“Everything Must Go” sign at a retail store did not always mean stores were closing for good but instead was usually a sign of a massively discounted sales promotion over Thanksgiving or other holidays. But, as Bob Dylan wrote in 1964 – “The times they are a-changin’.” Now, “everything must go” sign means not only the products in the stores but the entire fleet of stores are closing.
The list of retail stores that have closed, filed for bankruptcy and completely gone out of business is getting longer by the day as Amazon continues to gobble up business from store after store. The two new additions to the list in the near future may surprise you – Ikea and Sam’s Club.
Ikea started the movement to have shoppers swing through several furnished rooms in their store and visualize how the product they wanted would look like back home. They even let customers stay overnight in some of their stores. Problem now is shoppers are not swinging through and no one is interested in sleeping over anymore. And, the company messed up its online strategy which requires customers to place orders online, and then collect their items from local stores. Hmm…
Sam’s Club, the membership warehouse owned by retail giant Walmart, is shutting down or converting 63 stores. Of the 63 Sam’s Club locations, about 50 will be going out of business for good and rest 10 to 13 of the stores are slated to be converted to regional distribution centers to help fulfill online purchases.
Future Wealth’s View
The road is littered with companies that simply could not adapt to the changing customer behavior and technological advances. Starting from early 1900s, we can trace the destruction that new business models have caused to incumbents who were in denial of the ability of these new businesses, until they had to close up shop.
Imagine life before computers, life before airplanes and automobiles, life before TV, life before cell phones and life before the internet etc. – those who have lived through these transformations, ask themselves – “How did I do it?”. And therein lies the magic of innovation – the ability to completely transform life as we know it and make old ways sound like a quaint way of life that existed many, many years ago.
There are several more to come in terms of obsolescence in the coming years – Cable and satellite companies, banks, grocery stores, gas stations, automobile dealerships, post offices and the list goes on. And for everyone of these establishments that go under, there lies an opportunity for an astute investor.