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"20 Signs That Target Is Being Destroyed
Much Faster Than Walmart"
by Epic Economist
"If things are going from bad to worse for the world's biggest retailer Walmart, conditions are going from ugly to catastrophic for smaller retail rival Target. Its recent 90% profit collapse has shocked investors and reminded industry giants that even the nation's most iconic department stores are still at risk of going bust at any moment. While Walmart generates about half of its sales from food, the figure for Target is about 20%, which means that as consumers tighten their belts in face of soaring energy and housing costs, ditching discretionary purchases, such as clothing, home furnishings, and electronics because they have to spend more on food, fuel and other things they need,
Target is significantly more vulnerable to suffering massive earnings losses. On top of that, its outdated business model and supply chain problems suggest that the company is still struggling to adapt to changing consumer trends and falling behind in the already-stressed retail environment. If it fails to keep up with its larger competitors, the retailer may get absolutely crushed during the ongoing economic downturn. And we'll probably see its collapse happening way before Walmart's empire goes down.
It has become evident to everyone that the big-box retailer’s supply chain was a hot mess. Target over-ordered big, bulky home goods such as TVs, kitchen appliances, and patio furniture, which are typically more costly to ship because take up a lot of space inside shipping containers - and their size also makes them extra costly to store in warehouses. The company had to pay a premium to import those bulky products, but it soon noticed that its customers didn’t want to buy them. And its expenses continued to pile up. Given that there wasn’t enough room in its existing warehouses to store all of its unwanted goods, the retailer had to rent new warehouse space - at ultra-high prices in the tightest warehouse market ever - to store its excess inventory.
Adding to the pain, Target was forced to slash the price of all of these low-selling products to entice shoppers to buy them and free up storage space, losing a whole lot more money in the process. That was the right strategy, but it exacted a heavy toll on earnings. To make things worse, the company reported that its price cuts did little good: It actually ended the quarter with 1.5% more inventory than it had three months earlier and 36% more than it had a year ago.
Current economic conditions are posing unprecedented challenges for the country's retailers. All across the board, pessimism seems to be the new predominant feeling. A consumer recession is no longer a threat, but a reality many of them are already facing. Not even the largest, the most popular, or the ones that had great performances in the past decade are immune to the imbalances that are occurring right now. With just a few months of slower sales, they can reverse the gains they recorded throughout years and years of hard work.
Unfortunately, it's clear that the carnage has only just begun. And many more iconic brands are at risk of going under overnight. We're entering exceedingly difficult times, and the extinction of many of our businesses will continue to accelerate as the next economic recession rolls on. That's what we're going to expose in today's list. Here are 20 Facts That Prove Target Is Collapsing Much Harder Than Walmart."
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