We Could Go Away Any Minute

At the recent CNBC Evolve Summit, Walmart CEO Doug McMillon was quoted as saying, “We could go away at any minute,” referring to the changing demands, tastes, and interests of retail consumers. Once the darling of Wall Street, Walmart was printing money with little competition to contend with.

“Retailers come and go,” McMillon said. “It’s really simple: If you’re not meeting the wants and needs of the customer, you’re done. There’s not a lot of loyalty here.”

With Amazon in the picture, Walmart has to fight tooth and nail to stay relevant as its stock has been on a roller coaster ride in the past 15 years with the onslaught of online retailing. But even Amazon is questionable.

One year ago, Jeff Bezos told employees: ‘One day, Amazon will fail,’ but our job is to delay it as long as possible. One only has to look at the long list of failed retailers in the past decade to understand McMillon’s and Bezos’s concerns.

Here are just a few of the victims of the retail apocalypse:

  • Sears
  • Shopko
  • Payless
  • Claire’s
  • Toys “R” Us
  • Bloomingdale’s
  • Borders

To remind yourself of how quickly everything can change in retail, McMillon keeps a photo on his phone of the top-10 retailers each decade since 1950.

Of the top-10 retailers that existed in 1970, none are currently in business. Of the top-10 retailers from 1980, only Walmart and Target are still around. When some of the most well-known brands on Wall Street are telling you it’s only a matter of time, you should listen.

This apocalypse is only one example of consumer fickleness. This general consumer fickleness also trickles down to retail investing, where investors jump on and jump off the next hot stock almost as quickly as Henry VIII cycled through wives.

Wall Street volatility caused by fickle public sentiment is one of the reasons sophisticated investors seek alternatives to Wall Street.

Sophisticated investors know that fads come and go. The number 1 retailer in 1980 can be out of business by 2017. The Yahoo! ‘s, Blackberry’s, and AOL’s of the world can all be gone “in a minute.”

Wall Street liquidity which allows investors to buy and sell stocks at the swipe of a screen is the reason for its volatility and these waves are almost never a product of any underlying fundamental financial shifts but more from shifts in investor sentiment from rumors and innuendos. It’s all speculation.

Sophisticated investors like institutions and high-income investors play in a more disciplined sandbox where investors can’t jump on and off at will. That’s why the savvy ones prefer alternative investments that provide cash flow as well as long-term appreciation.

When the CEO cannot install confidence in investors, it’s time to look at other alternative investments. You may not know how long Amazon or Walmart will be in existence or demand, but you know that real estate and other real assets will be around and in demand.

Invest in cash flowing and appreciating assets that provide superior recession-resistant returns compared to Wall Street offerings.

For investors seeking investments that aren’t prone to weak confidence from CEOs or an uncertain future, look into alternative investments like commercial real estate that provide some of the highest risk-adjusted returns of any investment class.