The title is hyperbole. I don’t think Walmart will go out of business, rather it will fall victim to what the great economist Joseph Schumpeter called creative destruction. In the mid 20th century General Motors was the exemplar of American industrial excellence. In the first decade of the next century it went bankrupt and was bailed out by the US government. Walmart is sure to follow the same trajectory. It may even get a government bailout.
Walmart was the greatest retail success of the second half of the 20th century. Its model was to sell just about everything at low prices. It put the small retail store out of business. At first it boasted that most of its products were made in the USA. But as time passed it came to rely heavily on China for ever increasing amounts of the goods it sold. Then it was bludgeoned by the 21st century.
Three events hit the chain with blows that cumulatively are close to mortal. The first was Amazon. The online retailer gradually came to offer everything and more that Walmart sold. And they gave the convenience of not having to go to Walmart’s rather grimy stores. Walmart offered virtually no customer service while Amazon became the world standard for excellent customer support. As the 21st century progressed there became less and less reason to shop at Walmart.
Reliance on China for cheap products became more of a necessity as competition from Amazon pressed heavier on the big box chain. Walmart also tried to get an online presence, but their efforts were clumsy and they didn’t know how to provide customer service remotely like that of Amazon.
The final blow cruelly and ironically came from China – the Coronavirus. The panic caused by the epidemic and the resultant shutting of the economy deprived Walmart of customers, as it did other non-virtual stores. In an attempt to deal with the crisis Walmart established an online Grocery which offered delivery at a price of $12.95 per month. But they promised deliveries that they couldn’t meet and offered their customers no information as to the fate of unrealized deliveries.
When a delivery to me didn’t materialize I called Walmart and was put on permanent hold. Contrast that lack of response to Amazon which immediately answers the phone or takes a return number and promises to promptly call back; and they do. Amazon is hiring about 175,000 new workers. Walmart can’t deliver a loaf of bread. Which company has better prospects? If Amazon anticipates a delay in delivery its customers are immediately told about the situation. Usually the delayed product arrives earlier than Amazon’ stated date.
When the current epidemic subsides and its accompanying terror is over, the country’s behavior will be changed forever. Chinese products will be in bad odor and unwanted regardless of how cheap the may be. The fate that Walmart inflicted on small retailers last century will befall them. While they may not go away they will be forever diminished. Interestingly, some of the mid-size grocery stores seem better equipped to handle the current government mandated lock-down and may come out of this debacle in better shape than Walmart.
I had an opportunity to meet and talk briefly with founder Sam Walton in 1986, when he lent his substantial support to Students in Free Enterprise (SIFE). He remarked at the growing importance of computers in retail, but as there was no Internet and Web in 1996, he could not have foreseen the rapid evolvement of the online retail world that will forever change the once-familiar experience of real-time shopping in stores.