May 31, 2019

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Any stories we should be chasing? Hit reply to this email or message me at [email protected] or the rest of the Future team: Kaveh Waddell at [email protected] and Erica Pandey at [email protected].

Today's Smart Brevity count: 1,122 words/<5 min. read. Okay, let's start with ...

1 big thing: Loosening Walmart's vise-grip

Illustration: Aïda Amer/Axios

For some three decades, Walmart has held onto the massive market of low-income U.S. consumers, fiercely defending this territory from newcomers — but threats to its dominance are piling up, Erica writes.

What's happening: Amazon is emerging as a substantial rival to Walmart in the fight for the estimated $624 billion-a-year market, joining other retailers and brands and betting that — as it has in so many industries — it can capture a large part of this much-overlooked cohort.

The big picture: With competition rife for affluent and mid-range retail customers, the low-end market is the new battleground for big merchants.

  • At stake is a third of U.S. households — those earning $50,000 or less a year — 88% of whom visited a Walmart last year, according to a recent survey by GlobalData Retail.
  • Since the 1980s, Walmart has come to dominate this sector of the consumer market with what so far has been an unbeatable strategy: Go to every town (the juggernaut has 5,362 locations and sits within 10 miles of 90% of Americans) and undercut everyone else's prices.

But now it's facing competition against both its footprint and its prices.

  • Grocery's deep discounters like Aldi and Lidl from Europe have started to make a dent in Walmart's market share. Aldi has some 2,000 stores in 35 states, including in Walmart's hometown of Bentonville, Arkansas.
  • "Aldi has built a cult-like following. ... The allure is all in the rock-bottom prices, which are so cheap that Aldi often beats Walmart at its own low-price game," CNN's Nathaniel Meyersohn reports.
  • And the dollar giants are refusing to be left behind. To fight against Walmart's increasingly popular "buy online and pickup-in-store" model, Dollar General has developed an app that lets its shoppers do the same — capitalizing on its 15,500 U.S. locations.

Now Amazon, with its deep pockets and track record of disrupting industry upon industry, is entering the ring.

  • The company is leaning into its strong suit, injecting high-tech delivery into the fight. It assumes that discount shoppers want the same speedy delivery it offers to all its other customers — a perk that this market segment has long been excluded from, says Fred Killingsworth, a former Amazon manager who runs a retail consultancy.
  • Amazon has joined a New York pilot, along with Walmart and Shoprite, that lets food stamp (SNAP) beneficiaries buy groceries online. It also rolled out a discounted Prime membership at $5.99 a month — compared to the standard $119 per year — for those on SNAP or Medicaid.
  • It's adding lockers around the country at places like Kohl's to give customers worried about packages being stolen from their stoops a place to pick up goods.
  • It has launched a slew of private label products, ranging from sofas to button-downs to milk, at cheap prices to compete with Walmart brands like Great Value and Time and Tru.

But, but, but: While Amazon may be able to make a dent in apparel or appliance sales to less-affluent shoppers, the most lucrative business is grocery, and the e-commerce giant will have much more difficulty winning that game, experts say.

  • "I think Amazon will have some impact but I don’t see it as being a major disrupter in this space," says Neil Saunders, managing director of GlobalData Retail.

Amazon and Walmart did not respond to requests for comment.

2. The future of parking

Illustration: Sarah Grillo/Axios

Among the urban transformations expected to come with autonomous vehicles — whenever they arrive — is a mass emptying of frequently jammed parking spots, Axios' Kia Kokalitcheva writes.

  • Why it matters: With cars always on the go, and dockless bikes and scooters eating into driving, young startups and staid building developers are considering new ways to use the immense real estate currently devoted to empty cars.
  • What happens to parking lots will potentially change city landscapes in the coming decades.

A future with less parking will mean fewer garages.

  • AvalonBay Communities, a developer working on a Los Angeles residential complex, anticipates converting a large parking garage into a home for a gym, theater, retail and restaurants, the LA Times reports.
  • City Storage Systems — ex-Uber CEO Travis Kalanick’s new undertaking — has been buying properties, including parking garages, to turn into commercial kitchens for delivery-only restaurants and other consumer services.

And the spots that remain will be repurposed for more than just personal vehicles. Among the contenders:

  • ParkJockey wants to sell space access to businesses such as ride-hail, car rental and food delivery. It's offering hardware and software to garage owners who will turn their real estate into a service that customers can pay to access.
  • SpotHero is focused on a parking spot booking app (for human drivers), but it’s already thinking about the arrival of robot drivers. It’s been working to upgrade some lots to handle AVs.

Yes, but: Developers already have tough decisions in regards to their investments, which typically have a 30-year horizon, as they juggle near- and long-term uses.

  • Construction costs for above-ground parking structures can amount to $21,000 per space, and another $500 per year to maintain each space. Meanwhile, parking costs an average of $2 per hour in the U.S., but can reach $33 for 2 hours in New York.
  • Converting garages is expensive: In Pittsburgh, it cost $17 million to convert a 3-floor garage into some 60 apartment units.

The bottom line: These companies may have to make big investments years before it's clear if they made the right bet.

Go deeper:

3. What you may have missed

Big White Ski Resort, British Columbia, Canada. Photo: Noprm Betts/Barcroft/Getty

You just couldn't pull away? No worries. Here's the top of the week of Future.

1. A case for large wage hikes: The Fed should chill

2. Medical AI's big data problem: Rife with errors

3.The future of big electrics: Look for a slew of SUVs and pickup trucks

4. Worthy of your time

Illustration: Sarah Grillo/Axios

Mukesh Ambani seeks to dominate digital India (Simon Mundy — FT)

What Intuit knows about you (Courtenay Brown — Axios)

The Tiananmen Papers (Andrew Nathan — Foreign Affairs)

Food giants go beyond meat (Aaron Back — WSJ)

Uber: Path of destruction (Hubert Horan — American Affairs) (h/t Izabella Kaminska)

5. 1 sovereign thing: When your home gets towed

An imagined seastead off the coast of French Polynesia. Image: Bart Roeffen/The Seasteading Institute

The Thai government hauled in a floating fiberglass structure from its coastal waters last month, accusing the couple living on it — a rich former Bitcoin investor and his partner — of threatening its sovereignty, Kaveh writes.

Details: The pair were "seasteaders," part of a movement to set up independent nation-states in the world's oceans, FT's Stefania Palma and John Reed report.

  • Now, the floating pod's inhabitants, 45-year-old Chad Elwartowski and his partner Supranee Thepdet, could face the death penalty if they are charged.
  • The demise of the project, which cost $250,000, threatens the seasteaders’ global movement, which counts billionaires like Palantir's Peter Thiel among their ranks.

The movement's proponents say it's a chance to start anew, rejecting ossified governments and freeing them from tax burdens to faraway countries, Palma and Reed write.

But Peter Newman, professor of sustainability at Australia’s Curtin University, tells FT: “They don’t contribute to any common good, tax or land development base. … They are simply designed to enable wealthy people to have a place in the sun, and water.”