Should you short the stock of Costco and Target?

I was in Barnes and Noble two weeks ago and noticed that though there were quite a few people mulling around in the store, I didn't see anyone purchase anything other than coffee or some other refreshment from the café. In fact, about half the people in the store were in the café using the wi-fi. I ended up purchasing a remainder book for $6. 

These big-box retailers are struggling and the end of big box retailing is near. Internet retailing is reducing the revenue per square foot for bricks-and-mortar retailers. Stores like Barnes and Noble, much like Borders before them, also struggle with space dedicated to near-obsolete media - DVDs and music CDs.

Megan McArdle has more about how survival of big-box retailers will depend on niche products. Still a long shot.

Now, short BKS stock?

 

Comments

[anon]

I buy a lot of stuff online for myself and my business, and have been an Amazon Prime user since 2006.

Also shop every other week at Costco. And I can't see that changing - there are too many things Costco carries I can't or won't buy online. (Plus, the food court and $1.50 hot dog are still a great deal, especially if you like hot dogs.)

[Mark]

Costco and Sam's Club and BJ's are in different markets than places like Barnes and Noble and Target and Wal-Mart. So first, I agree that the warehouse niche is still viable. I do, however, believe it's over-saturated.

In terms of the rest, the grocery business makes at least Wal-Mart viable (that and the fact that it's such a market leader), but I can see other big-box retailers go under. Are we seeing the end of shopping malls? It's much harder for large department stores to thrive in this more competitive environment. So I do believe that you'll see a lot of consolidation i the big box retail sector, with many firms going under. Some may still remain, though I do believe there will be a large transformation in the business model of those that survive. More emphasis on food and immediate purchase items (i.e., lawn and garden).