Is Walmart Destroying The Retail Industry?

Last Monday on CNBC, retail consultant Jan Kniffen said that Walmart has literally destroyed retail and every other form of retailing. The number one public enemy of retailers today is Amazon but the biggest threat comes from Walmart because of its extremely low prices. Retailing is actually a race for the lowest price and Walmart is offering the lowest prices for the products it sells.

The dominance of Walmart in the world of retail has created an environment where retailers are unable to compete in the crowded market. In fact, Walmart has beaten other discount retailers like Gold Circle in 1988 and Venture Stores in 1998. Walmart has expanded so fast across the country that there are now more than 5,000 retail stores and Sam’s Club locations all over the United States.

The issue with Walmart’s dominance is further complicated by online shopping. Online retailers are creating more competition particularly since many shoppers prefer the convenience of buying online. According to Challenger, Gray & Christmas, a job placement firm, about 44,000 positions have been cut by retailers this year.

According to Kniffen, the root of the problem is the abundance of physical retail stores in the US. Last week, Macy’s has announced the shutdown of 100 locations by early next year because mall traffic has slowed down. Even Walmart has closed 269 locations this year because the shopping habits of consumers have evolved. Subpar stores and malls won’t be open in the coming years because the US has never been this over-stored.

A possible solution for brick and mortar stores is to provide consumers with incentives. Instead of simply selling products, they can add coffee shops, hair salons and other options to boost the quality of experience in the store locations.

In order to prevent price wars among its retailers, manufacturers request compliance with MAP policy. MAP means minimum advertised price which must be followed by retailers and resellers selling the products to protect brand image and maintain seller profit margins. However, it is also important to monitor MAP violators that advertise the product for a lesser amount in order to increase sales and profits.