Can 'The All American Store' Reverse Our Nation's Walmartization?

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Made in the USADeep in the heart of Ohio, a new store is challenging the "Walmartization" of America.

What do I mean by Walmartization? For one thing, I refer to the trend toward superstores, each one alone the size of a shopping mall. It's also the goods these stores stock -- the proverbial $1 dozen-pack of tube socks, and all the other things -- from Barbie dolls to HDTVs -- adorned with the "Made in China" label. And it's the service, or rather the lack thereof: Vast expanses of retail space with nary a minimum-wage employee in sight and 24 cash registers at the front, of which two are manned, and 12 are self-checkout.

If you scan through the nearly 700 comments that DailyFinance readers posted in response to my column last month on the rise and fall of Sears Holdings (SHLD), you'll find numerous references to such issues: There were more than a few complaints about lousy customer service, unattractive storefronts, and the impossibility of locating, much less purchasing, anything labeled "Made in America."

More generally, though, Walmart's (WMT) conquest of of America embodies a decades-long drive toward the lowest common denominator. It's a trend by companies to cut costs and maximize profits, and they often end up reducing quality in the process. But is it a trend we can reverse?

We Make It and We Sell It

Folks in Brookville, Ohio, think so. That's where, two years ago (several months after the Great Recession officially ended), an intrepid group of entrepreneurs pooled their capital to set up a new kind of retailer by the name of "The All American Store."

The All American Store is exactly what the name implies. It's a corner retailer. A hardware store. An echo of the old general stores that used to be the mainstay of retailing in so many small towns across the land. And AAS sells American-made goods -- much like the goods I argued that Sears should consider selling.

To those who say it's not possible for Sears to reinvent itself -- that "Made in America" is too quaint a concept to work, or that "we don't make anything in America anymore, so how could you sell it?" -- AAS has a response: Yes, we make it. Yes, we sell it. And yes, this can work.

All American Store



Supply-Side Retailnomics

Let's start with the complaint that "Americans don't make stuff anymore." Hogwash. Sure, the manufacturing of certain low-cost, low-margin, commodity merchandise has left these shores, and probably for good. AAS tells me it's had no luck tracking down U.S. suppliers for tiny but essential items such as light switches and fuses, and maintains a small display section for such items. But according to store managing member Mike Petro, while it takes some doing, AAS has found plenty of suppliers for the goods it wants to sell.

Indeed, 98% of the products for sale at AAS are made (or at least assembled) in America. Whether it's boots or blue jeans, kitchen tables or power tools you're after, AAS stocks them in spades.

How Much Is That Shovel in the Window?

"But what about the cost?" you ask. "Isn't the whole reason American manufacturing fled to China, because it's cheaper to make stuff there?"

Again, there's an acorn of truth here, but don't go mistaking it for a full-grown forest. While "Made in the U.S.A." goods can cost more than "Made in China," the price differential is often smaller than you'd think.

On average, Petro says a U.S.-made product might cost 50% to 100% more than a Chinese analog. Some products cost less -- a U.S.-made wrench set, for example, might cost as little as 15% more than a Chinese knockoff.

Petro pulls out a shovel as an example. It costs $22 at AAS. You can buy a similar spade at Lowe's (LOW) or Home Depot (HD) for $8 or $9. Is the American shovel worth the premium? Perhaps. With wages on the rise in China, manufacturers are hard-pressed to keep prices low enough to satisfy their U.S. distributors. Often, this requires cutting corners on quality. They'll frequently use lower-quality steel, for example. Or they'll skimp on quality assembly.

This creates a very profitable business model for Walmart and its discount cousins. Selling low-quality goods at low prices, a big-box retailer can assume products it sells will break with some regularity. Perversely, this creates repeat business, as consumers file back into the store to buy replacements. Lather, rinse, and repeat!

Or not. Last quarter, Sears' sales were down 1% year over year. And the All American Store? Up 15%.

Motley Fool contributor Rich Smith does not own shares of any company mentioned above. The Motley Fool owns shares of Walmart Stores. Motley Fool newsletter services have recommended buying shares of Walmart Stores, Lowe's Companies, and The Home Depot. Motley Fool newsletter services have recommended creating a diagonal call position in Walmart Stores. Motley Fool newsletter services have recommended writing covered calls in Lowe's Cos.








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1352 Comments

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John Mike Mottern

I ordered some jeans from all American store 3 months ago and still waiting they took my money and every time I have called them they say I'll check on this and call you right back well still waiting on the phone to ring!!!!

May 29 2014 at 12:35 PM Report abuse rate up rate down Reply
John

in elma ny theres a american made store i buy t shirts socks underware, there not more exp, better made

December 17 2013 at 9:21 AM Report abuse rate up rate down Reply
MIchigan Man

I will gladly pay more for "Made in the USA" label. Most Chinese articles are junk; poorly made with questionable materials, and poor quality control. The only reason China makes so many of the items we use is because the companies that sell them can get them made cheaply and sell them for a larger profit. Maybe some prefer the Walmart variety because of the lack of funds, but I am willing to bet there are many of us who would but products produced here. Ever wonder why there is so much unemployment in the U.S.? Easy, all the jobs are in some other country.

December 16 2013 at 3:45 PM Report abuse rate up rate down Reply
Master Bergeron

OPEN ONE IN SOUTH LOUISIANA!!!!!!!!!!!!!!!

January 26 2012 at 3:46 PM Report abuse rate up rate down Reply
bewe56

Just received a product I bought from AAS on-line. Very happy to spend the extra money for a quality product. Replacing something I bought 54 years ago, also made in America by the same company that made the new one. We need to search these companies and stores and start supporting them.

January 26 2012 at 2:59 PM Report abuse rate up rate down Reply
jahblatchford

o

January 17 2012 at 1:52 PM Report abuse rate up rate down Reply
awrightsdch

What are these guys thinking? Do they really think they can open a made in America store in America? Don’t they know they will be charged with discrimination for not allowing products from other countries in their store. Good Lord I can’t believe the ACLU hasn’t taken up this case on behalf of the rest of the countries in the world. How foolish of these capitalist to think they could get away with this. I have absolute faith that our Attorney General Eric Holder will put an end to this.

January 13 2012 at 10:42 PM Report abuse rate up rate down Reply
tommyp

I have been talking about opening a made in usa store for years. For all you great americans with a pair of balls in Ohio, thank you for creating this store. I know I am not alone in saying this but I am sick of buying made in china cheap crap which doesn't necessarily cost cheaper. Look at our nike sneakers, home depot crap, etc. the list goes on and on. Walmart looks like a welfare store and gives people looking for a bargain just a bunch of garbage. The American made quality is still here. We don't even make lightbulbs here anymore and we invented them. I can go on and on about all the bullshit going on but I am so happy some great brave americans with money are taking this chance to make stuff here again. I dont mind paying a litlle more, but I am sure I will have to buy it once instead of buying the cheap crap 3 times over. Hurry up and build a store in New York. I cant wait to give my money to my fellow americans who ever they are. Good luck guys. You will be surprised to see how many more people feel the way I do. Take care, see you in New York , a fellow american. Tommy P.

January 12 2012 at 1:43 PM Report abuse +1 rate up rate down Reply
1 reply to tommyp's comment
Master Bergeron

AMEN......open one in South Louisiana please!

January 26 2012 at 3:46 PM Report abuse rate up rate down Reply
Weaver

All you have to do is look in every garage in your neighborhood and even yours. 75% foreign made vehicles. Oh and I dont care if its made, assembled or what ever exuse you come up with. The profits still go over seas. Just think if every single American bought a USA car or truck in the last three years!!! We would not be in the recession we are in.

January 12 2012 at 11:12 AM Report abuse rate up rate down Reply
talaki3

Sears is where I go to find tools Made in America. Lowe's and Home Depot have very little Made in America selection. Sears, however, offers nearly every item with a Made in America option when it comes to tools. Electronics and clothing are a different story. Still looking for those.

January 11 2012 at 10:32 AM Report abuse +1 rate up rate down Reply