(KPIX 5) — Big box stores like Walmart and Target may have to reinvent their business model or end up on the dustbin of history, according to a major investment firm.
Analysts from investment firm Goldman Sachs cut their ratings on shares of Walmart Tuesday, noting that shoppers are increasingly skipping big box stores and turning to more convenient smaller stores or the Internet.
Sales at Walmart and Target are in decline, with Target profits down 16 percent and same-store sales at Walmart falling in 12 of the last 20 quarters, according to Retail Metrics.
Liz Gannes, a writer at tech website Re/code, is one of the reasons. “I’m 31 years old and I don’t often go to big box stores.”
Gannes can use her smartphone to dial up Google Shopping Express – which for the time being has free delivery – and have stuff brought to her.
Need toilet paper? “I’ve typed in TO, the first item they suggest is toliet paper. I click on it, I have options of Scott 1,000 bathroom tissues, unscented, 20 rolls,” said Gannes.
“If you think of the phone as what some call they remote control for the world, you summon whatever you want to get to you,” she said.
“What consumers say they want is what they want, when they want it,” said consumer psychologist Kit Yarrow.
Right now, Amazon is the big boy in Internet sales with $68 billion sales last year, and is targeting Walmart’s retail numbers.
“Now, of course, Walmart is the biggest . They are absolutely satisfying consumer needs,” said Yarrow. “However, looking forward, you can see Amazon is much more in tune with what consumers are saying they want.”
Walmart and other big boxes are slowly ramping up their online service, hoping to avoid being wiped out. However, Walmart did about $10 billion in online sales last year, nearly $60 billion less than Amazon.