Welcome to the new economy, where big box retailing like Wal-Mart has peaked and is now in a slow, downward slide. U.S. consumers are increasingly buying in smaller quantity, and they are buying at smaller stores.
Big box isn't dead, yet, but Wal-Mart's U.S. struggles epitomize the shifting trend, meaning the big box model is aging, and in decline.
Consumers want smaller and less instead of bigger and more.
Early in the Great Recession Wal-Mart did well, as consumers flocked to low-pricing in big packages. But increasingly, Wal-Mart's everyday low pricing advantage has eroded, due to competition from online retailers like Amazon that truly have the lowest prices and a trend in which consumers are buying less at once.
Wal-Mart's advantage as the company grew fast over several decades from a regional discount retailer in Arkansas into the world's largest retailer was big stores that offered everything and bulk packaging at discounts. But by the end of the two-year recession, marked by a slow-growth recovery, consumer shopping habits are changing.
And it doesn't appear to be a cycle. It appears to be a trend shift.
Consider only that Wal-Mart is now deeply involved in a two-year slump. The company reported Tuesday its ninth consecutive quarter of falling sales at U.S. stores. Same-store sales have long been the bellwether gauge for the retailer's performance. That's what fueled massive stock growth for Wal-Mart from the 1970s to the 1990s.
But that's all changed now. As credit tightened after the recession, consumers began to use more cash at stores. And, as gas prices have risen, they don't want to drive as much. Less driving to reach big-box retailers and less credit means more small purchases at more small stores.
That equation is putting pressure on Wal-Mart.
"We remain concerned about the economic pressure on customers and the uncertain impact it can have on their shopping behavior," said Wal-Mart's U.S. CEO Bill Simon, in a statement.
The problem for Wal-Mart is bigger than the slow-growth economy and continuing high unemployment, however. The company averages 140 million shoppers weekly to its stores in the U.S. Volume drives profits, so it doesn't take much of a shift in shopping habits to impact same-store results.
The reality, it appears, is that Wal-Mart, the kingpin of big box retailing that flourished in the past two decades, has reached a pinnacle in its current state of behemoth operation, beginning a down hill slide as the consumer shopping trend evolves.
Last month, a Morgan Stanley survey reported that 60 percent of Wal-Mart's customers no longer believe the retailer's prices are lower than those of competitors. Another study revealed that Amazon, the online retailer, consistently has the most competitive retail prices.
Without the everyday low price advantage, combined with the fact that big box is no longer en vogue, Wal-Mart faces a stiff headwind into the future.
For Wal-Mart to continue being the U.S. retail kingpin into the future, the company is going to have to change with the changing times -- the big box must get smaller, fast.