(Oct. 27, 2008) — Plastics News will celebrate its 20th anniversary in 2009. A lot has happened in 20 years — major changes to the plastics industry and the U.S., and world, economies. Globalization. Global warming. Recession followed by economic rejuvenation. Beginning with this issue, we're doing a countdown of the Top 20 stories covering issues of lasting impact in the last 20 years. The series will end with the No. 1 story, in our 20th Anniversary special edition March 16.
Beginning with this issue, we're doing a countdown of the Top 20 stories covering issues of lasting impact in the last 20 years. The series will end with the No. 1 story, in our 20th Anniversary special edition March 16.
Plastics News staff members voted on the stories. This week:
No. 20: Retail Consolidation
It's a loaded word: Wal-Martization. Through a laser-focus on lower prices, Wal-Mart Stores Inc. has grown into a major global force — for good, or evil, depending on who you talk to.
One thing's for certain: Few companies that make consumer products can escape Wal-Mart. But Wal-Martization has come to mean far more than the mass-retailer based in Bentonville, Ark. It symbolizes a major consolidation that has changed the face of retailing across the United States.
Names from the past are long gone, once-proud regional names fallen to the giants. Bradlees. Caldor. Zayre. Ames. Gold Circle. Not to mention all the local mom-and-pop toy stores or independent department stores that once lined Main Street USA.
Montgomery Ward still exists, but it's now only an Internet retailer.
The big, big-box retailers have taken their place. Wal-Mart. Kmart Corp. Target Corp., Toys “R” Us Inc. Big-box retailers have risen to great power in the past 20 years.
For plastics processors, it means far fewer retail customers. The retail behemoths that have survived are powerful. They offer suppliers the carrot of enormous volumes. But then there's the stick — profit margins get squeezed, and the vice tightens especially hard when resin prices jump.
Plastics News has covered the “stick” angle several times since we debuted in 1989.
Ralphco Inc., best known for its giant crayon-shaped piggy banks, closed its doors in Worcester, Mass., in 2004. Officials blamed a string of bankruptcies by regional retailers and downward price pressure.
The beleaugured U.S. housewares industry has absorbed much of the pain, with many of the body blows landing in the gut of the Leominster, Mass-area. Tucker Housewares, Tamor Plastics Corp., Holiday Housewares and pink-flamingo maker Union Products Inc. all closed down, and all cited the cutthroat retail environment as part of the problem.
When Tucker Housewares closed in 2000, owner Alfred Teo blasted the brutal pricing power by mass retailers, resin price hikes, financing problems and a union organizing drive. But Teo said “the straw that broke the camel's back” was Tucker's inability to pass higher resin costs to the mass retailers.
However, Rubbermaid Home Products vs. Wal-Mart was the biggest story. In the mid-1990s, Rubbermaid tried to push through price increases to Wal-Mart, which responded by pulling Rubbermaid off the shelves and stocking goods molded by Sterilite Corp. and other competitors.
Sterilite's business took off, as the Townsend, Mass., company built several plants and never looked back.
A weakened Rubbermaid ended up getting sold to Newell Co.
More recently, the big retailers are showing their clout with packaging, through Wal-Mart's packaging scorecard to the decisions by several players to restrict PVC packages and polycarbonate baby bottles.
Today, many plastics processors around the world owe their livelihood to a handful of U.S.-based mega-retailers — a situation that few of our readers could have imagined back in 1989.
Bill Bregar is an Akron-based senior reporter, and one of
Bill Bregar is an Akron-based senior reporter, and one ofPlastics News' original staffers.