By now you have heard what's happening over at Starbucks. Shutting down 600 or so units and displacing countless employees. Starbucks is obviously a victim of its own success. This not anything new and this will happen again to another company or companies. Currently, there are not that many nationwide organizations that have been expanding (at the speed of Starbucks) yet they are out there. There are two organizations that are on my radar: Best Buy and Walgreens.
I am not singling them out for any other reason than that I personally feel that while their brand is highly recognized it is also reaching a saturation point.
Best Buy: I don't know about your neck of the woods but these guys, in my neck of the woods, are expanding ALL over the place. I kid you not, the following statement is true: If I go the to busiest intersection in the town next to where I live and drive for 10 minutes in one of three directions I will be at the front door of a brand new BEST BUY store. Seems like a little "too much, too fast" kind of growth for me. Of course, this alone will not bring down the consumer electronics giant, but will certainly cripple it. The current economic situation is driving too many variables to make any kind of prognostication about the future of Best Buy and especially, its expansion plans.
Walgreens: This is no secret, over the past number of years the Walgreens organization has been buying up corner properties all over the U.S. and setting up shop. In my town, there are two Walgreens less than 5 minutes apart. How is that for market saturation?
So why does Walgreens pop up on my radar? With so many stores, one can't help but wonder when the bubble will burst for the Walgreens expansion? I bet the Deerfield, Illinois organization also took the news from Starbucks to heart, because on July 10 they issued a press release declaring that they will be scaling back "organic" growth "in fiscal 2009 to provide flexibility to invest in its core strategies and improve shareholder value."
However, this might not be enough to save Walgreens. There are just too many outside forces that are driving the economy right now and to X them out is not wise. There does exist, at least, two things that will help save Walgreens from (or at least slow down) a complete collapse and that is the aging population and the diabetes epidemic. So long as they can effectively deliver the product and service to support those two sectors of the healthcare industry, Walgreens stands to be around longer than those that do not or can not deliver.
So for now all I can offer, is that if you are invested in any of these two organizations please continue to monitor the situation very closely....I know I will.
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Dave Guerra, Best Buy, Starbucks, Walgreens, Store Closure, Prepare, See the light before the warning, Opportunity
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