The tech industry has been on a six year roll but the momentum has greatly slowed these past few months. Earnings reports from the leaders have all slipped, with PC and tablet sales slowing (as reported last month by IDC). Even Wal-Mart Stores, Inc. (Walmart) blamed electronics for a poor performance last quarter.
“While I’m disappointed in our comp sales decline, I’m encouraged by the improvement in traffic and comp sales as we progressed through the quarter. The 2 percent payroll tax increase continues to impact our customer,” said Bill Simon, Walmart U.S. president and CEO.
“The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending. Net sales in the first six months were below our expectations, so we are updating our forecast for net sales to grow between 2 and 3 percent for the full year versus our previous range of 5 to 6 percent,” said Holley. “This revision reflects our view of current global business trends, and significant ongoing headwinds from anticipated currency exchange rate fluctuations.”
The Los Angeles Times provides a nice overview of the challenges – from the need for innovation to the shifting desires of consumers. We are moving from building social circles on the web toward a need for something new and exciting. Will companies provide the “next big thing” before companies crumble?
Maybe the unsettling, unwritten, and unspoken truth is that we are nearing the end of the ‘made in China’ era – in which cheap is not always better. The price we’ve paid in the U.S. economy for cheap is the loss of jobs, the loss of a middle income earning group, and therefore the loss of consumer purchasing power.
Cheap is not always better.