Warren Buffett, one of the richest men in America has decided to divest his interest in retail giant Walmart because of their declining stock. It was just announced in Business Insider that Buffett sold over $900 million of Walmart stock and choosing to pour billions of dollars in Apple Computer and various airlines. Last year Walmart laid off thousands of employees after store sales had declined which was a result of online purchases via Amazon and other competitors. Amazon’s market value is valued at a whopping $356 billion, compared with Walmart’s $298 billion. Many brick-and mortar retailers have experienced financial loses do to the success of e-commerce businesses.
Walmart does have a footprint in e-commerce however it pairs in comparison to Amazon.com Walmart’s online sales were $13.7 Billion in 2015, compared to Amazon’s $107 billion that same year.
“It is a big, big force and it has already disrupted plenty of people it will disrupt more,” Buffett said at his annual shareholders’ meeting in 2016, according to Bloomberg News.
Buffett understands all too well when it is time to move his money as he predicted in 2005 the downfall of Kmart and Sears department stores.
Sears has since closed hundreds of stores and will likely be filing bankruptcy in the months to come. Macy’s announced after the Thanksgiving holiday that they too would be closing hundreds of stores across America in the months to come.
We reached out to real estate and appraisal expert Gail Nedd who had the following to say about Buffett dumping his Walmart stock:
The closing of anchor stores such as Macy’s and Walmart’s in malls results in a loss of retail industry positions which causes a negative economic impact to that local economy. There is an urgency to replace an anchor tenant for a multitude of financial reasons. The problem is that the location has already proved unsuccessful. Another motivation however is emotional. No mall owner wants their shoppers to see signs of blight in their malls. It discourages shoppers from coming. This could erupt in to a snow ball effect with the other tenants following suit and leaving. Mall owners may find themselves lowering lease rates to maintain attractive tenants. Gail Nedd Broker at Gentle Bee Star LLC. New York
Real talk, the millennials are taking their rightful place. Brick and Mortar stores are coming to a steep decline giving way to online everything. The malls will be a final resting place of the disenfranchised of the USA. They will serve as shelters, and affordable living compounds for those who did not fair well with the shift in the way business is done.
How does this all play into President Trump’s job growth initiative? What will be the thriving industries for 2017-18?