592 final presentation

A COMPLETE ANALYSIS OF THE BIG BOX RETAIL INDUSTRY FROM

1962 TO 2016

BY: STEPHEN EXETER

From Big Box to Inbox

Outline

Inception of big box retail – 1962Growth & customer impactLeadership decisions / Failed ideasSizing up the industry from 1990 – 2005Internet sales

AmazonTransitioning to small boxConclusion / Recommendations

Early 1960’s

1962 – Creation of Wal-Mart, Target, & KmartParadigm shift

Regulations on discounts Limited manufacturer input

Perfect economic timing“Corner store blues”

Growth & Impact on Customers

Stores by 1970 Wal-Mart - 38 Kmart - 180 Target - 40

Sales by 1970 Wal-Mart $44.2M Kmart $2.2B Target $53M

New business entry in 1977 was at 17%Beat the recession of the 1980’s

Leadership Decisions

Customers wanted year round optionsAdvertising

Newspaper (lucrative)Planogram

TargetStrategic geographic locationsCopycat market

Failed Ideas & Issues

Best Products – ShowroomWoolco – Took on too much debtCircuit CityKmart cutting customer service / Loyalty

programPolitical change by the end of 1990’s

Sizing up the industry 1990-2005

Continued growth for Wal-Mart and TargetWal-Mart becomes largest retailer in the

worldBeginning of financial issues for KmartCreation of internet

Amazon eBay

Market Share 1990-2000

Amazon

Went public in 1997 – reported $147M in sales

First year to turn profit – 2003Mimic big box stores without physical

locationEliminated overhead in nearly every facetBy 2004 they reported sales of $6.92B and

had expanded into almost every sales category as the other big box stores

Amazon – Diversification Strategy

2015 Net Income of $596MDrone deliveryIntegrating their own delivery branchWeb services / Cloud computing Amazon PrimeWarehouse / logistics innovation

From Big Box to Small Box

This is becoming the trend in the big box industry

TargetBest Buy kiosksWal-Mart Express

Already established Dollar Stores

By The Numbers

Shipping Costs

Busiest Shopping Day of the Year

Conclusions

Logistics expertsMissed the opening for online dominationMarket saturationInconvenient experienceIncrease in labor / Generational changeCan no longer win on price

Recommendations

Innovative ways to recycle old buildingsSolar energyPersonalization

Sharable experiencesDistribution optionsBeat Amazon and others at their own game

Online focus Recruit millennials

References

Johnsen, M. (2016, February 25). Kmart realizes full-year sales decline of 15.6%, but compsmoving in right direction. Retrieved August 12, 2016, fromhttp://www.drugstorenews.com/article/kmart-realizes-full-year-sales-decline-1-comps-moving-right-direction

  Kielar, A. (2015, August 4). No More “TargetExpress” Or “CityTarget,” Just Small Target

Stores. Retrieved August 15, 2016, from https://consumerist.com/2015/08/04/no-more-targetexpress-or-citytarget-just-small-target-stores/

  Kohlstedt, K. (2016, June 27). Ghost Boxes; Reusing Abonded Big Box Stores Across

America. Retrieved August 16, 2016, from http://99percentinvisible.org/article/ghost-boxes-reusing-abandoned-big-box-superstores-across-america/

Lam, B. (2016, May 11). Why the Biggest Big-Box Stores Survive. Retrieved August 28, 2016, from http://www.theatlantic.com/business/archive/2016/05/big-box-future/482211/

Lee, M. (2015, April 15). The American Economy of the 60s and 70s. Retrieved August 02, 2016, from http://classroom.synonym.com/american-economy-60s-70s-11277.html

References

Rivlin, G. (2005, July 10). A Retail Revolution Turns 10. Retrieved August 10, 2016, fromhttp://www.nytimes.com/2005/07/10/business/yourmoney/a-retail-revolution-turns-10.html?_r=0

  Schoenberger, C. R. (2002, January 18). How Kmart Blew It. Retrieved June 9, 2016, from

http://www.forbes.com/2002/01/18/0118kmart.html   Sidel, R., Yadron, D., & Germano, S. (2013, December 19). Target Hit by Credit-Card Breach.

Retrieved August 17, 2016, fromhttp://www.wsj.com/articles/SB10001424052702304773104579266743230242538

  Thomas, A. R. (2016, January 18). 5 Lessons from Walmart's Decline. Retrieved August 9,

2016, from http://www.industryweek.com/companies-executives/5-lessons-walmarts-decline   Udland, M. (2016, March 15). Amazon today is like Walmart in the 1980s, and that should scare

anyone in its way. Retrieved July 18, 2016, fromhttp://www.businessinsider.com/amazon-planning-world-domination-2016-3

  Wailgum, T. (2007, October 17). 45 Years of Wal-Mart History: A Technology Time Line.

Retrieved August 9, 2016, from http://www.cio.com/article/2437873/infrastructure/45-years-of-wal-mart-history--a-technology-time-line.html

References

Wolf, G. (2006, September 15). Kmart Corp. Retrieved August 9, 2016, fromhttp://www.encyclopedia.com/topic/Kmart_Corp.aspx

  Yarow, J. (2013, October 28). Former Amazon Employee Explains How The

Company's Business Model Really Works. Retrieved August 11, 2016, fromhttp://www.businessinsider.com/amazons-profits-what-people-dont-understand-2013-10

Yohn, D. L. (2016, June 22). Big-Box Retailers Have Two Options If They Want to Survive. Retrieved August 28, 2016, from https://hbr.org/2016/06/big-box-retailers-have-two-options-if-they-want-to-survive

  Zmuda, N. (2012, March 19). Walmart, Target, Kmart, Kohl's Lead 50 Years

of Retail Revolution. Retrieved August 16, 2016, from http://adage.com/article/news/walmart-target-kmart-kohl-s-lead-retail-revolution/233379/

Questions