Christensen explains in The Innovator's Dilemma that as companies grow, they abandon opportunities that aren't large enough to relative to their size. A million-dollar opportunity that would make or break a small business becomes too small to occupy a top executive's attention.
Wal-Mart and Target started out by catering to shoppers who want inexpensive goods, but now that the companies have grown and the market is saturated, revenue growth must come from elsewhere. Dozens of news stories discuss how Target and Wal-Mart now pursue a more fashionable — and profitable — upscale market far from their original roots: the companies introduced lines of fashionable clothing for women, with Target succeeding and Wal-Mart struggling.
The very success of Wal-Mart and Target will drive them out of their original business segment. The companies successfully disaggregated and then conquered a particular market, the value-oriented shopper; now the value-oriented shopper can no longer sustain the companies' revenue targets. Wal-Mart and Target have started to move on, and unless they can somehow maintain their hold on the value-oriented shopper — a task that's possible in the short term but probably impossible in the long term for such large corporations — a new ecological niche will soon appear.
Who will replace Wal-Mart? Who will replace Target? I suspect that it will be a Hispanic-owned corporation that expands from its niche of serving value-oriented shoppers in immigrant communities and reaches a wider urban market. In Chicago, I've notice the emergence of several larger Hispanic-oriented, value-shopper malls; I would not be surprised if one of them displaces Wal-Mart and Target from their current niches a decade from now.
Topics: · business · finance · marketing · predictions
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