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The big advantage would be that stores can skip the costly last-mile delivery and get many customers to do the pick-up themselves, a strategy which is common in Europe apparently.

People in Europe are used to going to the store daily to pick up their stuff. The distances are far less, the sprawl is less, and the habit is different. Americans are used to having things plopped directly in their hands, not in a store 8 miles away. The term "lazy Americans" didn't fall out of the sky.

Now that could change, of course, and it's not absolute, but there are different cultures afoot, so I would be hesitant to draw parallels. More than that, it's difficult for me to see how Walmart shipping to their stores, from which it is shipped to end consumers is any more efficient, and indeed it seems far LESS efficient, as the package must be picked at a warehouse, shipped to a store, where it is sorted again, then (in some cases) put into a shipping container and end-mile shipped same as Amazon does. That rather implies more manpower at the stores, which is exactly the opposite direction of where Walmart has been headed.

Which leads me to my very contrarian theory, if you will indulge me. While I am told how wonderful Walmart's returns have been over the past several years (I have been an owner, more on than off since the 90's, so I have been paying attention), I note that the financials have been artificially goosed by a clamp down on costs at the stores. Wages have not progressed at all (more in a moment.) Indeed, the numnber of associates per store has dropped dramatically, even as the company has expanded locations apace and increased total sales.

This has caused, at least to some degree, a general worsening of the shopping experience, to the point where the company had same-store-sales declines for more than eight quarters in a row. When you drop for a year, then are not matching your own pathetic drops a year later, there's something serious going on. I recall one conference call where the CFO told analysts their employees couldn't keep the shelves stocked. (Now that might be a terrific story. "The merchandise is flying off the shelves!" Instead, it was "SSS are down, and the reason is because the shelves are empty." Welcome to some rather serious problems, I think.) For the record, Dollar Stores of various ownerships were increasing SSS at the time. As was Target, minus the quarters impacted by the credit card fiasco, so it wasn't the financial meltdown, as the company has occasionally implied.

I expect that Walmart's heralded announcement of wage increases is not due to beneficence on their part, but because their employee turnover has increased to an alarming degree, and the only way to slow it down is to actually pay people better. (Hurrah!) Some might remember when Henry Ford pulled this same trick with his $5 a day wage, and I look to McDonald's announcing an increase at company owned stores for the same reason, not because they're "giving in" to a few noisy agitators but because the training costs and set-up costs for new employees is worse than raising the wages. But I digress, I guess.

WalMart announced an increase in SSS for the last quarter, and that is good, except buried in the numbers is that SSS in the mother ship (the big stores) still went down, and the number was rescued only by the large increases in the Neighborhood Stores, which have just started opening. Stores in their sophomore year often see this, as the first year people don't go in, or go in an pick around, but become comfortable with the experience and by the second year are "fully engaged" customers.

I take from this that they have much work to do at the mother ship, and (for one) I don't see how they do it without impacting financials somewhere. Raising wages, as I noted, may actually be a benefit and help, but they still have logistics problems and store shelving problems, and apparently merchandise selection issues to deal with, and none of that is going to happen easily or quickly. The new CEO is moving cautiously; that might be right, or it might be wrong, I have no idea.

I hope no one takes from this that I am saying "Oh, the sky is falling." Walmart is a great and powerful corporation, if Value Line asked me on "safety" I would say "1". That does not mean, however, that I am sure their financial performance will, uh, outperform over the next short term period. I recall when Nardelli came in and nearly wrecked Home Depot that they did OK after a period of attitude adjustment.

[Now some smart aleck will come in and tell me that Home Depot doubled revenues during Nardelli's reign, which is true. Lowe's, operating from a far weaker position, tripled. Home Depot, of course, survived and prospered, and I expect Walmart to do the same. My question is "over what time frame."]

I am often a contrarian, although I do not play one on TV. But I know how easy it is to pump the financials of a company while gutting it; I watched several lauded executives do just that during my business career. Then they were off to retirement, or another vaunted post, while somebody else had to clean up the mess. It's perhaps not as bad as I am picturing it, but it is not as good as those saying "Wow, look at the stock over the past couple years! And that capital allocation! Zowie!" either.

There is trouble in the back room. They have new management. I am holding my position in the company, but that does not mean that I am sure about the next few years. I have reason to be hopeful, I have reason to believe the investment completely safe, but I also have reason to think that there might be some difficult maneuvers for the company ahead. And I am pretty sure that shipping the long-tail product line from warehouses built to deal with a traditional brick-and-mortar retail model, and then asking people to drive to pick up their products isn't going to save the day.
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