Tuesday, August 16, 2005

turn that frown upside down

A wary Wal-Mart
On one hand, higher gas prices will continue to cut into the pocketbooks of Wal-Mart's predominantly low-to-mid-income customers.
At the same time, Schoewe said more expensive fuel was costing Wal-Mart more on the back end of the business, primarily to use its vast trucking fleet to move freight around the country to its stores.

Damn that Kunstler and his Negative Prognostications made so he could Sell Books.

Now beloved cornerstone of American enterprise is losing money.
If only Kunstler were an optimist, this wouldn't be happening.

Burn him at the stake, before he causes more trouble.


At 11:06 PM, August 16, 2005, Blogger UNplanner said...

Funny thing that Walmart is in the news over rising gas prices. Walmart's whole existence is based on the premise of cheap energy. Without it, the whole company's means of existence vanishes.

First their vulnerable customers vanish, then their distribution system becomes more expensive to maintain, resulting in not so low prices. Soon whole product lines disappear. Eventually the whole system, once touted as the "world's most efficient" seizes up for good.

Like many other cheap energy dependent sectors of the economy bankruptcy and abandonment results.

On the flip side, there will be 3000 to 4000 opportunities for suburban renewal out there.

Like this idea I posted for newly abandoned properties:


At 8:52 PM, August 19, 2005, Anonymous Anonymous said...

ROFL ... C'mon folks, lets not be economic illiterates here.

1) Consider the impact of gas on food purchases. Would less food be purchased? ahem, not on the long run. High gas prices may have a substitution effect, yet that is a one-time adjustment relative to the amount of the economy the price increase displaces.. ie. the increase from $40 to $60, ie $20 per barrel, over the 6 billion barrels, is $120 billion - significant impact, ie 1% of our economy. ... Yet the economy is currently booming last year over 4%, so it crimps a 4% growth down to 3%, looks manageable.

2) a look at the chart shows walmarts decline in growth a trend since 2000 ... maybe it's a company thing, ie running out of places to grow.

3) Same store sales are still going UP, only slower... positing the demise of the world's largest retailer because same store sales are up 2% is, well, hilarious.

4) "Like many other cheap energy dependent sectors of the economy bankruptcy and abandonment results."

Um, no. Adjustment and economizing results. As ever, the nimble survive.

Some companies hog-tied to gasline may go bankrupt. It wont be Walmart, it will be Delta.

At 10:51 PM, August 19, 2005, Blogger monkeygrinder said...

Patrick, in my world, economic illiterates are those who don't understand that oil will rise past 150$ a barrel in the next five years, and walmart will be severely affected;

but sure, people will still buy cheap food, cheap as they can find. I dunno about cut rate dvd players from the china, you know?

At 10:09 AM, August 20, 2005, Blogger mh497 said...

There's a midpoint between your arguements. If oil continues going up, there are a lot of businesses that will be squeezed out of business. Wal-Mart, I suspect, will not be one of them. Bruised sure, but knocked out no.

One of the things not mentioned is that Wal-Mart indicated they found people buying more food items. Why? People are probably both cutting back a little and combining errands. So Wal-Marts move to include groceries likely means they are taking sales from regular supermarkets at an increasing pace now.

Yes, Wal-Marts costs will go up, but so will everybody else's. And there are plenty of marginal retailers that I suspect will disappear long before Wal-Mart, and who's customer's will then have to make the trek to... Wal-Mart.

At 6:49 PM, August 21, 2005, Blogger monkeygrinder said...

I think the idea that Walmart could become the last standing supermarket for food is about right.

At the same time, shipping other goods overseas will no longer be a cost effective.

So I would envision lots of empty shelves.


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