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Cheap shipping killed Sears and Woolworth
Who captured the margins
Competition and heavy spending kept the shipping companies' own profits thin, and the margins went to the businesses whose goods rode in the containers. Flat-pack furniture was a perfect fit for container shipping, and IKEA rode it to the top. Walmart used the predictability that containers brought to lower its inventory and the costs that come with it, and Costco and Target prospered too.
The retailers that fell
The fallout from cheaper shipping sent Sears and Woolworth into downward spirals, finished off Montgomery Ward and A&P, and drove Macy's into bankruptcy before Federated rescued and downsized it. Sears took advantage of cheaper goods prices but never reinvented itself, and Walmart gained at its expense.
North Carolina's furniture
North Carolina, the furniture capital of the world, tried to compete with IKEA by importing cheap pieces from China. The furniture makers ended up replaced by their suppliers.
Why does flat-pack furniture suit container shipping?
Assembled furniture is mostly empty air, and a container full of it carries very little. Flat boxes stack tightly and fill the whole container, so each shipment moves far more furniture. Company lore holds that IKEA's flat-pack idea began in the 1950s, when employee Gillis Lundgren took the legs off a table to fit it into a car.
How did containers help retailers cut inventory?
A sealed container is loaded once and opened at its destination, which cuts breakage and theft along the way. Tracked containers arrive on a schedule that varies much less than loose cargo did. A retailer that can count on arrival dates can hold smaller safety stocks, and every pallet not held in a warehouse is cost avoided.
Why was North Carolina the furniture capital?
North Carolina had plentiful hardwood forests, rail connections, and a large local workforce. The city of High Point held its first furniture market in 1909, drawing buyers from across the country. By the late twentieth century the state's factories supplied a large share of American furniture.
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