Walmart shows its weak spots
Las Vegas -- As far as global rankings go, Walmart is not budging from its spot as No. 1 retailer anytime soon. But according to journalist Charles Fishman, its grip might be slackening.
Fishman, who literally wrote the book on Walmart, delivered an educational session at the National Hardware Show here at the Las Vegas Convention Center. Titled "'Succeeding in Spite of Walmart: Understanding 'the Walmart Effect' and Using it to Your Advantage,'" the presentation took a close look at how Walmart got as big as it is and why that growth might be hitting a plateau.
"I want to leave you with a sense of how fast Walmart is changing right now and why," said Fishman. "Walmart is nervous. The largest company in the history of the world has a little anxiety problem."
That problem, according to Fishman, comes from the fact that Walmart is currently struggling to keep up with more innovative and more creative companies. Over the last four years, total sales for the retailer have only increased 10%. That's compared to the annual double-digit growth it experienced between 1990 and 2000, when the slowest year saw a 12% increase within those 12 months alone -- and six of those years saw 20% increases or more.
"All the people who wanted to find Walmart have found it," said Fishman. "It's now struggling to grow faster than the economy."
Of course, there are other problems beyond the inevitable plateau of total market saturation. Many consumers are turned off by the long lines at Walmart, and many find its enormous size unpalatable.
Even when the retailer dipped its toes into smaller-format stores, however, those ventures weren't very profitable. Its "Walmart Express" offering was completely closed down 8 weeks ago.
What's more, says Fishman, is that Walmart cannot seem to figure out the digital world. Still, the competition is formidable. Walmart is $100 billion larger than the next largest retailer, and it pulls in $1.3 billion in sales per day (which adds up to roughly $1 million per minute). It sells more than Home Depot and Lowe's combined by April 23rd. Additionally, Walmart has managed to open 11 new stores a week (globally) over the last five years as most of the world struggled to come out of the downturn.
"You all have a harder job than [hardware store owners of the past] or even Sam Walton," he said. "You have to create the sense of magic and competence and welcome that [independent retailers of the past] created, in a world that's ruled ruthlessly by Walmart and Home Depot and Lowe's, and more and more by Amazon."
Though independent retailers have been beating the customer service drum for decades, Fishman believes we might be at a unique juncture in time where these value propositions might present a greater advantage than they ever did before.
For one, Walmart is no longer operating by the rules of the past. Once famously secretive, it's now entering a new era of transparency by releasing extensive data related to its operational costs. But the independent retailer will remain the obvious choice for customers looking for a personal touch.
"No one ever walks into a Walmart or Home Depot or Lowe's, and the moment they step in, feels overjoyed," said Fishman. "There's no joy in those stores. The only thing they have is price. That sense of joy you give your customers is your in."