Homestead mailing list

["Toni Hawryluk" <tonihawr AT msn.com>]

is a dual one, indicating that it is a time of

both opportunity and disaster - disaster for

small businesses ? or a niche market for

small *producers* ... ?



http://moneycentral.msn.com/content/invest/forbes/P100080.asp?GT1=5809<http://moneycentral.msn.com/content/invest/forbes/P100080.asp?GT1=5809>

 

Wal-Mart's next victims

The world's largest retailing machine is always looking for new worlds to 
conquer. Here are 5 that look particularly vulnerable, including banking and 
electronics.

When Toys "R" Us said in August that stiff competition from mass merchant 
Wal-Mart Stores was making it consider exiting the toy business, the news 
struck fear in the hearts of retailers everywhere. 

After all, Toys "R" Us 
(TOY<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=TOY>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=TOY>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=TOY>) 
pioneered the "category killer" concept that's now employed by big-box 
specialty stores like Best Buy 
(BBY<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=BBY>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=BBY>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=BBY>), 
Home Depot 
(HD<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=HD>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=HD>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=HD>) and 
Bed Bath & Beyond 
(BBBY<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=BBBY>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=BBBY>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=BBBY>). 
The notion of creating giant specialty stores that cater to a particular 
product segment has become a staple of the U.S. economy. But Wal-Mart 
(WMT<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=WMT>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=WMT>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=WMT>), 
the antithesis of a category killer with aisles stocked with a vast spectrum 
of products, is posing a dire threat to this way of business. 

Wal-Mart had sales of $259 billion for fiscal 2004, ended Jan. 31, ranking it 
as the world's largest retailer. That sheer size has vaulted it to the No. 1 
spot in categories as disparate as food, apparel, jewelry and home 
furnishings. For fiscal 2005, Wal-Mart plans to add 310 new stores and 30 new 
Sam's Clubs to its stable of 3,625 locations. Oppenheimer retail analyst 
Bernard Sosnick expects that by 2010, Wal-Mart will have 3,000 supercenters, 
up from 1,600 this year, and total company sales of half a trillion dollars. 



That kind of growth will make Wal-Mart No. 1 in plenty of other product 
categories soon enough, and it will put an even tighter squeeze on existing 
players in arenas that Wal-Mart already dominates, like apparel and food. 
With a lion like Wal-Mart on the loose, no store is ever safe, but here we've 
identified five categories that that look particularly vulnerable to its 
looming threat.

Consumer electronics
Wal-Mart is the second-largest consumer electronics retailer in the U.S. 
behind Best Buy, but it won't be for long. This spring, it rolled out a 
private-label electronics line, ILO, which thus far includes low-priced 42 
inch plasma TVs, LCD monitors and DVD recorders. That move put electronics 
stores large and small on notice, as have Wal-Mart's efforts to boost its 
brand partnerships, introducing Sony and expanding its relationships with 
Panasonic and RCA. Says retail analyst Howard Davidowitz, "They are going to 
fry Best Buy's brains out."

Banking
The superstore has been trying to get into banking for five years, but its 
efforts to buy banks in California, Oklahoma and Canada were thwarted by 
regulators. Wal-Mart has a ready-made market at hand: 20% of the 100 million 
customers that come through its doors weekly don't have bank accounts. The 
chain already offers financial services such as check cashing, bill payment 
and money orders, and it boasts 28 Wal-Mart Money Centers, which are operated 
by SunTrust Banks, as well as hundreds of other in-store bank branches. The 
company says it has no plans to get into retail banking, but industry sources 
say Wal-Mart is still pushing this agenda quietly and is expected to take 
another run at banking again.

Pharmacy
Wal-Mart ranks fourth in the pharmacy business, behind giants Walgreen, CVS 
and Rite Aid, according to the National Association of Chain Drug Stores. But 
it is upgrading its profile, rolling out a handful of 24-hour pharmacies in 
August. Pharmacies are low-margin propositions, and people with health 
insurance who pay only co-payments aren't price-sensitive. That could put a 
kink in Wal-Mart's strategy of squeezing supply chains to push down retail 
prices. But for the shoppers who don't have insurance, many of them its 
customers, Wal-Mart's brand of competitive pricing would be just what the 
doctor ordered. 

Gasoline
Gas pumps are a huge traffic driver for Wal-Mart. There are 1,555 stations on 
Wal-Mart properties, 300 of which are operated directly by Wal-Mart's 
warehouse arm Sam's Club and the rest by third-party vendors like Murphy USA 
(MUR<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=MUR>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=MUR>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=MUR>). 
Launched in 1996, its pumps already have a 3% share of U.S. retail gas sales 
-- the 10th largest in the U.S. As Wal-Mart's share grows, the only question 
is whether Wal-Mart will oust its vendors and go it alone. Independent gas 
suppliers are growing as the oil giants spin off their refineries, which 
makes that kind of a move plausible, and the sheer number of Wal-Mart 
locations makes it an appealing partner. Says retail analyst Kurt Barnard, 
"The volume they could offer would be of enormous interest to refineries." 

Fashion 
Wal-Mart may lead the apparel market, but it does so with the sale of mundane 
items like underwear, socks and sweatshirts. Analysts say that Wal-Mart is 
losing sales of fashion items to companies like J.C. Penney 
(JCP<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=JCP>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=JCP>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=JCP>), 
Kohl's 
(KSS<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=KSS>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=KSS>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=KSS>) and 
Target 
(TGT<http://moneycentral.msn.com/scripts/webquote.dll?iPage=qd&Symbol=TGT>, 
news<http://news.moneycentral.msn.com/ticker/rcnews.asp?Symbol=TGT>, 
msgs<http://moneycentral.msn.com/community/message/board.asp?Symbol=TGT>), 
which has had particular success with its lines from Isaac Mizrahi and Liz 
Lange. Wal-Mart is now gunning for a hipper milieu with George, the 
No.1-selling British apparel brand that Wal-Mart landed when it bought its 
parent, U.K. retail giant Asda, in 1999. Wal-Mart also stocks the Mary-Kate 
and Ashley line, licensed from the famed Olsen twins. Look for the retail 
giant to start sprucing up its clothing displays and marketing these brands 
more heavily as it reinvents its fashion sense.



 Since we've gone to a 'service' economy 

and those services don't usually pay a living 

wage - or even provide benefits now-a-days,

 it's time for individuals to be their own 

"producers" instead of providing *some* 

services. ................. Although I called 

around today, shopping for a plumber, to 

discover that those who charge by the job 

are not about to divulge dollar amounts on 

*how* they figure their fees, (at least, 

not on the phone ...............I wonder if I

went to an office and asked to see *rates*

would those be open to 'public inspection ?)

and those who are at least "up front" about 

charges related that "free estimates" equate

to being included in the first hour's charge

*if* the plumber then goes to work while

he/she is there, and the 'first hour varies

from $99 to $145, with the next 1/4 hrs

being from $35 to $50.  ( and who knows 

what quality one is buying until the "proof 

of the pudding" leaks - or does not leak ??) 

The one I am leaning to employing was

recommended by the appliance store

where I bought a washer years ago -

he charges $89 plus labor and materials,

and I am ass-u-me-ing that he has a

reputation to uphold if he wants to 

continue getting recommendations from

an appliance store.