This is not a fight between the corporate world and the little guys. This is a fight between 2 different business philosophies. One, ATD, wants to build the business, new stores, more customers, better trained and happier employees. He keeps prices low to attract customers although this reduces profit per customer, he hopes to build more volume. To accomplish this, a lot of the profits are returned to the business to pay for all this. The result of this, eventually, is a business with a larger customer base and increased business value.
The other, ASD, wants higher profit per customer. That will probably mean higher prices. That may mean less employee perks and other costs. He also wants more profit available to shareholders, including himself. Part of accomplishing this is stopping store expansion and retaining the money for shareholders instead. All this can be a working philosophy. Many stores charge higher prices and are successful. (Apple) This philosophy can also lead to a more profitable business by cutting costs. It definitely yields more to the shareholders, who, like it or not, own the business and are entitled to the profits. If you deposited money in a bank, how would you feel if the bank told you that you would have to wait 15 years for them to grow the business until you got your money and profit back?
The question is, can MB compete against Hannafords and others if they no longer have a low price and friendly store advantage? I personally doubt it.
But don't believe that ATD doesn't want corporate profits. He's just taking a more long term approach of building the business to get them.
|