No offense, but who are you trying to kid? We've become a culture where low price wins 99% of the time, and the 1% isn't enough to build a successful business case upon, unless you're in a very ideal environment - an old neighborhood with very high real estate prices for example. Look at the popularity of sites like Pricewatch, Froogle, etc - all designed to make finding the lowest price amongst places with already low prices quick and easy.

Wal-Mart is the perfect example of the 99% business. I despise shopping at Wal-mart - the dingy lighting, dirty floors and shelves, the people, the workers, you name it - but they're successful because the prices are almost always the lowest in town. Personally I drive another 5 miles to go to the much nicer Target even though the prices are sometimes a bit higher. I could cut my grocery bill by about 15% over the local chain I shop at (which is clean and has a well staffed seafood and meat counter). Even that chain has had to make concessions in customer service - they're often understaffed with baggers, so the cashier and customer end up bagging. Not a big hassle but a bit disappointing. Anywhere they can cut people, they are forced to to stay somewhat competitive with Wal-mart. Look at how quickly "self service" lines are taking over - 1 person can now staff 8 lines instead of 12-16 people! People think they're getting through quicker, so they use them.

Long term, the Wal-Mart's of the retail business will thrive (or at least survive) because most people will go for the low price at the expense of clean stores, decent customer service, etc. I suspect many of the people in this thread are in that proverbial 1% group - willing to pay a bit more for groceries, a bit more for to get the stereo from the guy who knows his stuff, etc. But that is a distinct minority of people!


Side rant: The low-price culture is also a driving force why we can't get American made goods anymore. People want Made in America but are only willing to pay Made in China prices. People want to "live large" on a moderate salary. It doesn't work without cheap labor.

 

Fascinating, I'd love to read that woman's diary.

 

 

[QUOTE=WestSideBilly,Dec 29 2004, 12:07 PM] No offense, but who are you trying to kid?

 

No offense taken because there isn't one retailer who has tried to build a business solely on the basis of price that has managed to survive the long run. Yes, priced based retailers appear and even seem to prosper in the short run, but if you look at the history of retailing, you cannot find one that has survived the long run. The marketplace is littered with the names of discounter who for a time "owned" the market but are no longer in business. The market in general might be looking for cheap prices, but for any one retailer price competition is the kiss of death.

Wal-mart is relatively new in the scheme of things and they too wlll have their day. They might not be able to compete with the internet or the next great cheap seller. The life cycle of your average discount retailer is relatively short.

To survive the long run, a retailer has to find other ways to compete.

 

This is a point which many fail to realize - that $4 widget at Wal-Mart is often not of the same quality as the $6 one at another retailer. They simply see the $2 price delta and go with the cheap one.

 

How long before their demise? 10, 15, 20 years?


Wal-mart needs to fall a long ways before a big-box retailer can take any significant portion of their business away by relying on customer service to win repeat customers. You and I would likely patronize such a store, but would the average low or middle income family? I doubt it.

 

I think more and more people are beginning to catch on. No one that I know buys clothes at Wal-mart, and most of the people that I know are mentioning the second rate quality of merchandise purchased at stores like Home Depot.

Most everyone knows that the "Brand Name" mechandise found at outlet malls was manufactured specifically to sell at the outlet mall and really isn't the same as the regular merchandise.

You may very well see commodity merchandise like motor oil sold at the discounters, and other merchandise sold in "better" or specialty stores in the future.

 

Low income people will probably always trade price for customer service, with middle income people it can go either way. My point was, however, that any store that competes only on price has a limited life cycle. Another store, not necessarily a customer service oriented store, will come along and steal the business. The stores that compete based on price tend to eat each other up.

That Wal-mart has a long way to fall is something I heard about Montgomery Ward, W.D. Grant, E.J. Korvettes, S. Klein on the Square, Best & Co., Bradlees and a host of other discount retail giants that are now memories.

How long? Hard to say, but they will have their day.

In the thirty years that I spent in the menswear business, I saw this happen over and over again. History has a way of repeating itself. Wal-mart is no different.

 

I must respectfully disagree about people leaving Wal-Mart in search of better quality. Most of the younger people I know, particularly those who have small children, shop diligently at Wal-Mart and love it. Personally I have no desire to shop at Wal-Mart and have never liked it. However, we have three Wal-Mart stores in the area and all three of them stay jam-packed with shoppers around the clock. They've filled a niche for folks who don't have a great deal of disposable income to throw around. Quality clothing, etc. is not ultra-important to some people, nor is knowing that certain items are manufactured to be a lower grade item -- they just look at the bottom line.