Walmart vs. Amazon: Who Wins the Retail Future?

The following graphic from Minyanville illustrates how the shift in retail to online sales affects employment and commercial construction.   Amazon generates 1/12 the sales of Walmart and has 1/60 the number of employees.  Even if one assumes that subcontractors and delivery firms employ one person for every person employed by Amazon, the Amazon retail model requires fewer employees than Walmarts.

As far as real estate, the difference is obvious.   Amazon needs only its distribution centers.   Walmart needs both distribution centers and retail stores.   Amazon's model requires lower capital requirements to build selling space than Walmart, reducing construction spending as compared with the traditional retail model.  Amazon's model also moves jobs away from communities that are close to the ultimate consumers to the distribution locations that are further away. 

Walmart is trying to replicate Amazon's model and grow its on-line sales as brick and mortar sales stagnate.  Still as the chart at the bottom of the graphic shows, Amazon may eclipse Walmart's sales by the middle of the next decade.
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Via: Online MBA

Closing Post Offices or Cutting Hours.

The Spatanburg Courier-Journal reported that the Clifton, South Carolina post office is going to have reduced hours.   Currently, the Clifton post office is open Monday through Friday from 7:30 to 11 a.m. and from 1 to 4:45 p.m. and on Saturday from 8 to 11:45 a.m.  The new hours will be 9 a.m. to 1 p.m. and 2 to 4 p.m. Monday through Friday and 9 to 10 a.m. on Saturdays.   This is a reduction of 8 hours per week or more than 20% of total hours.  The reduction in hours creates greater difficulty for households or businesses that are within one-quarter mile from the post office as they have their mail delivered to a post office box that is only accessible during opening hours.

Clifton South Carolina is illustrative of the problem facing many post offices, reduced levels of service.  What are the alternatives?

• By cutting hours, is the Postal Service trying to discourage retail business?  Customers have to really want to use the Postal Service given the limited number of hours
• How does the USPS expect to compete when there is a FedEx location that is open from 7:30 a.m. - 9:00 p.m. weekdays, 10:00 a.m. - 6:00 p.m. Saturday, and 12 noon - 6:00 p.m Sunday only 7 miles away and self-service boxes located as close as 2 miles away?
• How does the USPS expect to compete when there is a UPS location that is open from 8:30 a.m. - 6:30 p.m. weekdays, and 8:30 a.m. - 6:30 p.m.. Saturday less than 7 miles away and self-service boxes located as close as 2.5 miles away?
• Would consolidating the 5 post offices within 5 miles of Clifton and offering longer hours at the offices that remain open longer hours make the Post Office more competitive for retail parcel shipping in Clifton than a Post Office in each of these communities open only limited hours?
• Could the Post Office put in a cluster box outside the Post office for those that customers that must collect mail at the Post Office that would give them 24-hour access?
• Could an automated Kiosk like those deployed by Deutsche Post, Post Danmark offer better parcel pick up and delivery service in Clifton than a post office that is only open a limited number of hours?

 Closing post offices is an emotional issue and affect both the communities that lose their post office and the employees that work there.   However, the purpose of a post office is to serve customers.   Clifton, South Carolina provides a good illustration how a combination of how expanding the use of cluster boxes, self service kiosks used along side a more limited number of full retail outlets with convenient hours could cut the Postal Service's costs, make its services more convenient to customers, and make its services more competitive.  Only money and creativity prevents this from happening.

Could a retail slowdown help mail advertising?

Today a number of stories illustrated the weakness in the consumer economy.

The Associated Press reported that consumer spending in July, the traditional beginning of the back to school season continued to decline in items other that food, gasoline, and automobiles.   is resulting in a below expectations back-to-school season "Sales were down 1 percent at department stores and also dropped at specialty clothing stores, furniture stores, hardware stores and appliance stores."

Bloomberg reported Both J.C Penney's and Kohl's, department stores that cater to a broad cross-section of American consumers both reduced guidance in the third quarter. (July-though September) "J.C. Penney is counting on consumers doing their back-to-school shopping later this year as they shop closer to the start of the school year."   The lowered earnings guidance and reliance on later season sales suggests that a higher share of back-to-school across all retailers will be sold at a discount and greater promotional activity (i.e. advertising across all modes including mail) will be required to induce consumer spending.

Another indication that retailers may have anticipated stronger retail sales than are now developing is the continuing growth in both domestic and international intermodal rail volumes.  A recent W.H Blair analysis reports the following:

Absolute [rail] intermodal volumes at 2008 levels, +20% yoy for week 31 (+0% vs. 2008). 2Q's seasonal momentum has continued into 3Q. Intermodal volumes to end [of] July / begin[ing of] August were 2% above mid-June volumes, modestly better than traditional seasonal 1% improvement; improvement was realized within both international and domestic lanes. We expect both domestic and international growth to continue given ongoing domestic truckload conversion, rebounding ocean freight import volumes and modest economic growth. 

So what does this mean for the Postal Service and firms trying to sell mail as an advertising media?

Now is the time to start contacting retailers before they realize how serious their need is likely to be. this is particularly true for smaller retailers that have the least sophisticated sales tracking systems that most major chains now have.  Now is the time to develop ideas for using the mail to boost sales earlier in the season to reduce the risk that items in the supply chain from overseas suppliers will need to be sold at a large end-of-season discount and begin presenting these ideas to potential customers.     Finally, now is the time to start talking to retailers about the need to plan print purchases in order to ensure that the print capacity they need is available when they will need it.