Big-Box Stores Headed the Way of the Dinosaurs?

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Goldman Sachs says stores like Walmart and Target are losing steam.

Big-box discount retailers like Target and Walmart are not as popular with shoppers as they once were. It appears the domination of big-box stores might be coming to an end.

Goldman Sachs recently downgraded Walmart stock from “buy” to “neutral.” Meanwhile, the investment banker upgraded Costco stock to “buy,” Forbes said.

In a note to clients, the firm explained the rise of e-commerce has prompted customers to see less value in general merchandise stores with large product assortments. Shoppers now prefer a combination of value and convenience, which analysts said they have found in narrow-assortment retailers like dollar stores, drugstores and warehouse clubs.

The migration of shoppers to Amazon, Costco and smaller stores appears to be taking its toll on both Walmart and Target. Arkansas-based Walmart has experienced declining sales for five straight quarters, and its U.S. CEO was recently replaced, according to Business Insider.

Meanwhile, Target’s profit fell 16 percent in the first quarter, compared with one year earlier, The Huffington Post said.

Charles Fishman, author of “The Walmart Effect,” told HuffPo:

Everybody needs diapers and everybody needs toothpaste. People have figured out that buying it online is easy and inexpensive and you don’t have think about it.

While Walmart had $10 billion in Web sales last year, Amazon had $68 billion, HuffPo said.

Goldman Sachs said Walmart and Target both are experimenting with “mini-stores,” which are aimed at enticing urban shoppers. Walmart has had success with its marketplace-style stores and could add another 300 this fiscal year, according to HuffPo. Still, Goldman predicted that would bring only “2.8 percent of revenue to Walmart’s 2013 base,” HuffPo added.

I do my fair share of online shopping, especially with Amazon. But I live in a small town that has very few stores, so oftentimes I can’t find what I want in town, and I’m forced to shop in a larger town (more than 90 miles away) or online. I love the ease and convenience of shopping online, but there are so many things I would prefer to buy in person – like clothes, furniture and food.

Where do you shop? Are you a fan of the big-box stores? Or do you prefer the convenience of online shopping? Share your thoughts below or on our Facebook page.

Stacy Johnson

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