Opening Insights: Power Extinguished?
For decades Walmart has dominated America's retail market. Yet, its dominance is being threatened by the trends in online shopping and the attraction of speedy delivery options of Amazon, for example.
Retail guys are going to go out of business and ecommerce will become the place everyone buys. You are not going to have a choice. We're still pre-death of retail, and we're already seeing a huge wave of growth. The best in class are going to get better and better. We view this as a long term opportunity.
...Retail chains are a fundamentally implausible economic structure if there's a viable alternative. You combine the fixed cost of real estate with inventory, and it puts every retailer in a highly leveraged position. Few can survive a decline of 20 to 30 percent in revenues. It just doesn't make any sense for all this stuff to sit on shelves. There is fundamentally a better model.
...I'd bet on the pure plays in ecommerce. Software eats retail.
- Marc Andreessen
Online U.S. News & World Report - Money by Wayne Duggan recently outlined the realities of Walmart today and the concern of shareholders and analysts alike, about the future of the retailer moving forward.
Informational Insights: Life or Death?
In 2017, Walmart Inc. (WMT) demonstrated to investors that its business can stand up to online completion from Amazon.com Inc. (AMZN). Now that online sales growth appears to be slowing, however, analysts are having a tough time finding reasons for investors to buy WMT stock.
On Friday, Oppenheimer analyst Rupesh Parikh downgraded Walmart stock from “outperform” to “perform” and said there’s no longer a reason to be excited about the stock.
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In February, Walmart experienced its single worst day of trading in 30 years when shares dropped more than 10 percent in a day. The sell-off came after Walmart reported that online sales growth dropped from 50 percent in the third quarter to just 23 percent in the fourth quarter.
Walmart expects online sales growth to accelerate to 40 percent in 2018, but Parikh says that target may be “a stretch.” If online growth continues to come in soft, he says buyers will likely avoid the stock.
In the meantime, Walmart's heavy investing in its omni-channel initiatives will continue to weigh on margins and limit earnings upside, Parikh says. Oppenheimer lowered its fiscal 2019 EPS estimate for Walmart from $5.15 to $5.23.
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In addition to the downgrade to “perform,” Oppenheimer has lowered its price target for WMT stock from $110 to $93.
Source: https://www.msn.com/en-us/money/companies/walmart-loses-its-biggest-selling-point/ar-BBJN2Y9?ocid=spartandhp
Possibilities for Consideration: Retail and Culture
Have you considered the consequences of the death of retail, and what that means to the economy, as well as on a social cultural level? As Marc Andreessen emphasized the death of retail means: "...You are not going to have a choice."
- What does the loss of retail mean for our consumer choice?
- What does the loss of retail mean for our abilities to discover new brands?
- What does the loss of retail mean for our abilities to related, collaborate and engage?
- What does the loss of retail mean for our countries job and employment opportunities?
If you are interested in exploring and finding solutions to these questions and more consider a FREE PWI Co-Lab Online Workshop
Add Your Insight: Collaboration Culture
...I'd bet on the pure plays in ecommerce. Software eats retail.
MARC ANDREESEN
The PWI Co-Lab opens the door to discovering and uncovering the tools and resources we need to unify, empower and communicate with others about the problems, answers and solutions we want to see. Life offers us many opportunities and directions, few paths lead to deliverable and measurable solutions... the PWI Co-Lab offers a path to the solution for the people, by the people, of the people.
