Ten Companies Running Out Of American Customers
Companies locked in a struggle to remain viable and maintain their profits and sales sometimes begin to run out of customers. This happened to GM (NYSE: GM), which had a 50% share of domestic car sales in the mid 1960s. GM’s portion of the American market is 20% today. Most of the business GM lost went to large Japanese manufacturers Toyota Motor (NYSE: TM), Honda (NYSE: HMC) and Nissan. The effects of GM’s failure where the loss of hundreds of thousands of jobs and an eventual Chapter 11 filings.
Sears (NASDAQ: SHLD) used to be a dominant retailer. So did JC Penney (NYSE: JCP). These wound up losing market share because of competition from Wal-Mart and a number of specialty stores such as Abercrombie & Fitch (NYSE: ANF). This is nothing new. Microsoft (NASDAQ: MSFT) was the only broadly available PC operating systems for years. Yahoo! (NASDAQ: YHOO) was the No. 1 search engine until it was replaced by Google. Dell’s (NASDAQ: DELL) leading spot in the PC industry was eroded by Hewlett-Packard (NYSE: HPQ) which bought Compaq, and several Asian firms led by Lenovo and Acer.
One reason why companies lose customers is a lack of innovation. The Post Office did not move into the fax business. It did not offer e-mail addresses like AOL (NYSE:AOL) did. In other cases, large companies loosened their grip over the marketplace over time. Ninety-year old Kleenex had more than half the market share in tissues for decades. Store brands have pushed the market share of Kleenex down to 46% although it is still a highly profitable brand for parent Kimberly Clark.
Another reason that companies lose customers is that new competition often offers lower prices for similar products or services. American steel firms dominated the industry from the late 19th century until four decades ago. Japanese manufacturers began to offer cheaper products. More recently, steel production in China has increased sharply. The largest steel company in the world is India-based AcelorMittal which operates in more than 60 countries
Buggy whip companies could have been the first car makers, and newspapers could have been the first firms to put large amounts of news online. Neither happened. One new set of businesses were born. Older ones lost customers and some lost enough so that they were no longer viable.
This is the list of the Ten Companies Running Out Of American Customers.
1. Best Buy
December same-store sales for the consumer electronics company fell 4%. For the same period, sales at Best Buy stores open for at least 14 months declined 5% in the United States as competing retailers offered deeper discounts. Profits for Best Buy (NYSE: BBY) decreased 4.4% in the third quarter compared to last year. The company risks further loss in market share as more consumers turn to mass merchants and online shopping for their electronics needs. Best Buy offered a weak forecast for the quarter ahead when it announced earnings. The firm’s stock fell from $42 to $34 the day of the disclosure. Best Buy will specifically face greater future competition with like Wal-Mart (NYSE: WMT) Amazon.com (NASDAQ: AMZN)
The Wii was a surprise victory for the video game company. The console outsold the Microsoft (NASDAQ: MSFT) Xbox and Sony (NYSE: SNE) PS3 worldwide for most of 2007, 2008 and 2009. More than 86 million Wiis were sold from 2006 to 2010. But as the novelty of the system wore off and with no replacement on the horizon, Nintendo has stopped winning new customers. The company is threatened by Sony’s “Move” device for the PlayStation 3 and Microsoft’s “Kinect” for the Xbox. Nintendo recently cut its sales forecast for the Wii from 17.5 milion to 16 million for the year. It also reduced sales forecasts for its handheld platform, the DS, by 1 million units.
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3. US Postal Service
The United States Postal Service continues to lose customers to its more efficient competitors. The number of pieces of mail handled by the USPS decreased from 201 billion in 2008 to 169 billion in 2010. The number of processing facilities operated by the agency fell from 599 in 2009 to 528 in 2010. The Post Office has been hurt by competition from UPS (NYSE: UPS), Fedex (NYSE: FDX), the fax machine and e-mail and online data transfer. People are even able to take notes on their smartphones that they used to write on paper.