Target :
The Fall of WalMart

hese are things you probably haven't noticed consciously but you may have had some dim sense that something is not quite right with WalMart ... the nation's biggest current enterprise.

It's not going under soon but it has taken the fatal step in that direction ... that is ... the K-Mart two step. This ship will sink but it will take several decades. Target will grease the path to facilitate the downward slide.

Let me paint you a picture

Few people are aware of it but there is a significant value to empty space in a retail outlet. The ratio of empty space to filled space is the most obvious visible sign of the health of these companies. I am talking about the area filled with merchandise versus the area available to the customer to simply move his/her shopping cart around in.

Forget economics, forget who is in charge, forget the "bottom line" ... all are insignificant in the long run compared to the "Space Rule".

Give 'em too much and they think you're goin' outta business.

Give 'em too little and they don't wanna' come back.

If you are dying in this business, you need to sell every customer as much as possible right now. You must "jam it down their throats" if possible to turn a buck and pay your daily bills. This is the terminal state that "the BIG K" finds itself in. They have merchandise in every nook and cranny and they have set up merchandise in the aisles ... all the aisles ... such that it is no longer possible to navigate through even a small amount of traffic.

K-Mart is totally cluttered. It is directly analogous to the arteries of an old person, too clogged to allow the passage of blood (the customers). If you don't think that customers are blood, watch how white the manager gets when they all leave without buying something and go to the store two blocks down the street ... which has the same things for the same price (or less) ... and ... has lots of "room".

I am insulted when merchandise is placed "strategically" in my path so as to influence my buying. I suppose I am a typical customer. So I must expect that many others are equally insulted.

The rub here is that this strategy actually works. People will buy more things when you stick it "in their face". The flipside is that over the long haul ... two decades or more ... the plan backfires and kills the enterprise, i.e. it's a short term idea. And ... most managers and CEOs are short term in the same way. They won't be around for two decades so ... what the heck? It makes them look good to the shareholders during their term of office. A CEO's span of attention never exceeds about ten years. He's looking to do something with the company which affects only his tenure in a positive way. The long term is essentially meaningless.

Maybe this is a good thing. People get to constantly build new places of business and remodel them and find new jobs ... ;o)

Enter Target

Target is the next king of the cheap department store. WalMart has been killed off by it. However, WalMart is unaware that it is dead meat because there are so many WalMarts and not nearly as many Targets. This situation will be remedied in the coming decade.

If you don't believe it, just examine, impartially, what you see in these stores.

  • Absolutely ... terminal clutter. I mean you can hardly move.
    Eight foot aisles with three foot wide displays in 'em.
  • Food aisles have been added to a store too small to keep up with a "supercenter"
  • I am beginning to smell "popcorn" in the store (shades of Woolworth)
  • Soon I shall heat the plaintive call of parakeets no doubt
  • This company is on its last legs
    WalMart Supercenter
  • Gum all over the entrance (even in a new store - my pet peeve)
  • Merchandise in front of the registers preventing movement there
  • Crap in every aisle where there used to be empty space
  • Checkout lines way too long
  • Inventory security detectors going off constantly at the doors
    "We're sorry, you've activated WalMart's inventory control system. Please step back and an associate will help you."
  • Merchandise laying all over the place ... out of place
Contrast the above with WalMart' Son of ...
  • NO -- Gum all over the entrance
  • NO -- Merchandise in front of the registers preventing movement there
  • NO -- Crap in every aisle instead of empty space
  • NO -- Checkout lines way too long
  • NO -- Inventory detectors going off constantly at the doors
  • NO -- Merchandise laying all over the place ... Neat and tidy
And what is it like at Target?

    Target Supercenter
  • Lots of space to move in all over the store
  • At least twenty feet wide area in front of the checkout counters (32 of 'em all in a nice neat row about 120 feet long) ... 120 x 20 = 2400 square feet of free space in front of the registers not devoted to merchandise ... just easy movement.
  • NO -- Gum all over the entrance
  • NO -- Merchandise in front of the registers preventing movement there
  • NO -- Crap in every aisle where there used to be empty space
  • NO -- Checkout lines way too long
  • NO -- Inventory security detectors going off constantly at the doors
  • NO -- Merchandise laying all over the place ... Neat and tidy
  • And ... their selection is better. For instance, people like DVD movies. In WalMart, they are all locked in glass cabinets. In Target they are all out and available and there are twice as many to choose from. Lots more computer games too.
I find myself continually going to WalMart for this or that and ending up buying it from Target. WalMart is gradually becoming a "junky" store. No doubt about it. It's got a long, long, long way to slide though.

The downside of going down

Most things proceed on a "curve" ... rarely a straight line. So too with mercantile decay.

As the store begins to turn junky, the employees lose respect for it. You get sloth ("They don't care, why should I?"), pilfering of goods ("I worked for it"), dirty restrooms ("I'm not gonna' do this shit!"), failure to put the store back in order at the end of the shift ("Why bother, it's always like this."), etc.

Everything bad ... compounded annually.

The company tries to shore up its losses by cutting back. They hire fewer people and pay them less ... and ... expect more. The slave driver mentality rears up. There are union troubles. Management gets drunk every day but still can't cope. Pressure everywhere to make a sale ... so ... put in more junk ... and on it goes till the "new guy" aka Target ... comes to the rescue of John Q. Public.

The best employees go to the new store leaving the crumbs to perform the increased workload. Sure ;o)


It takes a long time.

Sam Walton is spinning.

Maybe he faked his own death and went to work for Target.

Addendum 02/23/04 :

Got a friendly email from a WalMart manager in Florida so I answered. He defended his company very well ... but that won't stay the Grim Reaper ;o)

Thanks for taking the time to write. I don't often get "official" comments.

I can imagine how difficult your job is. WalMart is beating the pants off everyone else. It will of course fail eventually just as K-Mart did. All such economy ventures are doomed to failure by the modus operandi of the free enterprise system and can fail for other reasons as well.

One is trade policy. Today, the American "cheap goods" market is almost totally dependent on the Chinese. If China stopped trading with the US for any reason ... WalMart could easily go belly up ... certainly into bankruptcy proceedings. Virtually 100% of WalMart's stuff comes from China (or thereabouts ;o). China is the world's leading producer of "value" goods. I mean stuff that's cheap but eminently usable. Of course, it is not likely that China will stop trading with us. They are locked in an economic death grip with us just as much on their end.

When the Waltons leave the corporation entirely, it will most definitely fail due to "corporitus", i.e. a new wave of big shots will kill it by way of their improvements. All this will take a few decades so you needn't ever worry about your job going up in smoke. And should WalMart fail in your lifetime, your efforts have not gone in vain. You have assisted in the ongoing maintenance of civilization in a constructive way as have all of your employees.

Based on what I see and have seen before, I think WalMart will last at least another twenty years before being marginalised by some other entity. In fact, it may be bought out by the Chinese as their export outlet ;o)

PS ...
The way free enterprise will destroy WalMart is via the "bottom line" philosophy which is the foundation of that system. You will find your stores getting cruddier and dirtier and older and more jammed up with unsalable goods to increase sales per square foot. New execs won't be able to get money to maintain a decent atmosphere ... either in the physical store or with the employees or with the customers. By it's nature, WalMart will be used up and discarded ... just like K-Mart. To last for a century would take a more upscale type of business and even these go the way of the dodo eventually.

Lastly, loyalty to a business is always misplaced. Your attitude toward your business must be one of cold indifference. If you find fulfillment in work, do not let this alter your judgment. It is irrelevant. WalMart will discard you like an old shoe as the occasion arises. Reserve your loyalty for your family. This is the only place it actually counts.


Ebtx Home Page