N Judah

Come on, man, we've been over this and you're arguing in circles. If Wal-Mart starts a price war, its competitors innovate and some fail. When Wal-Mart ends the price war, not only is there a retail vacuum and nothing to keep the competitors out, but the competitors that are left are stronger than ever.

The threat of a price war can keep competitors out. The goal is to make money, not to lose money.

I don't think that anybody here has denied that market cannibalization between Wal-Mart stores occurs. What's more, your link hardly supports s3mk's arguments.

He or she claimed that, "Wal-Mart isn't going to spend piles of cash to compete with itself," and that "And chances are very strong that these [lunchtime] consumers have been cannabalized from suburban Wal-Marts, meaning a net zero in terms of revenue." Your article says that some stores cannibalize up to 20% of sales from other stores...and yet...Wal-Mart continues its efforts to densify. Wal-Mart has literally thousands of stores yielding plenty of data to feed into a predictive model.

I was referring to the claim that Wal-Mart just wants to screw with Target, whereupon everybody began saying with conviction "No, they just want to serve the Inner Loop!" I'm saying that you can't say for sure either way. It's tempting to think that they are willing to cannibalize existing stores just so you don't have to drive another 5 minutes to get to their store, but it's also possible they just want to use their economies of scale such that they can eventually set the price without competition. They certainly have enough money to support any losing proposition to this end indefinitely as long as eventually they can achieve this goal.

If they want to build, clearly its because they think that they can make money in spite of some inevitable rate of cannibalization.

I agree.

The threat of an ever-lasting price war is not credible. Though a tremendous boon for consumers, it would not be in Wal-Mart's long-term interests.

It would not be ever-lasting. It would only need to drive competitors out of business. This is most certainly in Wal-Mart's long term interests.

Anyway, there is no doubt in my mind that people can come up with business models that can make money selling things. It was not my point to say that there weren't. What I was trying to show by posting that link is that s3mh's ideas about Wal-Mart's motives and reasons for building are as valid as anyone else's. And in addition, I find it funny and a little bit sad that people think H-E-B could ever outbid Wal-Mart on a site, that not shopping at a Wal-Mart could *ever* make it close, and that things like "governance" and "laws" could ever prevent multi-billion dollar corporate entities from doing whatever they wanted wherever they wanted for whatever reason they were capable of coming up with.

I understand why an individual store in a small market would engage in a price war to force out competition and subsequently raise prices. I don't understand why Wal-Mart would want to "...operate all of its Houston stores at a loss sufficient enough to undermine every other retailer in town on every item, indefinitely." How could they possibly expect to maintain monopolistic pricing when barriers to entry are so low...except by maintaining an indefinite price war?

I meant that Wal-Mart *could* do such a thing if they wanted to -- they have a lot of money. If I were a new retailer thinking of entering a Wal-Mart dominated area I could not possibly be excited about the prospect of being undercut on price no matter what I did or how long I did it -- and I think this would be a losing proposition I would be stupid to enter. This would be in addition to advantages Wal-Mart would already have with respect to economies of scale regarding suppliers, which I'm not going to pretend to understand the subtleties of, but which I know in fact do exist.

That was a serious response to an absurd proposition.

So you don't understand "why" Wal-Mart would want to do that, or you don't understand "why" the eventuality of Wal-Mart being the only game in town might be perceived as a bad thing?

...but why?

And if they did, GOOD FOR US!

Are you truly that shortsighted, or are you just being obnoxious?

It has been interesting watching s3mh posit 'unassailable' theories of Walmart's mistakes, claiming them as uncontrovertable fact, only to have a subsequent post reveal that Walmart's research and planning led them to do exactly what s3mh claimed they could not do.

Well I don't see the article I linked to as contradicting anything s3mh says. Wal-Mart is probably capitalized enough to operate all of its Houston stores at a loss sufficient enough to undermine every other retailer in town on every item, indefinitely. I almost feel sorry for H-E-B for thinking they could outbid Wal-Mart.

The Crosstimbers location is barely 4 miles from the Yale location. By definition that means market cannabilization between the two stores.

It probably does, but that hasn't stopped Wal-Mart from doing exactly that.

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1382

I'm guessing the ideal for Wal-Mart would be the "Dallas District" where the median person is only 3 miles from a Wal-Mart store.

This isn't spite.

Well had I known you would take it so personally I would have included a disclaimer. All generalizations (and, in fact, all posts of mine in the future) are hereby NOT directed at you, and should never be taken to reference you specifically in any way, shape or form.

I do on a number of things, but I don't know how calling your characterization of all those not opposed to a new Walmart as being driven by "spite" hyperbolic reflects me projecting at all. Perhaps you and I are using different definitions of the word hyperbole. So you know, I'm using it to reference heightened exaggeration. Perhaps you could provide a different definiton to help me understand your position.

I may be guilty of generalization (which was my intent, which seemed like it would be obvious but clearly was not), but certainly not "heightened exaggeration." To parlay this into an accusation of "love of hyperbole" goes beyond some kind of cognitive bias and into hyperbole itself.

I don't see it. Please explain. What have I mischaracterized here that's so hilarious?

sigh. Implicit in your paragraph are the notions that:

-- it's just a handful of people who don't want the Wal-Mart

-- these handful of people are driven by hate

-- these people are a minority

-- these people are vocal

-- these people seek to "dictate the lifestyle for everyone"

-- these people seek to dictate a lifestyle for anyone

-- these people seek to dictate a lifestyle

-- these people don't "have the right" to do such things even assuming these are their intentions

-- "having the right" to do something has anything to do with an end result

-- ecological/cultural concerns with the construction site must usually be considerations to block out a Wal-Mart

-- Wal-Mart only builds stores where they think they can turn a profit

If you had prefaced it with "I think that" instead of presenting your opinions as fact, it would not have been quite so hilarious. I guess the humor factor dissipated a little when it became clear to me that you weren't just saying these things to be obnoxious.

That's one way to frame it. The quality of life issue does seem to be the primary point of contention for one side, but spite is an askewed mischaracterization of those arguing from the other side.

Well, I was speaking from my perspective (ie "it seems"). But I suppose if you're going to present your opinions as fact, there's nothing I (or anybody) can say that contradicts you.

I think convenience and price would have been a better description, but I know that would have interfered with your love of hyperbole.

Wow. Project much?

It's happened before. Usually there's more in consideration than simply that a handful of people hate Walmart (ie. ecological or cultural concerns with the construction site).

The vocal minority doesn't have the right to dictate the lifestyle for everyone, and when it comes to Walmart, if they think they'll be able to turn a profit, they'll build the store.

Now THIS is a good example of framing and mischaracterization, right on cue. Thanks for a good laugh!

Hrmm, one side wants to "turn it into Western MA" the other side wants to turn it into FM 1960. One side motivated by quality of life considerations, the other side seemingly motivated entirely by spite. I think I've seen this conversation before...

But anyway. For me, the more important larger issue is: even if the neighborhood wanted to stop Wal-Mart, could they?

And another one bites, and another one bites, and another (neighborhood) bites the dust...

From this latest article I deduced that there would be an addition, to be opened in 2012, and a brand new building, to be opened 3 years later. This was news to me, as I did not know how they would go about it.

My guess is they will build the addition next to the existing UC and then demolish the existing UC and build a new one in its place. So if that is the case then it is just construction in two parts, set up so that at least part of a UC space is usable at all times.

Anyway from the UC 2010 initiative web site it looks like it will cost ~$100 million and will be ~250,000 square feet.

Compare this to the Tate Student Center Renovation at U. Georgia, which added 100,000 square feet of new additional space, which "effectively doubles" total available student space (for 200,000 square feet of space overall). The total cost for this project is ~$60 million.

http://schooldesigns.com/Project-Details.aspx?Project_ID=3695

In addition the U. Georgia built a new Student Learning Center with another 204,000 square feet of space for an additional ~$33 million.

http://schooldesigns.com/Project-Details.aspx?Project_ID=2026

So the end result is ~400,000 total square feet at UGA v. ~250,000 square feet at UH...for the same price.

I'm hoping this isn't part of a larger trend of things at UH costing more than they should. (For example, a stadium holding 40,000 people costing $120 million v. the Univ. Akron stadium holding 30,000 people which cost $61.6 million.)

But you never know what's included in the price until they tell you, and I'm just hoping that this new student center will, for that amount of money, be the be-all-end-all of student facilities, setting the standard for years to come for all such endeavors for universities and colleges around the country/world.

Getting lots of different sorts of ho-hum generic items in a single trip and at a time of my choosing allows me to optimize productivity and do PT outdoors during scarce daylight hours and optimize my leisure time during the evening. Why should effective time management be deserving of a punitive reaction?

Punitive? We're building a Wal-Mart, not tearing one down. To put it another way: we certainly shouldn't bring traffic 24/7 into somebody else's neighborhood just to indulge your sense of entitlement, should we?

I think you're just jealous of the ease with which I reject the douchey mass-marketed sense of shame that I'm supposed to feel over shopping at Wal-Mart.

LoL. When I saw you say something similar above, I thought "project much?" but didn't say anything because I didn't want to incur a tantrum

Plans for the new "UC" (University Center) are on track:

“The consideration for approval is set for August,” UC 2010 Initiative Co-Chair Nicole Sopko said. “With support from the administration, we look forward (with) hopes of approval in August.”

Once plans are approved, professional design and construction teams will be solicited. During this step, Sopko expects to lock down an architect and design team who will carry them through the rest of the planning.

Students are anticipating the new modifications for the project they voted on.

“When students voted in the process that took place in Fall 2008, they voted for a fully transformed UC,” Sopko said. “The plan is to create an addition and enable that to be used as swing space. It will also allow for a more ADA-friendly UC Satellite.”

Both the directors and the design team will work together to give the UC its new look.

The grand opening of the UC addition is scheduled for a March 2012 unveiling. The renovated UC, which will be named the New University Center Complex, is scheduled for completion May 2015.

(from: http://thedailycougar.com/2010/06/23/plans-for-new-uc-on-track/ )

The total cost of the project should be ~$100 million (in 2011 dollars).

This is according to the cost model, found at: http://www.uh.edu/uc2010/pages/costmodel.php

Ah well, if someone can't manage their time effectively, then maybe they should have to drive the extra few miles to find a Wal-Mart.

Hah, is Target just not good enough all of a sudden?

Is there not a middle ground between making investments in "lifestyle amenities" and improving the educational quality of the university? You seem to only deal in absolutes, only the Sith deal in absolutes. That was my first Star Wars reference and will be my last (although a reference from the mediocre Star Wars).

And hopefully it's your last ad hominem attack as well

The school has poured hundreds of millions of dollars into lifestyle amenities and quite a bit less into improving educational quality. The only academic investment they have made that could possibly attract prospective students was into the library renovation, which actually cost less than the new freshman dorm and was at least partially paid for by fundraising. So if there is a middle ground, the school seems to be going out of its way to avoid it.

I don't think it was a suggestion to follow UT, but to get some of the quality of students UT gets.

Well, usually better schools manage to attract better students, but that doesn't mean attracting better students will result in a better school.

The money should be spent according to whatever will create a larger pool of better-qualified applicants. At the undergraduate level, that has very little to do with academics and more to do with lifestyle amenities and sports programs; these are also the programs that foster alumni involvement. At the graduate level, research spending is the name of the game.

Well, we'll have to agree to disagree, since for my part I think the money should be spent to create a larger pool of well-qualified graduates (*not* applicants). If it were as easy as going into debt to finance lifestyle "amenities" and sports programs I think they (as well as every other school) would have done it years ago. Moreover, many of these lifestyle "amenities", as I have mentioned, seem specifically designed to target specific income/demographic groups to the exclusion of others (who still have to pay for the construction of such amenities with their tuition).

If they can select from a better pool of prospective students (more like UT-Austin) then they're going to do better on average, one way or the other, and corporate recruiters won't need to be sought after...they'll just show up.

Not sure UT is the model to follow...the "flagship university", in a very populous state, that can barely crack the Top 50? Surely there are better examples elsewhere.

Well the reality is that either U of H stays as it is, or they spend money. So should the money spent be directed towards educational directives that pay off in the form of a student body that companies will beat down the door to recruit, or should the money be spent on "amenities" designed to entice a new economic class at the expense of existing students? Keep in mind U of H is spending into the hundreds of millions of dollars here against a ~$500 million systemwide endowment.

I would be truly interested in hearing about any idea that raised acceptance standards without reducing the class size and therefore revenue. Usually good schools manage to avoid bad students, but that doesn't mean avoiding bad students will result in a good school.

Well, it would result in fewer students and less revenue. I guess that would achieve the end of forcing tuitions up, if that's solely what you're going for.

The best route for U of H to take is to improve the quality of its education first, in turn enticing better students to apply and taking the best ones. This is the model that has worked for many of the schools on that list, which (as you may have noticed) subsequently ended up with higher SAT averages of entering students.

I am not sure how an article written about Seattle U. pertains all that much to The University of Houston. I guess you didn't know that Seattle U is a private school located in a city in which it is completely overshadowed by a large state school (U of Washington)?

Well it's been several replies since I posted that, but you're the first to admit non-understanding. I'm not sure what to say.

Anyway, my advice would be to actually read the article, which can help you to not be so "amazed" (as you admitted below) by students expressing concern about the direction their institution is heading.

The University of Houston is a TOTAL BARGAIN. It's one of the ebst bang for your bucks you'll ever come across but it is HIGH time for the students and alums to spend more.

According to who, you? And in comparison to what? Well, at least you can rest assured that the administration probably agrees with you and has decided to pin its hopes on admitting more of your kind, building the things you (and only you) like and spreading the burden across the rest of us.

It would seem wealthier students perform better academically and are demographic that UH needs to draw away from schools such as UT, A&M, and Tech. It seems that particular demographic is essential to UH (among other factors) to becoming a more reputable and better academic school.

I think that particular demographic is only essential to UH becoming a school with more of that particular demographic.

Some interesting links:

http://economix.blogs.nytimes.com/2009/09/28/poor-students-at-rich-colleges/

http://rankings.usnews.com/best-colleges/national-economic-diversity

University of Houston Houston, TX 29%

I'm guessing somebody at UH noticed a correlation between income and academic achievement or something like that and messed up on correlation v. causation. I think top notch schools can tend to attract wealthy students, but that doesn't mean attracting wealthy students will result in a top notch school. For example, there are wealthy schools that are academically crap, and (as the second link I posted should make clear) there are lots of schools that are significantly better than UH which already have more poor students than UH does now.

The tuition increases approved this year are happening all over the country as a consequence of tighter state budgets.

Maybe "every" year was a bit of an exaggeration, but I want to make clear I wasn't just talking about this year. When I was there in 2006 (my first year at U of H, when the economy was doing pretty well) there was also a large increase, if I recall correctly.

But yeah, Tier One is all about empire-building for the UH System. That should've become clear when UH-Downtown was founded just a few miles away as part of their effort to more effectively segregate and target different segments of their pool of prospective customers.

Well that may be true and I think that any segregating done should be on the basis of academic ability first and foremost. If the more qualified students just happen to have more money, then I say so be it. But I think it's cynical to specifically attract students with more money with expensive amenities and put the squeeze on poorer students (who pay for some of these amenities with their tuition increase, but cannot afford to actually live in them) in the meantime.

I was mulling over UH's "Tier 1" infatuation, its $100+ million new loft dorm, and its new $55+ million new regular dorm and I remembered an article I read somewhere about another school...

Many schools use consultants such as Noel-Levitz and continue to attract a mix of students with a broad range of economic backgrounds. But some fear Seattle U.'s move could signal a willingness by the college to target wealthier students — who typically arrive with better grades and are more able to pay tuition — over the types of disadvantaged students McKeon championed.

"There are real concerns in the profession when outside marketing firms are asked to come in," said Lloyd Thacker, director of the Portland nonprofit advocacy group The Education Conservancy. "They are typically brought in to improve the average SAT scores, the selectivity and the wealth of students."

(from http://seattletimes.nwsource.com/html/education/2010081573_seattleu17m.html)

So the new amenities at U of H are geared towards attracting richer students and in the meantime they raise tuition every year?

Hmmmm....I think I see what this is all about...

Seconded! It makes the city look so...ambient

That Chevy commercial is idiotic. Only in auto-centric Houston would somebody park their pickup in the middle of a baseball field where kids are playing.