Inbuilt obsolescence is killing the Walmart business model. According to market principles and the demand changes of the transaction, Walmart is out of date, out of touch, and out of depth in understanding the way in which the transaction culture has changed.
The Walmart model was built upon real estate, square footage of space and the yield that each square foot of space can yield a return on investment. That is the basic style of trading that Walmart was built on. In order to drive transactions, Walmart opted for a pile them high, sell them cheap approach with goods being sourced from China, India, Vietnam, Malaysia, and many other Asian countries. It was the outlet for manufactured goods being produced in the East.
The corporations that owned the goods closed down the factories in the United States and sent them to China to create even greater yields for the holding companies that were eating the yields for these goods. Transaction costs were the target and part of the plan was to release these goods through established retail brands that contained natural scalability and large goods holding capacities. Walmart fits this description down to the last nut and bolt.
The logistics that supported this transactional design allowed massive throughput of products, effectively suffocating indigenous manufacturers across the United States. This produced layoffs affecting large portions of the U.S. population as manufacturing industry jobs trickled down to a tiny selection of products that consisted of military products and high barriers of entry products such as aerospace and defense. These were the only products that were not sold at Walmart. After all, where do you store an airliner?
Although China has been blamed on many fronts, the truth of the matter is that it was the U.S. holding companies, business owners, and shareholder voting systems who opted for this to happen and effectively encouraged its growth as the sell-off took place over a 16-year period since the year 2000. This model of outsourcing has been done before, with Japan, Malaysia, Thailand, and many others. The process is labeled globalization. It has changed the very nature of work itself.
Change of Transaction Logistics
Delivery of very low prices, quality acceptable to legitimate standards, warranty based aftermarket, customers who were happy to part with very little money for a standard product, shareholders who were very happy at the thought of massive return on investment, and Walmart employees who were becoming the go-to place for lifelong employment ensured that the transaction continued for as long as possible.
The Walmart model transaction did not just deplete the manufacturing industry of the United States, it also literally wiped out the Mom and Pop stores that littered the North American landscape. Now that Walmart had an effective model, the rest of the world’s large retailers watched carefully, and simulated and emulated this style of trading. These types of stores came from everywhere to surround the waterhole and drink in exactly the same way that Walmart was drinking.
Here in the UK, Sainsbury’s, Marks and Spencer, Aldi, Lidl, and countless others are doing exactly the same thing as competition increases, and the increased heat being produced by this retail war forces each retailer to start turning to cannibalization in order to survive. At every corner each retailer turns, melting returns on investment rates are forcing shareholders to put pressure on the company to produce the yields they require.
Any form of loss produces massive downswings on the share price as the losses multiply and cascade into all areas of the firm. This then produces even more pressure on management to come up with even more pressure on the employees to come up with good ideas, suggestions, and improvement schemes disguised as cost cutting to produce results for the shareholders of the firm.
This is not just in Walmart. It’s everywhere, all over the world, in every retailer and in every high street with boarded up outlets that used to house businesses.
Where Do We Go Now?
We understand that the supply chain has produced these results, and yes we also understand that blame is being channeled up to the leadership of the country resulting in proclamations based upon divisive politics. The immigrants who enter the United States and Europe are feeling the same pressures as they flee poverty based upon the business model described above.
President Donald Trump has nailed the problem very well, and it is not just the Trump administration that is telling the truth. This is also showing up in Italy, Spain, Britain, Germany, France, and throughout Europe. Fascism could return in Europe as people struggle to contain the overspill of pressure associated with each family that is being dragged through this set of very difficult circumstances. The pressure that this is producing on the public services and any unions that the EU was developing is breaking unity and annihilating plans for the future.
Changing for the Better
What must be done is very simple. Bring the factories home and do everything to avoid a war that encroaches upon the world as it enters an environment of international exchange levels. The problem lies with the family, giving them their freedom back and the chance to make a living just like they used to. No amount of sexualization of the youth can replace the fact that the system is broken and does not function anymore. Future generations of our nations will be like deer in the headlights, paralyzed as they fall into the trap of internal and external strife and very possibly conflict.
Yes, it began with a transaction that suited Walmart, snowballing into something unrecognizable in today’s market economy. Transactions have been seized from the family and this is producing massive undercurrent pressures in society that have shown up in the voting system.
Trump, EU convulsions, and Eurasian nationalism are not the problem. The problem is figuring out how we got here and what should be done to improve the situation. We either do it peacefully or we do this violently through war. If we do this violently through war and throw our problems on Asia’s doorstep, and Eurasia responds in kind, this will produce an inevitable nuclear war.
If we don’t fix the problem internally, the pressures spilling onto the streets could produce the environment for an incremental path toward civil war over the coming decade. This will be exacerbated by the advent of the 2019 recession and the massive 2026 recession which are threatening the very existence of the West itself. Times might be good now, but the chickens are about to come home to roost.
Amar Manzoor is the author of the book “The Art of Industrial Warfare” and founder of the 7Tao industrial warfare system.