Decline of Big Box Stores

[Stephane Dumas]

After the dead malls, here come the decline of Big Box Stores due to the rise of internet sales.
http://sanfrancisco.cbslocal.com/2014/07/30/demise-of-big-box-stores-walmart-target-predicted-with-rise-of-internet-sales-smartphone-google-shopping-express/

[Brandon]

Riiiiight.  I sincerely doubt that internet sales will completely supplant most or all brick and mortar retail stores.  The internet will supplant catalog sales, but catalog sales have never really endangered brick and mortar stores.  I strongly suspect the internet will be treated as catalogs were in the past.  There's just something about being able to pick up an item, size it up, check its quality, and then buy it.  And as for grocery shopping, the predictions of the internet just make me laugh.

[ZLoth]

It highly depends on the product. Perishable product and stuff that requires a fitting (clothing, shoes) will lean highly towards a local presence, while non-perishable stuff will lean towards mail order. While I am a avid Amazon shipper, I have items that I want on price watch at CamelCamelCamel so that when it hits a low price point, I can purchase it.... even it means waiting a few months. There are also some products which Amazon is a little more expensive that local (go figure). Oh, so I have to wait two-three days for an item to be received? OK.

There are some practices of the local stores that I don't like. Ever notice that the DVD player usually only comes with a low-end composite video/audio cable or that the new printer lacks an Lan or USB cable? The retailers insist that the manufacturer do not include such cables because they can turn around and sell that cable separately for $30 with a huge margin.... even bigger than the printer/DVD player itself. That same cable can be obtained from Amazon or Monoprice for no more that $4. 

Computer parts? I trust Newegg or Amazon more than I trust the local Fry's Electronics unless it is in a factory sealed box.

[1995hoo]

Several of the grocery stores around here offer online shopping where you out in what you want and they get the items and bag/box them and you just pick it up at a drive-thru service. One store also offers delivery. I won't use either because I want to examine the meat and produce. I don't want them selecting it for me.

[formulanone]

It's too convenient to buy groceries and pick up those other household durable goods, along with a spare USB cable for good measure. Probably the higher-end sales will start to taper off, things like electronics which can usually be found a for a bit less and delivered free. But as long as the average family is spending $100 on groceries alone, they're making pretty good coin on the basic staples. There's always going to be a immediate demand for many things because, well...it broke and you need another one as soon as possible.

If anything, they've hit a bit of an over-saturation point (Home Depot, Lowe's, Wal-Mart, Target, et al), so it may appear they're tapering off by not building as many new sites. But I don't see them just going away anytime soon, except by local revolt to their continued expansion, or some other big player comes into the mix.

[Roadrunner75]

Keep track of your favorite retailers that have been put out of business by the Amazon Drone:
http://en.wikipedia.org/wiki/List_of_defunct_retailers_of_the_United_States

[Scott5114]

I think it's more likely that online retailers will continue to put pressure on the big box retail industry, but not actually supplant it. This will mean that retailers will no longer be able to compete purely on price or selection. Instead, customer service is going to become the defining factor, since at Target you can speak face-to-face with a human, whereas you can't really on Amazon. That means the retailers that don't do customer service well (Walmart) will probably suffer more than those that do (Costco).

I have cut back my spending at Walmart considerably due to the construction of a new 24-hour grocery store in Norman. It's called Crest and is part of a locally-owned chain exclusive to Oklahoma City. Crest doesn't have a few things I need from Walmart, but they are competitive on price and their store is a lot less noxious than Walmart (feels like less of a hassle to get in and out). Before they opened, we were at Walmart once a week; now, it's maybe 2 to 3 times a month.

[Brandon]

Keep track of your favorite retailers that have been put out of business by the Amazon Drone:
http://en.wikipedia.org/wiki/List_of_defunct_retailers_of_the_United_States

Most of those went out of business long before Amazon was even a dream.

[Roadrunner75]

Keep track of your favorite retailers that have been put out of business by the Amazon Drone:
http://en.wikipedia.org/wiki/List_of_defunct_retailers_of_the_United_States

Most of those went out of business long before Amazon was even a dream.

Yes.  The company responsible for updating the list for Wikipedia went out of business and added themselves to the list.

It's a good read for many "I remember that place..." moments.

[Duke87]

It highly depends on the product. Perishable product and stuff that requires a fitting (clothing, shoes) will lean highly towards a local presence, while non-perishable stuff will lean towards mail order.

Another major motivation for local shopping is urgency. If you need or want something ASAP it is often more practical to visit a local store than to pay for overnight shipping. And sometimes you really need whatever it is now and overnight isn't fast enough for you.

And then there is the question of trust. If you are looking to purchase a used item of some decent value, it is wise to want to see it in person before you buy it so you can verify the condition it's in and, in the case of collector's items, its authenticity.


The role of brick and mortar stores certainly has decreased substantially over the last 15 years, but it isn't likely to completely vanish anytime soon.
It's also worth noting that in the case of retailers for products like books or music, they have gone under not just because people buy online instead but also because the products they sold themselves have become somewhat obsolete (most media these days can theoretically be downloaded, eliminating the need for a physical copy entirely).

[Pete from Boston]

People want to touch, handle, and try things on.  People want to compare tv pictures. 

Anyone remember catalog showrooms?  Those were less than satisfying because you couldn't see the stuff.  We always ended up returning things, which is also the problem with shopping online.

[Crazy Volvo Guy]

I'm one of "those" people - you know, the ones who wish they'd sales tax the 'net, because I'm a brick-and-mortar kind of guy.  I like to see/handle/try what I'm going to buy before I buy it.  And now, being an OTR trucker, I need to be able to walk in and get something right there, or it's going to be a lot of waiting (until the next time I go home, and seeing how I bounce back and forth between two places for my earned time off, that can be as much as a couple months.

[algorerhythms]

I have cut back my spending at Walmart considerably due to the construction of a new 24-hour grocery store in Norman. It's called Crest and is part of a locally-owned chain exclusive to Oklahoma City. Crest doesn't have a few things I need from Walmart, but they are competitive on price and their store is a lot less noxious than Walmart (feels like less of a hassle to get in and out). Before they opened, we were at Walmart once a week; now, it's maybe 2 to 3 times a month.

I hadn't heard of that place. I may have to check it out at some point. I usually go to Homeland, though, since it's closer.

[Scott5114]

Not quite a big box, but after reading this thread I stumbled on this article which says Sears is circling the drain: http://money.cnn.com/2014/05/15/news/companies/sears-store-closings/

I have cut back my spending at Walmart considerably due to the construction of a new 24-hour grocery store in Norman. It's called Crest and is part of a locally-owned chain exclusive to Oklahoma City. Crest doesn't have a few things I need from Walmart, but they are competitive on price and their store is a lot less noxious than Walmart (feels like less of a hassle to get in and out). Before they opened, we were at Walmart once a week; now, it's maybe 2 to 3 times a month.

I hadn't heard of that place. I may have to check it out at some point. I usually go to Homeland, though, since it's closer.

You should definitely give it a shot. It's much cheaper than Homeland for most things. It's located on 24th Ave NW across from Target.

I'm one of "those" people - you know, the ones who wish they'd sales tax the 'net, because I'm a brick-and-mortar kind of guy.  I like to see/handle/try what I'm going to buy before I buy it.  And now, being an OTR trucker, I need to be able to walk in and get something right there, or it's going to be a lot of waiting (until the next time I go home, and seeing how I bounce back and forth between two places for my earned time off, that can be as much as a couple months.

I'm in the process of setting up an online store. The problem with sales taxes on the Internet is that sales taxes are collected by the states, and there is simply no legal mechanism to enforce it. Say I sell something to algorerhythms here: obviously I have to tax him because we both live in Oklahoma and if I don't Oklahoma can certainly come after me for it. Now, if I sell to you and don't tax you, but Illinois wants me to collect tax from you, the Illinois government has no legal way to come after me. I'm not a citizen of IL and the IL authorities cannot come to OK to pick me up. The transaction, for all intents and purposes, happened in Oklahoma, so it's hard to say that I should even collect IL tax.

Part of the fantastic thing about the Internet is that anyone can set up a store and sell to anyone in the world. Having to require businesses to register with all 50 states to collect sales taxes and keep up with the ever-changing sales tax rates all over would be a massive time sink and burden for the business owners. There is also what some states have been looking at, which is to require ecommerce businesses to collect sales taxes for the state that the company is in regardless of whether the customer is in that state or not. The problem this causes is that it puts that state's businesses at a disadvantage compared to those headquartered in other states, meaning that they will soon find their businesses relocating to Delaware or Wyoming or somewhere with a more favorable tax structure.

One other thing–in Oklahoma, at least, all untaxed purchases from outside the state are to be declared on the income tax form and become subject to "use tax". This is of course done pretty much on the honor system, since the state government has no way of knowing what you have bought from out-of-state. As far as I know nobody actually totals up their Amazon purchases and pays use tax on them, even though they are legally required to do that.

[Brandon]

Not quite a big box, but after reading this thread I stumbled on this article which says Sears is circling the drain: http://money.cnn.com/2014/05/15/news/companies/sears-store-closings/

I can sum that up in two words as to why Sears is circling the drain: Eddie Lampert.  The man is a retail moron.

[Scott5114]

That presumes that he is even attempting to run a retail business. Lampert's behavior is fairly consistent with someone attempting a gradual wind-down of a business.

[Brandon]

That presumes that he is even attempting to run a retail business. Lampert's behavior is fairly consistent with someone attempting a gradual wind-down of a business.

Touche.  I've suspected for years that all he wants is the money from selling off assets.

[jeffandnicole]

There are certain stores that are in trouble, and have been in trouble for awhile.  Electronics Stores, for example, are having issues.  Best Buy in particular have seen sales declines, and notices the traffic that comes into the store to see and touch the product, but then walks out and orders it on Amazon.  Or...they see and touch it, then order it on Amazon, then walk out. 

The article - and some of the analysts - may be going a bit extreme with all Big Box stores though.  Lowes & Home Depot offer products that I'm not going to order on Amazon.   Barnes & Noble looks like a mini Apple Store with all their gadgets on the sales floor.  Walmart smartly transitioned into a supermarket retailer. Many retailers are getting smarter too - instead of building 100,000 sq ft buildings, they're buying 70,000 sq ft buildings. 

So, yes, people are buying a LOT on the internet.  The smart retailers are learning how to co-exist.  The others will bite the dust.  The era is different from when Woolworths was around then shut down, but the results are the same.

[Pete from Boston]

I'm not sure why Sears doesn't jettison Kmart, if it's possible at this point.  It would scarcely be missed.

Home Depot is not going anywhere.  It's not for nothing that they have an entire second set of registers for tradespeople, and that tradespeople get the best customer service in the store (rivaled only by that for folks buying high-value installs of non-stock items like windows and kitchens).  The bulk of their business is need-it-now.  There are other stores that so almost everything they do better, but not under a single roof or for that cheap.

[Brandon]

I'm not sure why Sears doesn't jettison Kmart, or even if it's possible.

Kmart (aka Eddie Lampert) bought Sears.  I'm not sure Lampert wants to jettison either until he gets his money out of them.

[bulldog1979]

I'm one of "those" people - you know, the ones who wish they'd sales tax the 'net, because I'm a brick-and-mortar kind of guy.

Scott5114 mentioned use tax, but I'll expand on what he said a little. Here in Michigan, we have to pay use tax on any merchandise used in the state of Michigan that would have been subject to sales tax if purchased through traditional means within the state but no sales tax was collected. If an online retailer doesn't collect the Michigan sales tax, then I still have to pay it, albeit indirectly.

Use tax also applies to items bought out of state where the sales tax does not equal 6%. In Wisconsin, for example, sales tax is 5%, so for any items purchased there, I'm supposed to pay 1% to the Michigan Treasury Department if it's used within Michigan. Basically, I get a credit for the sales tax I did pay; I do not get any sort of credit on taxes paid in excess of 6%, say the 7.5% rate in California.

Use tax is handled on our state income tax forms. I have friends that claim a small nominal amount owed to stave off potential issues with an audit rather than keep receipts. Obviously, if I order a big-ticket item that wasn't subject to sales tax, I do track that. Since there's at least one Apple Store in the state, purchases on store.apple.com will be taxed

There is one loophole to all of this: merchandise used outside of the state. If I buy a consumable product (food, cleaning supplies, fuel, etc) and completely use it up outside of the state, I don't owe Michigan use tax on it. We don't tax grocery items anyway, so they'd never be subject to use tax, but you get the idea.

[Pete from Boston]

I'm not sure why Sears doesn't jettison Kmart, or even if it's possible.

Kmart (aka Eddie Lampert) bought Sears.  I'm not sure Lampert wants to jettison either until he gets his money out of them.

Kmart is even worse than Walmart(!) when it comes to employee motivation and morale.  The good thing is, there is a lower staffing level at Kmart, thus fewer gloomy employees.  The bad thing is this means the experience is slow and frustrating for everyone involved, making gloomier employees. 

It's not helpful for anyone to write an email saying "I went to six of your stores in three states and nobody seemed happy to be there," because customer service reps are only really trained to handle specific problems, not company-wide malaise.  I know, because I did. 

[Brandon]

I'm not sure why Sears doesn't jettison Kmart, if it's possible at this point.  It would scarcely be missed.

Home Depot is not going anywhere.  It's not for nothing that they have an entire second set of registers for tradespeople, and that tradespeople get the best customer service in the store (rivaled only by that for folks buying high-value installs of non-stock items like windows and kitchens).  The bulk of their business is need-it-now.  There are other stores that so almost everything they do better, but not under a single roof or for that cheap.

In the Midwest, it's Menards.  They're better than Home Depot and have a better selection (which is like an Ace or True Value in comparison).

[Pete from Boston]

Menard's is indeed a better store.  Wish we had them in the East.

[Revive 755]

Keep track of your favorite retailers that have been put out of business by the Amazon Drone:
http://en.wikipedia.org/wiki/List_of_defunct_retailers_of_the_United_States

And how many of those drones will be flying after Congress hears about some major fatal crash (probably involving a crash with a school bus or over a school playground) or terrorist act?  I have some doubts Congress will always be pressing the FAA to open the skies for drones.