's picture

The puny wage hike, which doesn't really exist for most positions, is not the reason WalMart is having problems.

Mon, 10/26/2015 - 11:12 | 6711979 Vlad the Inhaler
Vlad the Inhaler's picture

Time and time again, people blame the government, when it's really the precious job creators who are to blame. Rugged indivdualism and everybody acting in their own selfish short term interest will save us all!  But that boat is scraping bottom...   

Mon, 10/26/2015 - 11:20 | 6712006 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

WalMart is going bankrupt slowly but surely. Smaller Suppliers are going bankrupt at a fairly even pace. Banksters have been bankrupt since March 10th 2008. Politicans have been bankrupt since 1913.

Mon, 10/26/2015 - 11:31 | 6712048 Thejackasswhisperer
Thejackasswhisperer's picture

Reminds me of what Sears used to do. They would lure in a supplier with the promise of good margins, then, as the supplier became more and more dependent on Sears sales, lower the boom by demanding reduced margins, ultimately driving the supplier into total dependency or bankruptucy.  This is the trap of the mega retailer.

Mon, 10/26/2015 - 12:04 | 6712089 flysofree
flysofree's picture

I have been coming to these boards for a long time, almost from the very inception. One thing that I learned is to think and do the opposite whenever majority of posters on ZH are almost in unanimous agreement. In this case, condemnation of Walmart is overwhelming.

I have been witnessing amazing changes at Walmart during the past several years. Chiefly, most of its store employees are now young; there are more cashiers and plenty of self-check out terminals; shelves are well stocked; there are many associates all throughout stores willing to help out if assistance is needed; there are groups of employees working as teams and they seem relaxed and NOT stressed out like the horror stories one hears about AMAZON as a workplace.

I go to Walmart to buy food and use its pharmacy, and I mostly find the experience pleasant.

Mon, 10/26/2015 - 20:53 | 6714731 FireBrander
FireBrander's picture

"shelves are well stocked; there are many associates all throughout stores willing to help out if assistance is needed"

B_O_L_O_G_N_A_!

Mon, 10/26/2015 - 21:19 | 6714850 Prisoners_dilemna
Prisoners_dilemna's picture

You forgot the /sarc tag.

My nearest Walmart has 30 checkout lanes, usually 5 are manned.

No employee looks up at a customer or speaks to them.

There are no self checkout lanes.

 

By your logic we all agree to buy the phyzz so really we should buy the fiat?!?

 

Also your account is 1 year 37 weeks old. That's hardly from inception.

 

An employee at the local Walmart, a simple guy who just wants to play xbox and maybe get a girlfriend before he hits 50, got fired for being late, ONCE.

They hired him back after a month at beginning wages.

Pleasant isn't the word to describe him or the other employees.

Mon, 10/26/2015 - 11:41 | 6712090 atomicwasted
atomicwasted's picture

This is par for the course when it comes to being a small supplier selling to a large giant.

I used to work for a small (200 employee, $75M revenue) manufacturing company here in California.  Management was awful and couldn't find its ass with both hands, but it was still a valuable learning experience.

One of the key lessons you learn is that the further you are from the customer (that is, the higher up the supply chain), the less the portion of the ultimate profit ends up in your hands.  We would sell Product A to a company that would combine it with 5 other things to make Product B.  Product B would get assembled into Product C by another manufacturer.  Product C would get transferred to a huge distributor, who would then sell it to Big Box Retail.  The problem with being at the top of that chain is that you get fucked by everyone downstream from you.  Every single entity downstream is trying to reduce its costs, and guess what?  If you are at the top of the supply chain, you are a cost to everyone downstream.  It is constant pricing pressure from every rung in that ladder.

Another key related lesson is that shit flows downhill.  There is a bargaining power asymmetry at each step in this process.  As a small company, you understand that, and you focus on protecting yourself from the worst bits of predation that your customers try to pull over on you.  But if you don't understand this, you can end up either signing a shitty deal just to get in stores, or just as bad, becoming a captive supplier.  "Captive supplier" means you are shipping 50%+ of your product to one customer, or worse yet closer to 100%.  That's the classic Walmart issue for suppliers.  They can go from selling $1M/year of a product to $100M/year; it's a tiger by the tail.  But if all those sales are to Wal-Mart, and you are totally dependent on them for everything, they have 100% of the power.  You can go 100X in sales and barely increase your total profit at the same time.  The thing is, if you're a captive supplier to anyone, they will fuck you and then not stop fucking you.  In that situation, you won't even get paid net 90, you'll get paid when they fucking feel like it.  What are you going to do about it?  If you're in finance/accounting at a captive supplier, it blows goats, because you can't do shit about not getting paid.  You get beaten by management for not getting money in the door, but management is too afraid to go confront the entity that is pulling the strings for fear of losing the business.

Wal-mart is an exception to the rule only in the sense of their size and the extent to which they have refined their skills at fucking their suppliers while making them come back for more abuse.  

Mon, 10/26/2015 - 12:18 | 6712109 DosZap
DosZap's picture

But someone has to pay the bill, and that means either i) hours will need to be cut and employees higher up in the food chain will need to be fired, ii) suppliers will have to absorb the cost, or iii) both."

 

The LATTER, as they are already doing them both PROIR to the supplier resqueeze. 

 

“It’s a lot of pressure on my business because a lot of inventory has come off the floor,” says an executive at a large food company. To make up for lost sales from promotional areas, the company is trying to stock more profitable package types and foods selling well in the refrigerated section of the store, says this executive.

 

My wife is always on some special diet(eyeroll), and I used to go to Walmart 2-3 times a week for her crap,they have stopped  stocking the items I USED to go for,I have found two other smaller chains, with the same or lower prices on the exact same goods as WalMurt.

 My monthly tallly used to be around $55.00-$75.00 a week.That's just one customer, imagine that multiplied buy thousands.It's amazing how much money in sales they  COST themselves!,ONE example of many.

6ea-2pks to a case,they ONLY order 2 cases!!.( 12 containers 2 = one meal)

I buy nearly a case and a half of that, IF it's not already gone.(most times it is)

 Yoplait yogurt,2pk,w/granola on lid.

Now  I buy ZERO.

It's truly sad for most of the employees, they may have 1-2 registers with HUMANS manning them(if they see you wirh a cart) they basically BEG you to come through their line, for JOB security!!!!, and one pushing folks to SELF checkout(no need for an employee,one can run 8.)

Mon, 10/26/2015 - 12:59 | 6712488 FireBrander
FireBrander's picture

Couple years back, a Wal-Mart MBA superstar had a brilliant idea...reduce the number of SKU"s to simplify inventory and boost profits.

FAILED BIG TIME!

Apparently giving people the choice of "Great Value" shit brand and ONE, expensive, "National Brand" isn't such a good idea.

They stopped selling Krusteaz branded products..they were perfectly priced and of good qaulity...that dramatically cut my trips to Wal-mart...I'm not going to two stores...I made one stop at the store I knew still sold the Krusteaz brand.

Mon, 10/26/2015 - 13:11 | 6712534 DosZap
DosZap's picture

"Apparently giving people the choice of "Great Value" shit brand and ONE, expensive, "National Brand" isn't such a good idea."

 

Oddly eought the Great Value items are as good as the name brand, at least the ones I tried, and are packaged to last 3-4x's longer due to an inner liner in the cans.'

Unlike Del Monte or Libbys.

Same for Tom Thumbs store brand( owned by Safeway), my $$ is on the same products justbrand fed propaganda sold buy name brands thinking it's the BEST.

Mon, 10/26/2015 - 13:53 | 6712697 FireBrander
FireBrander's picture

GV is hit or miss badly...Compare GV pancake mix to Krusteaze...GV is total shit...same goes for the syrup...all water.

Mon, 10/26/2015 - 11:58 | 6712180 MrBoompi
MrBoompi's picture

As I've previously pointed out, businesses must pass along their costs to the customers.  Vendors, most of whom are already squeezed, should not be forced to lower their proces simply because WalMart's profits are down.  The overall increases in selling prices would hardly be noticable.  And the author failed to mention the high price taxpayers have to pay for their underpaid employees, most of whom qualifiy for food stamps and other benefits.  

What we see here is simply decades old WalMart strategy.  Make an enormous profit from slave labor and dirt cheap vendor prices.  

Mon, 10/26/2015 - 11:59 | 6712186 RedDwarf
RedDwarf's picture

Live by the Walmart, die by the Walmart.

Mon, 10/26/2015 - 12:16 | 6712264 Zymurguy
Zymurguy's picture

Tylers... can we get a "Price" check please?  MW is running an all hail Dan Price article today... just 2 months ago on 0-hedge things weren't looking too good for Dan Price:

http://www.zerohedge.com/news/2015-08-02/ceo-hikes-minimum-wage-70k-capi...

http://www.marketwatch.com/story/the-70000-minimum-wage-is-paying-off-fo...

 

I'm certain this MW article is just spin but I'm having trouble getting through all the propaganda on teh 'net praising this so called genius.

Mon, 10/26/2015 - 13:06 | 6712520 Dickweed Wang
Dickweed Wang's picture

So essentially, Wal-Mart is set to push some of its vendors over the edge with the relentless pursuit of savings.

 

Just by putting their stores in place they have already wiped out thousands of mom and pop stores all over the country.  That wasn't enough for WhaleMart so now they need to wipe out small vendors . . . just perfect.

Tue, 10/27/2015 - 13:58 | 6717428 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

amazing that a little 'ole Arkansas would be the sources of so much carnage. what else is hiddin' there????

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