Warren Buffett thinks retail in America is going through a huge transition. At the Berkshire Hathaway annual meeting, Buffett said there is clearly pain for retailers as they adjust to the growth of online shopping.
“The department store is online now,” Buffett said, noting that the shift could be hard to grapple with for the major retailers.
Buffett’s partner, Charlie Munger, agreed that the retail business has become incredibly difficult.
“It would certainly be unpleasant if we were in the department store business,” Munger said.
Roughly 3,500 brick-and-mortar retail stores are expected to close over the first half of 2017 and retail executives are been noting the pain in recent public statements. Earlier this year, Berkshire Hathaway sold off the overwhelming majority of its share in Walmart for $900 million.
https://www.youtube.com/watch?v=bw-PeCfOGjY
“I have no illusion that 10 years from now will look the same as today, and there will be a few things along the way that surprise us” the Berkshire CEO said. Buffett did say that his retail businesses — Fruit of the Loom and Nebraska Furniture Mart — have seen an increase in online shopping, but have also seen increasing same store sales and thus the effect has not been a negative one.
In fact, Buffett said the percentage of shopping done online at Nebraska Furniture is close to 10% of sales. “The world has evolved, and it’s going to keep evolving, but the speed is increasing,” Buffett concluded. Full story
The end of regular retail; people want the best at the lowest possible price. The internet has spoilt everyone, and there is nothing that can change that. However, people are willing to pay more when the service is great. In most retail stores the services range from mediocre to terrible. Now hop over to Asia, and you will understand what service with a smile is all about. Some malls in China even have an artificial beach or mini resort built in them. Current developments and future development continue to indicate that the future lies in Asia. Take a look at this massive mall in Chengdu
The giant structure has 1.76 million square metres of floor space and is half a kilometre long, 400 metres wide and more than 100 metres tall. Contained inside is a 14-screen IMAX theatre, two five-star hotels, a shopping village and a long stretch of offices. The developers claim that you could fit more than 20 Sydney Opera Houses inside the Global Centre.
“We have borrowed a Japanese technique,” guide Liu Xun told the Sydney Morning Herald. “There is an artificial sun that shines 24 hours a day and allows for a comfortable temperature.” The sun shines down on a manufactured beach-side resort built to hold over 6,000 people. When people first enter into the massive structure, they are met with an 18-storey concourse, with giant escalators highlighting the building’s huge glass ceiling.
The entranceway alone is shocking in its opulence, the Guardian reports: Full story
For those looking for a visual look at this giant structure take a look at this YouTube video
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