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Leaked Walmart memo reveals competitive threats

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Re: Leaked Walmart memo reveals competitive threats

#171

Post by bigwavedave »

mc32 wrote: post #2

I think Wal*Mart has an image problem. I’ve gone into their stores. Their stock assortment isn’t bad compared to the competition. In fact, aside from Whole Foods on the organic/bio side of things, they measure up very well and better compared to their competition. They are more of a hypermart where you can do one stop shopping ala Carrefour. The issues I see are: very drab color palette. Working class shoppers. Sure,…

> The issues I see are: [snip] Working class shoppers. Sure, it’s elitist, but people like shopping alongside people in their own stratum.

When I was very young, I liked talking to my dad about possible business ideas and how to make millions of dollars so I could buy a castle for our family to live in when I grew up (yeah, yeah, I was a kid). One evening, after proposing yet another crazy idea (I can't for the life of me remember what it was), my dad sat me down and asked me which kind of customer I thought Walmart would prefer to have: 1 customer that spends $100 or 100 customers that spend $1. I naively answered "The $100 customer, because it's a guaranteed higher amount!" He corrected me, saying that they'd prefer 100x $1 customers for two reasons: 1) there will always be a market for them and 2) it's less detrimental to lose a customer when each one pays $1 than it is to lose your only customer.

I don't think attracting the average Joe instead of the elitist is a bug, it's a feature.

Re: Leaked Walmart memo reveals competitive threats

#172

Post by barry-cotter »

Spooky23 wrote: post #138
paxys wrote: post #107

Walmart gets a lot of flak for being old school and allowing Amazon's rise, but they are one of the very few retailers who have actually been able to respond to competitive threats over the last decade or two. Walmart Labs has some great tech and hires top software talent in the industry. They aren't shy about making large acquisitions when needed (like Jet). They have built out their own delivery and logistics netwo…

Walmart has some weird cultural issues that make store operations hard to adapt. It’s a pretty miserable place to work. They hire anyone, turn them out quickly, and have weird work rules for things like gathering in a group. Target’s pickup operation is superior in every dimension. They made the decision to put it front and center, and their employees seem happier. It takes The other issue they have is that their log…

You’re just describing how Target and Walmart have different business models, same as CostCo does. There’s a continuum there. Walmart has lower profit margins, lower prices, stocks many more items, has many more options for size rather than all bulk and will hire far lower quality workers. CostCo is at the other end on all of those and Target is intermediate. People really, really care about price.

Re: Leaked Walmart memo reveals competitive threats

#173

Post by jackson1442 »

pengaru wrote: post #34
handrous wrote: post #12

Earlier quoted context omitted.

Observations about the nearest Wal-Mart: 1) All the employees look sad, all he time. 2) They've obviously carefully tuned their check out staffing so that the lines are always long. This is such a constant that it has to be intentional, and they're doing a good job of it. 3) Sometimes they attempt to check receipts at exit. I don't get that at any other non-membership store. 4) All the shoppers look sad. 5) It's the…

Most of what you're observing is simply a reflection of the area demographics. It's similar to visiting a small town DMV. Your description of gambling machines reminds me of my last visit back home in IL, after they legalized gambling. It's very jarring to walk past locals glued to video slot machines at 9AM in a gas station. It's depressing as hell, I'm sure the walmarts have cashed in on the action too but I didn't…

I don't think it fits quite as tightly in that description. I've been to many many walmarts and exactly one hasn't felt sad.

They've installed these gates at the walmart nearest to me that essentially force you to walk through a checkout line even if you don't end up buying anything. Most necessities are locked in cases and I always struggle to find the single employee with the key to any particular case, who then has to follow me to the checkout and have me pay for the item immediately.

The H-E-B two miles down the road is significantly nicer in almost every capacity and only marginally more expensive. The time I save not waiting in checkout lines (I scan everything on my phone at H-E-B then bag it while I shop) and looking for keys quite literally makes up the price difference and then some.

Re: Leaked Walmart memo reveals competitive threats

#174

Post by mgkimsal »

lotsofpulp wrote: post #161
mgkimsal wrote: post #143

Earlier quoted context omitted.

Every time I hear people talking about "grocery store margins" the numbers get smaller and smaller, and I suspect "Hollywood accounting" may be behind some of the numbers people are thinking/repeating. I can say some of the shops around here have always been pricey, but a Lidl came in to town and manages to undercut every other store by around 30% on pretty much every comparable item. Overall, stores making 0.5% prof…

It is pretty easy to search for 10-K for all the big retail companies. They all show sub 5% profit margins, frequently in the 2% to 3% range. It is a pretty cut throat business. Lidl is probably coming in and destroying competition by running leaner operations with less payroll due to not having to deal with legacy unions. It happens and has happens in many businesses (see declining real wages for past few decades fo…

I did reference looking up numbers for a regional chain - net profit was 2.3% - this is still > 4x higher than 0.5%. I don't doubt some operate (for a while) at a sub 1% profit, but have to imagine those end up closing down eventually. Per the article I linked to, there was reference to smaller operations that focus on 'upscale' services may be north of 5% net profits (but are likely doing less volume overall).

Lidl likely is 'winning' there (if indeed there's legacy union component to their pricing). They also scaled back their expansion plans. The one by us is moderately large, and newer ones (and future planned ones) are (and will be ) smaller.

Within a 3 mile radius, we have a Walmart, Lidl, Aldi, Target, Wegmans, Lowes, Food Lion, Harris Teeter, Lowes, and Harris Teeter (yes, 2 Lowes and 2 Harris Teeters). This is in North Carolina - some of these are regional chains. The Lowes and HT have historically been some of the consistently highest prices for anything, and I'm honestly baffled how people can afford to shop there regularly.

Yes, perhaps keeping a bit more money 'local' (vs that money going out of state) might be a 'good thing', somehow, but it's hard for me to justify it. Perhaps, if there's real benefit, they need to do some better PR. Or perhaps they have, and everyone else 'gets it', and I've just not heard it?

I wanted a bag of frozen cherries. Local HT - 'name brand' was $5.25. HT store brand was ~$4.25. Walmart store brand was ~$3. Target store brand was $1.89. (same sizes for all - all late 2019 prices from memory). I have a hard time justifying spending 100% more for generic brand stuff. Cheeses, milk, bread, cereals, eggs, meats - our local HT is almost always at least 50% more than the Lidl or Target or Walmart. Maybe these disparities aren't as great in other regions, and this will shake itself out eventually?

EDIT: found some HT numbers from a few years ago that indicated their net profit was closer to 3.6%. They also have a profit sharing program, which may account for aiming for a higher profit percent.

Re: Leaked Walmart memo reveals competitive threats

#175

Post by reducesuffering »

barry-cotter wrote: post #172
Spooky23 wrote: post #138

Earlier quoted context omitted.

Walmart has some weird cultural issues that make store operations hard to adapt. It’s a pretty miserable place to work. They hire anyone, turn them out quickly, and have weird work rules for things like gathering in a group. Target’s pickup operation is superior in every dimension. They made the decision to put it front and center, and their employees seem happier. It takes The other issue they have is that their log…

You’re just describing how Target and Walmart have different business models, same as CostCo does. There’s a continuum there. Walmart has lower profit margins, lower prices, stocks many more items, has many more options for size rather than all bulk and will hire far lower quality workers. CostCo is at the other end on all of those and Target is intermediate. People really, really care about price.

I’m fairly certain Costco has lower prices and profit margins than Target. So it’s not “on the other end on all of those” with Target being intermediate.

Re: Leaked Walmart memo reveals competitive threats

#176

Post by jackson1442 »

partiallypro wrote: post #65
yumraj wrote: post #37

Earlier quoted context omitted.

One thing I've noted in general is Costco employees are much younger on average than Walmart employees. I almost never find an old employee at Costco, while at Walmart most of them are old or middle aged.

Walmart often has stores in poorer areas than Costco, which is likely why you see the age discrepancy.

Costco also has a pretty robust internal promotion system from what I've heard, so older employees might also be occupying management spots.

Though it might also be that nearly every piece of stock at a Costco will be significantly heavier than that at Walmart, making it difficult for older people who might have more in the way of back problems etc to work there.

Re: Leaked Walmart memo reveals competitive threats

#177

Post by maxtheman »

kevinventullo wrote: post #157
andreilys wrote: post #150

Earlier quoted context omitted.

In the last 20 years they’re stock has only gone up 150%.... Yes that’s better than bankruptcy but Walmart is a far cry from a successful old incumbent being able to address new upstarts. Also what makes you say Walmart Labs has great tech and hires top software talent? A quick look on Glassdoor shows the salary is quite low (esp. as it’s based in San Bruno). I know plenty of new grads that are earning much more, eve…

In the last 20 years they’re stock has only gone up 150%.... To be fair, they’ve been paying ~ 2% dividend yield that whole time. Still, if your comp is mostly in stock, those dividend payments hurt versus something like a buyback.

Dividends don't always "hurt". They let one automatically claim profits on a trade, without the hassle of divesting shares.

Re: Leaked Walmart memo reveals competitive threats

#178

Post by elliekelly »

Spooky23 wrote: post #138
paxys wrote: post #107

Walmart gets a lot of flak for being old school and allowing Amazon's rise, but they are one of the very few retailers who have actually been able to respond to competitive threats over the last decade or two. Walmart Labs has some great tech and hires top software talent in the industry. They aren't shy about making large acquisitions when needed (like Jet). They have built out their own delivery and logistics netwo…

Walmart has some weird cultural issues that make store operations hard to adapt. It’s a pretty miserable place to work. They hire anyone, turn them out quickly, and have weird work rules for things like gathering in a group. Target’s pickup operation is superior in every dimension. They made the decision to put it front and center, and their employees seem happier. It takes The other issue they have is that their log…

A few years ago Walmart came out with this bizarre simulation game(?) where you “work” in their store: https://apps.apple.com/us/app/spark-city/id1435371389

Re: Leaked Walmart memo reveals competitive threats

#179

Post by BeetleB »

Spooky23 wrote: post #138
paxys wrote: post #107

Walmart gets a lot of flak for being old school and allowing Amazon's rise, but they are one of the very few retailers who have actually been able to respond to competitive threats over the last decade or two. Walmart Labs has some great tech and hires top software talent in the industry. They aren't shy about making large acquisitions when needed (like Jet). They have built out their own delivery and logistics netwo…

Walmart has some weird cultural issues that make store operations hard to adapt. It’s a pretty miserable place to work. They hire anyone, turn them out quickly, and have weird work rules for things like gathering in a group. Target’s pickup operation is superior in every dimension. They made the decision to put it front and center, and their employees seem happier. It takes The other issue they have is that their log…

> It takes In my experience, it's rarely as low as 3 minutes. It's often quicker for me to go in and get in line at the customer service.

Re: Leaked Walmart memo reveals competitive threats

#180

Post by kevinventullo »

maxtheman wrote: post #177
kevinventullo wrote: post #157

Earlier quoted context omitted.

In the last 20 years they’re stock has only gone up 150%.... To be fair, they’ve been paying ~ 2% dividend yield that whole time. Still, if your comp is mostly in stock, those dividend payments hurt versus something like a buyback.

Dividends don't always "hurt". They let one automatically claim profits on a trade, without the hassle of divesting shares.

What I mean is, if I get a stock grant spread out over four years, then the shares I receive in year 4 have implicitly had their value decreased by the dividends paid out in years 1-3.
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