Brick-and-mortar retail sinks artfully into coma.
It’s been a tough quarter for Macy’s. Again. Sales dropped 4% to $5.87 billion in the second quarter, it reported today. It had already closed 41 “underperforming Macy’s stores” in its fiscal year 2015. So among the remaining company-owned stores, comparable sales fell 2.6%. Operating income plunged 73% to $117 million. Net income plummeted 95% to a nearly invisible $11 million, or 3 cents a share.
The first quarter, on a year-over-year basis, was even worse. So for the first half, sales dropped 5.7%, operating income 53%, and net income 82%.
“We are encouraged by the distinct improvement in our sales and earnings trend in the second quarter,” is how CEO Terry Lundgren explained the phenomenon. He even gave credit to “a normalized weather pattern” – rather than blaming the weather, as is normally the case. And tourist spending dropped again, but less than before.
Then came the music to Wall Street’s ears.
In a separate statement, Macy’s announced that it would be “reallocating investments to highest-growth-potential store and digital businesses, and capitalizing on opportunities within the company’s real estate assets.” These changes “represent an advancement in our thinking on the role of stores….”
What this corporate speak means in numbers is this: It will shutter “approximately” 100 Macy’s full-line stores, or about 15% of its current 675 full-line stores. Final decisions which stores to close haven’t been made yet, it said. Most of this will happen in early 2017.
And there’s a real estate angle, testament to the breath-taking commercial property bubble that has transpired across the US, and particularly in large urban markets. It’s going to shutter “a number of stores” and sell the locations because the “value of the real estate exceeds their value to Macy’s as a retail store.”
One of them is the Macy’s Men’s Store on Union Square in San Francisco, a fabulously expensive location. It’s a big store, with a number of floors. You don’t have to wind past perfumes, bras, stockings, and handbags to get to the escalators or the underwear section. It’s a little threadbare, but who cares. I treat shopping like I treat unpleasant jobs around the house, such as replacing tile grout in the shower. When I finally decide to do it, I make a plan, and I execute the plan as efficiently as possible. That store allows me to get in, get my business done, and get out.
But that’s not what Macy’s wants. It wants me to wander past bras and perfumes apparently. So it’s “in negotiations” to sell the property. If the deal goes through, the big men’s store will be shuttered, and merchandise will be crammed into a floor or so in “a comprehensive and compelling men’s shopping experience” at the women’s store across the street. Surely, men can find other suppliers for their stuff, like online.
Macy’s figured that out too. Online retailers are eating its lunch. Amazon is cleaning house. Millennials, the customers that Macy’s really, really needs, are shopping online. And so Macy’s will try to gravitate that way and “invest in growth sooner and more aggressively in digital and mobile.”
Given all these store closings, the already declining sales will be “somewhat smaller” still – by about another $1 billion!
But as miserable as 3 cents a share in net earnings is, Macy’s couldn’t leave it at that. So it adjusted its earnings by removing the biggest bad items, such as the costs of closing stores and axing employees – which is not a one-time item but part of its regular business model these days – and the costs of the retirement plan settlement.
Thus, it managed to pump up its adjusted fictional ex-bad-items earnings to 54 cents a share, easily blowing past analysts’ expectations of 48 cents a share. But the most positive thing must have been the layoffs and store closings coming down the pike. That always sells on Wall Street.
And Macy’s shares soared 17% today. You’d think Microsoft had made one of its wild-and-woolly buyout offers, or something. But shares are still down 45% from their peak during the glory days of mere sales stagnation in July last year.
These store closings, and those over the past few years – in total nearly 200 – show that Macy’s is trying to shift its footprint out of brick-and-mortar retail into online and mobile. They’re all trying to do it, spread over years. Brick-and-mortar retail is sinking into a coma, artfully dressed in corporate speak and “adjusted” accounting figures to cover up declining sales and plunging earnings.
It’s really tough out there. American consumers are squeezed. The shift to online has been brutal. Numerous retail chains have already taken refuge in bankruptcy. Private equity firms, which thought that retail was the best thing since sliced bread and bought out numerous retailers, are now getting burned. Read… Another Leveraged Buyout of a Retailer Bites the Dust
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Well, at least Macy’s personnel might be well dressed as they slip into a coma.
The brick and mortar closing Armageddon continues. While in socal they’re building new office and retail space right next to empty for lease office and retail space! The usa he’s gone mad!!!
LG
Nope.
USA has not gone mad. Macy’s is simply losing a competitive battle with Amazon (and other online retailers).
Macy’s, just like Sears, is getting their ass kicked by the competition, and they are failing to respond…
Why would a rational shopper want to do the following when they can shop on Amazon (usually at a better price):
o drive miles to the mall
o hunt a parking space
o walk thru mall (and perfume counters) to get inside Macy’s
o hunt thru floors of stuff to find your product
o god forbid you need help from a sales associate
o (assuming they have it) hunt for a check-out register
o walk back out the mall to hunt you car in the parking lot
o drive miles back home
Some of us actually go to Macy’s for the perfume and makeup counters. Unfortunately, they rarely have what I’m looking for, even when they advertise it. Maybe that’s their problem. They advertise furniture in my local circular but don’t sell it at the local store. Maybe that’s their problem.
Petunia
I too SOMETIMES enjoy buying at a department store (more frequently sporting goods, like Dick’s). I expect (hope) niche demand to carry that experience well into the future.
That does not mean I won’t do a huge and ever increasing percent of my buying on Amazon (and other on-line retailers).
Their problem has been a relentless ride down in quality which has accelerated in the last 5 years in particular. With the exception of some stellar brands in clothing one could be in Sears, Penny’s or the now defunct Mervyns.
Online shopping is fine for some things, but if you want to look your best, you try on clothing.
Doing sound bites for AMZN?
Women in general love to shop and my wife and teenage daughters seem to get some kind of rush of buying stuff in person.
Anyway – demise of Macy’s along with other department store which are anchor mall tenants will accelerate the demise of over-built retail stores and along with it even the low pay service jobs and hard times for families whose bread earner or 2 depend on such jobs.
PS – geesh I take it that Macy’s stock will skyrocket if they close 50% of their stores or something.
Vespa P200E
A statistics quirk most people have is taking short-term rates of change (number of stores being closed) and straight-lining that trend to complete destruction.
Undoubtedly a number of Macy’s 868 stores will close (not enough consumers are shopping there); however, Macy’s will probably still be around in 50 years (just not huge stores at every mall in town).
I doubt the stock will skyrocket – the incremental growth Amazon will have in 2016 will about equal Macy’s 2016 total sales. YIKES! Macy’s needs a new business model.
You are correct – this will impact working people.
My Millennial neighbor … she buys just about everything on line.
Sorry Chip Javert, I do not agree with your comment at all.
Why would I go to Amazon (or other websites) to buy a pair of pants? I want to see them up close and actually try them on (size numbers only go so far in accuracy). I want them NOW, not in a few days (I’ve heard about the rapid delivery by Amazon but I don’t think that is a sustainable service). I will buy a couple of pairs, and return one later if I change my mind.
Allow me to address your specific concerns:
o drive miles to the mall
[there are malls all over the place. I can stop on my way home]
o hunt a parking space
[it’s not that hard]
o walk thru mall (and perfume counters) to get inside Macy’s
[walking actually counts as exercise. it’s not hard]
o hunt thru floors of stuff to find your product
[as opposed to hunting through infinite web pages?]
o god forbid you need help from a sales associate
[as opposed to what? a chatbot? leaving an email reply?]
o (assuming they have it) hunt for a check-out register
[this can by annoying, but some stores are better than others]
o walk back out the mall to hunt you car in the parking lot
[more execise. wee!]
Of course, if you are wheelchair-bound or morbidly obese, then I can understand your frustration at having to physically move.
Gary
It’s (still) a free country. I, and a couple hundred million people in the USA, simply disagree with your shopping choice. (FYI: Amazon’s 2016 incremental growth will about equal Macy’s 2016 total sales). Your argument is with them, not me.
I ride my bike over 50 miles a week, so I don’t have a problem moving (sometimes sunburn…); however, unlike you, I don’t enjoy spending 90 minutes going 20 miles round-trip to my local Macy’s when I can buy it on Amazon (usually for less) in 10 minutes.
Macy’s is probably not going away, I assume they’ll have a few years of downsizing from 868 huge stores to some (hopefully) better business model.
If you want to see how retail space madness truly looks like, I’ll give you two choices: China and Italy.
China’s few gigantic empty malls are the stuff of legend but the true problems are the small empty malls located in fourth tier cities and the half empty ones located in third tier cities. To this it must be added China’s building frenzy has abated somehow, but continues, meaning more retail space is being added daily.
The mega-rich don’t shop at the mall: ordinary people do. And ordinary Chinese are extremely price-conscious, meaning the usual “mall price hike” cannot be applied, savagely cutting into profits.
Retail may be doing great in first tier cities, but first tier cities and their surroundings account for less than 8% of China’s population.
Italy is littered with dead and dying small and mini malls: for years retail was one of the main cash cows for local governments and the country already experimented with that “transition to a service economy” everybody expects China will do. Those Chinese are smart to keep on manufacturing umbrellas and chainsaws like there’s no tomorrow.
Problem is once the mall owner files for bankruptcy, tax payments are suspended and if the local government is owed money it has to get in line with all other creditors. This has led to closing one eye or both on the most audacious speculations, as long as the building fees enter the city coffers.
Now, another big problem is a country can only have so many retail shops. Thanks to our good old friends Amazon, Alibaba and eBay, opening a shop is not very high on any young enterpreneur’s book.
It makes far more sense becoming a plumber or fixing lawnmowers.
Smart choice. And big retail chains have lost a lot of their appetite for ruthless expansion: Wall Street may love grandiose expansion plans but the clobbering retail chains are taking (and regularly covered here) is making many CEO’s and CFO’s think at least twice about expanding their operations.
All that increasing retail floor space is fighting for, let’s face it, a dwindling number of shops.
As usual prime locations continue to do well, but all those small malls in Italy’s Rust Belt and China’s interior have to fall a long long way to find a buyer.
Well now it’s all coming to fruition. And more bad news it’s spun into more good news. Those jobless claims are going to look a lot less pristine next month. But then our Farce of a government has another month to manipulate those numbers as well. It’s really become comical and scary at the same time how manipulative our world has become.
It’s just as scary when you consider how easily the sheeple allow themselves to be manipulated. Our leaders (both in government and industry, to the extent there is even any differentiation nowadays) know this well and exploit it to their benefit. Aided and abetted by a compliant corporate-run fourth estate.
Just try having a rational discussion with someone drunk on the administration Kool-aid about actual realities, numbers, facts, analyses. If you are not a fellow swiller drinking from the trough you must be a Trumpeter — and therefore discussion over. It’s a perfectly Orwellian nightmare.
And we wonder why we are where we are today (and fear about tomorrow)?
Tell me about it. The Clintonistas I know go into a rage at the mere mention of Trump. As if Trump did any harm to them other than shake up the establishment and abandon political correctness. Clinton’s crimes, incompetence,and now health issues on the other hand, are in plain view to anyone willing to look past the relentless MSM propaganda supporting her and vilifying him. We are in the Twilight Zone.
Do not go gentle into that good night. Rage, rage against the dying of the light.
What else can one expect? Harry Dent points out the demographic changes, bad for shopping, and Richard Koo points out the balance sheet recession [aka saving to pay down debts and not shopping].
The government could step up and start investing in the economy, as opposed to Wall St, as it should do when the private sector is not up to it.
But ideology trumps sensibility in politics.
Perhaps Americans need to emulate Malaysians, who have nothing they’d rather do than go shopping!
John Doyle
So the US government should be shopping at Macy’s? I DON’T THINK SO.
A number of things drive standard of living; 2 primary drivers are productivity at making stuff (Americans aren’t doing good here), and education to create new stuff (America got a HUGE headstart after WW2, but have been dropping behind other developed countries for decades).
Put bluntly: you won’t have a high standard of living for very long if you’re unproductive & poorly educated.
“Put bluntly: you won’t have a high standard of living for very long if you’re unproductive & poorly educated.”
Uh how about countless millennials who are “highly” if not over-educated , under-employed, debt-ridden, still living with parents in a way FORCED (according to many of them) into unproductive low paying service jobs with no benefits?
Vespa P200E
I’m a recently retired Fortune 500 CFO from the SF Bay area (no, no a dot.com-er).
This nation has been kidding itself for 50 years about its quality of education. Billions in the developed world have now caught up – you’ve been reading the surveys for years.
Your issue of millennial education (and student debt) strikes home: unfortunately, that group is very poorly educated from an employment standpoint. An increasing number of SF Bay area employers (not just dot.com-ers) will not even consider a recent college grad with a BA degree (after you have experience – yes; just graduated – no). And they especially like STEM & Business/BS & Accounting/BS degrees.
If your kid wants to write poetry and commune with the vibes of the universe, French Lit, psychology and sports management may help. If your kid is going to run up a $50,000 student debt and wants a job, Electrical Engineering or Computer Science is about as good as it gets.
A trait that is growing with millennials, in my generalized opinion, is a lack of communication skills. Texting back and forth has replaced speaking over the phone, and this trait can hinder one’s value to an employer.
As far as Amazon versus Macy’s; if you know what you want to buy, and have the option of the two to make the purchase from, it does come down to cost and convenience. Should consumers be loyal to retailers like Macy’s? Perhaps, but what does Macy’s offer to earn that loyalty?
I need ink for my Epson printer. I can go to OfficeMax or Target and pay retail (plus state sales tax) and get my ink right away, or order from Amazon at a much lower price and wait three days for it. Any guess as to what I’ll choose?
guys, guys, guys, when are you going to listen?
two words:
GLOBAL. ECKANAMY.
where have you guys been?
*contorted face showing disdain, like “i’m sitting beside this LOSER? REALLY?”*
Blame US brick-and-mortar retail woes on the global economy? You’ve got to be kidding.
Its biggest problem is “online retail” and how society is now shopping (online). Far behind, the second biggest problem is stagnating real wages in the US. For Macy’s, a third problem is the “strong” dollar that has caused foreign tourists to curtail their dollar-denominated spending in the US.
i appreciate your attempt to engage me in a legitimate conversation, wolf.
if you want to check out what i wrote to kredit and brad, maybe get in on that?
i am not sure what to make of all this “retail is dead”. i think it’s an individual preference. for example, i’m sure some people don’t mind ordering their toothpaste, floss, etc online and getting it later. when i need stuff like that, i don’t care about saving 10 bucks (probably not even that). i would rather go to the store.
of course, you may not like going to the store. i like going to the store BECAUSE INDIVIDUALITY.
*shrug*. i’d like to see the merchant mediums compete in an environment where the offered wares is competitive.
Just for context (best I could do with a few Google searches):
o 2015 on-line retail was about $350B
o 2015 total retail (unsure how defined) was about $4,900B
However:
o online growing 14%/year (or about $50B)
o total retail growing 4%/year (or about $200B)
Conclusions:
o on-line retail is nearly 8% of total retail
o on-line retail growth is 25% of total retail growth
Remember, Chip, total retail also includes auto sales, which were booming last year. Auto sales have not been successfully migrated to online (you still need to go and take delivery of your car, sign a million documents, and shake a bunch of hands).
If you take the two growth sectors in retail – auto sales (ca. 20% of total retail sales) and online sales (close to 8% of total retail sales) – out of retail sales, the remaining retail sales will likely have shrunk.
So that’s the real fate of brick-and-mortar retail (ex-autos).
Macy’s also dropped Donald Trump’s clothing line. That may be the real reason. Thousands of people cut up their Macy’s credit cards and swore never to shop there.
When MILLIONS of Americans are willing to do what it takes to support Donald, not shopping at Macy’s is an easy way to tell them to shove it.
i heard that, in america, if you utter “GLOBAL ECKANAMY” three times in front of a mirror, instead of “candy man”, a 50k JPMorgan credit card will show up in your mail within a week.
just sayin’ ;)
I do some shopping online and never have a problem with the online retailers. The real problem is FedEx, they seem to be destroying American business one package at a time.
A few months ago we purchased a table from Wayfair which we received heavily damaged. Wayfair was great and sent us another table right away which was also delivered by FedEx damaged. As was a third table Wayfair sent us via FedEx. We finally gave up.
Today we received a chair purchased online, unfortunately sent via FedEx, severely damaged as well. We are begging the business not to send the replacement via FedEx.
With brick and mortar business being down and online retailing being up, you would think that FedEx would have figured out a better way to do business than to break everything they touch. These items were not just slightly damaged, they were mangled. Retailers need to be careful where they cut costs because losing your merchandise to a bad shipper can be costly. It is obvious to me that FedEx is now extremely badly managed. We never have a problem with UPS or even the slow post office.
I STILL find it difficult to believe the mainstream meme that “online shopping” is a real threat. For entertainment items with brand names, perhaps…but what about non-packaged food, used goods, lightbulbs, socks, non-bestselling books, lawnmower gas, jewelry, milk, cleaning products and a thousand other things…?
The “online shopping” crusade is probably like the BLS’ “data”: derived from a limited sample of brand-name merchandise bought from a limited sample of “big companies”. Millennials buying cell phones, computer hardware and CDs…
What we really need is a COMPREHENSIVE and imaginative survey of a wider basket of goods bought by a wider selection of real people.
With the exception of socks and jewelry, Macy’s doesn’t sell any of those items. And who buys jewelry these days? Certainly not millennials — they’d just assume get a new tat than buy a necklace. And the hipster jewelry they do wear isn’t usually found at Macy’s (unless it’s somehow ironic).
Macy’s is outdated in two ways. First, the sort of merchandise they sell just isn’t all that popular with a lot of younger folks. Office dress codes are becoming more and more casual every day — who needs dress clothes? Their kitchen and housewares products can be found practically anywhere. As Wolf duly notes, most men abhor having to endure the gauntlet of women’s perfume counter assassins just to find a pair of socks. Most of their fashions appeal to older, whiter, more staid customers of days gone by.
The second is their position in the economic ladder. In our ever more bifurcating world where the haves have ever more and shop at snotty boutiques which cater to the self-indulgent and insecure, while the rest of us are becoming smarter and smarter with where we spend our ever smaller share of the American Pie. Macy’s and their ilk seem to me to occupy a purgatory in the middle — too upscale for the value shopper and too beneath the tastes of the nuveau riche. Growth is at both ends of the scale while the center collapses.
BradK,
while your criticisms are likely valid (i am unable to shop there for geographic reasons), what kredit was talking about is the concept of online shopping and how it is going to surpass retail.
i am in agreement with kredit on this.
HOWEVER i also concede there will be a non trivial proportion of sales lost to online ordering just by the nature of introducing a new medium to merchants to hawk their wares.
i believe we can combine both criticisms in the sense that you’re right that the model of macy’s itself was destined to die, however we can also implement what kredit is referring to (“imaginative”) in that the immediacy offered by in-store is unparalleled, and this is what needs to be exploited to restore the edge that i believe it can hold over online.
yes, you can do same day, yes you “have prime”, but often it’s not free. you may get it free, but those losses are being dumped by amazon somewhere. the money saved by the consumer on shipping alone is likely being eaten by the shipping company AND someone else (the debt-holder aka sucker). i think all the stories about uber do a good job of demonstrating what i’m saying (http://www.vanityfair.com/news/2016/03/uber-loses-money-abroad-in-quest-for-world-domination).
there are a lot of mouths to feed per transaction, laddies.
great exchange guys
Kreditanstalt
Unfortunately it does not matter if you accept the on-line shopping meme. And it definitely isn’t the big bad BLS trying to pull the wool over your eyes.
Tens of millions of people did hundreds of millions of buying trips and spent $107B at Amazon and $27B at Macy’s (2015 numbers).
It’s even worse than you think: Amazon’s sales have more than doubled in 5 years; Macy’s increased by 5%. That’s a whole lot of people voting no on Macy’s & yes on Amazon.
Am I the only reader mourning the death of traditional retail? Don’t you want to try on clothes before you buy them? Don’t you want to see a piece of furniture, judge its comfort, determine how well its made before purchasing it? Maybe you live in cargo shorts and fit doesn’t matter? (Okay, cheap shot)
I’m no fan of shopping, but even less a fan of shoddy merchandise, mangled in delivery that has to be packed up and returned. I think the Amazons of the world count on the fact that most of us will compromise our standards rather than devoting effort to the hassle of returns.
I miss traditional retailing the way it was done years ago. I miss that the staff knew their customers. I miss that the staff had manners. I miss that every store had different merchandise. I miss the holiday decorations. And I miss cotton, it has become more rare than gold.
Petunia: Then stop shopping on line and be willing to PAY for the elegance and dignity you miss.
Mary
MACY’S IS NOT DEAD- YOU MAY GO SHOP THERE RIGHT NOW (oh wait a minute, the store might be closed for the night, but, you know, as soon as they open up around 10am).
Amazon is not killing traditional retailers – customers of traditional retailers are killing it – they simply will not continue to buy there.
Amazon could not stay in business if they sold crap and made it difficult for customers to do returns (in fact, they make it free & easy).
I’m sure FedEx/UPS/USPS does indeed break/mangle some packages, but I’d bet it’s in the 1-2% range. I’d also bet brick & mortar retailers also had returns…
Actually, I did shop at Macy’s yesterday and it was with warm memories of that experience I wrote the post. My partner and I are clothes shopping for a European trip and we both managed to find attractive stuff that fit (or better put camouflaged) our aging bodies.
At the cash register we met a very sweet young guy with a nifty sense of humor. He rang up our purchases and then took 25% off the total for no reason I could see. When the card machine tried to refuse my new credit card, he gave it a whack and voila, card accepted.
Of course, in contemplating the experience, possibly that final 25% discount helped put Macy’s in the red.
Yes, you, single handedly, bankrupted Macy’s.
Yes, I want to see the merchandise, try on the dresses and shoes, see the quality and compare before I buy. So do a lot of people. The problem is that once I identify the item I want, I can comparison shop on the internet for a better deal.
The other problem is that I can do without new clothing or the best clothing, since I don’t have a job to go to. But if I did, I would wear my old clothes because I know our country is in a race to the bottom, and all safety nets have or are in the process of being pulled.
TheBloomIsOffTheRose
There’s nothing wrong with your shopping desires and practices. If retailers want to maintain a physical presence (and I believe they will from now thru eternity), they need to come up with a better business model to meet your (and Petunia’s) shopping desires. Shopping changed greatly in the early 1900s – it’s time to change again.
It’s the retailer’s job to fix what’s wrong; it’s not your job (unless you want to do it) to feel bad for the retailer and pay more in dollars and inconvenience.
Regarding safety nets melting away, with food stamps, Medicare & Medicade, Social Security , WIC and a numbers of other programs, that certainly is a future funding concern, but not a short term reality.
This is why the SMART stores, like Wal-Mart and Target are only carrying products that are not available on line. You will find a great deal on a Flat Screen TV at Wal-Mart, with an interesting model number. The model number can NOT be found on line since Sony, Panasonic, etc. purposely CHANGED the model number to one exclusive for Wal-Mart.
This concept will help stop comparison shopping since Wal-Mart has no desire to be a place for you to learn all about the product….then buy it on line. Basically, you are stealing from Wal-Mart.
At least now there we have it from the horses mouth, it’s not the ekonomy, stupid!
Umm, but what about rail and the trannies, aren’t those part of the economy?
The economy is in bad shape. But even if it were thriving, globally and in the US, brick-and-mortar retail would still be dying the same slow death by a thousand cuts.
It’s an industry that is being obviated by events.
There will always be brick-and-mortar retail, but on a much smaller scale than during the glory days. Meanwhile, lots of pain.
Thanks for the level-headed explanation, the numerous fakeouts and bizarre action are perplexing.
Gotta confess, I’m getting all teared up at the very thought of the demise of retail.
I also know there are people who miss buggy whips and the craftsmen who made them…and I would bet only a tiny %age of that small group actually has purchased a buggy whip. Ever. In their entire life.
Well, here’s some good news: GOOGLE “buggy whips for sale” and you’ll find a place selling them for about $225 (do not show this comment to your horse).
And I bet this post will inspire exactly zero people to spend $225 on a buggy whip. THAT IS EXACTLY WHAT KILLED BUGGY WHIPS.
I often buy from Amazon prime because I know the product quite well. Delivered to my door without shipping costs. Rarely do I visit a brick and mortar once I know he product well.
Some retailers have what it takes. The rest fall by the wayside.
The rise of Amazon is a reflection of a lack of imagination and resistance to change by bricks-and-mortar retailers (as physical shop retailers are known as here in UK).
On line retailing is simply another form of mail order. Most retailers shy away from doing mail order. Unless you are geared up for it, mail order is a hassle, pricing, arranging reliable deliveries. dealing with returns, etc.
But done well as the likes of Amazon do it and you are onto a winner. And from the customer’s perspective despite the attraction of physical shopping that ends up taking second place.
In my little hick flyover area Amazon managed to delete a shop category: bookshops.
The only bookshop that’s been doing well (as always) is one selling occult-themed books, but they also sell paraphernalia. You’d be surprised at how popular magic is around here…
The rest… all gone bar one whose assortment dwindles by the day.
“Lack of imagination” describes very well why bookshops lost the war: you could walk into any of them and they all carried the same stock. If you needed a “special order” it took at very least two weeks to fullfill.
Nobody tried differentiating and they all believed they had a captive market that would buy whatever they offered. If you didn’t like it, you could mail order from somebody else.
Then big box stores started carrying a small selection of best-sellers. Then Amazon arrived and it was all over. Many bookshops managed to hang by the skin of their teeth by selling textbooks but Amazon and the big box stores soon caught up with them.
I’d like to say there was no resistance, but I’d be lying: there wasn’t even an attempt at resisting except reducing stock and personnel in a desperate attempt to slash costs which ended up hurting bookshops even more.
What astounded me is nobody tried differentiating, for example by specializing on a given topic and advertsing locally.
It’s like bookshop owners believed Amazon was just a passing fad in an increasingly connected world.
I have always been a big reader. I was in BN just two days ago and could not afford the book I wanted to buy, list $29.99 plus 10% tax was out of my budget.
One of the big reasons BN lost out to Amazon has to do with conservative book sales. The BN in Boca Raton, FL routinely hid the conservative best sellers in the cooking section. I found this out by accident because I spent a lot of time browsing thru the store. These books would have reaped profits for the store but they chose not to make them easily available, they would rather push a liberal corporate agenda. I would like to feel bad for them, but I can’t.
I haven’t bought books in years, I go to the library. We’re paying for those too, so we might as well go to the library. Save some bucks.
I notice this too. Any conservative book , or any book that represented my community,was either not available or in some corner.
BN does not realize that the MAJORITY of book buyers are from my community, yet they refuse to sell to us. The books they sell are some fantasy nonsense or esoteric BS that only a 1950’s beatnick would consider buying.
BN, because of PC and demographic changes, has killed themselves. They won’t sell to those who buy.
You could also wonder what publishers think about maintaining stocks of quirky titles that sell in the thousands, and shipping individual books to individual booksellers. They might prefer shipping skidloads of guaranteed blockbusters to giant warehouses.
Combine that with the fact that quirky readers, in the aggregate, are not making the money they used to to spend on books.
I’m reading this and wondering why Kenya is infected with the Mall Bug.
Of course as a small developing nation what is regarded as ‘big’ here is probably among the least in the US
http://www.cnn.com/2015/10/02/africa/shopping-malls-africa/
http://tworivers.co.ke/
The largest nearing completion is Two Rivers with about 62,000 square meter retail space.
I just observed the original developers gradually slashing their shares to 29%. Although this may be due to need for funding, I’m convinced it’s more to do with the fact that they are not convinced of its viability.
But it has nothing to do with online shopping. We’re very far from embracing that, I think there’s a glut of malls retail space with about 6 of them coming up in a 30KM radius all targeting the same group
Treading water…
U.S. retail sales were unexpectedly flat in July as Americans cut back on purchases of clothing and other goods, pointing to a moderation in consumer spending that could temper expectations of an acceleration in economic growth in the third quarter.
Other data on Friday showed producer prices recorded their biggest drop in nearly a year in July amid declining costs for services and energy goods. Cooling consumer spending and tame inflation suggest the Federal Reserve will probably not raise interest rates anytime soon despite a robust labor market.
http://www.reuters.com/article/us-usa-economy-idUSKCN10N1DL
Macy’s didn’t do itself any favors by publicly announcing it would no longer carry Donald Trump’s line of clothing. Why do companies engage in this kind of PC obedience? Do they think a large number of illegal aliens are going to rush to Macy’s and buy several hundred dollars worth of Macy’s apparel to make up for people like me, who actually did shop at Macy’s ( though I own no Donald Trump apparel) , and decide to say to ‘hell with Macy’s?
Hello,
Curious about your comment Wolf in this article and a few others I read where you say `Consumers are squeezed`. What evidence are you referring to that suggests that. Consumer spending has been very strong from PCE data and suggests consumers are not squeezed at all. Wages are high and growing (yes debts are high too), but more importantly Debt-Service ratio is very low from the so-called American De-Leveraging since the housing crisis.
This will help you understand the problem (with data sources and charts):
http://wolfstreet.com/2016/08/05/per-capita-job-growth-employment-population-ratio/
In other words: the pie is growing, but it gets cut into more slices, and each slice is getting smaller.
Also, you forget that real wages (adjusted for inflation) have DECLINED. The Bureau of Labor Statistics just reported that inflation-adjusted hourly compensation in the first quarter had fallen by an annual rate of -0.4% from the fourth quarter, and that in the second quarter, it had fallen another -1.1%.
Here is the link to BLS data: http://www.bls.gov/news.release/prod2.nr0.htm
If you look at the median real wage over the years, you will see that it peaked in 2001. And that it’s quite a bit lower today than it was then.
If you look at it by the level of wages, you will see that for the bottom 80%, real wages have fallen a good chunk. The top 20% did well though.
Amazon prime is a gimmick with a limited shelf life
The last seven or eight online purchase/searches Ive done only once was amazon a competitive bid
Ever with shipping free
Most recent case in point- shopping for prefinished hardwood flooring. Brick and mortar retail–$6.25->$6.89
Sq ft
Amazon $9.59/sq ft BUT FREE PRIME shipping!!!!!!
Purchased elsewhere $3.92/sq ft delivered to the door
2700 lbs LTL lift gate residential delivery included.
No FED EX, thank god. Amazon/prime is a pre monopoly scam with clever PR.
Amazon changes prices in real time, depending on what it knows about you and your browsing habits. So for example, you might want to clear the cache of your browser, then browse through three or four Amazon competitors for this product, read the reviews, etc., then go to Amazon. Very likely, Amazon will offer you a competitive price!!!
It’s called “dynamic pricing.”
nice phrasing Wolf, I call it profiling.
Actually, Amazon was like the third or fourth hit on my search string.
They need to be more agile in their dynamic pricing. I ran the search 3 days later and they still ran the same price by me. Now, granted, I didn’t fill a cart and go to checkout page, but that’s playing it a little close to the edge. The vendor I bought from says he regularly spoofs order inquiries to Amazon just to watch his back on pricing. Again, his sales margin may not be what Amazon is willing to work with since the product is variable quantity, recurring purchases. So rather than chase that kind of sale they just let it pass. In any case, I’ve told all my clients-get a second opinion/price- if you’re just on Amazon autopilot.
Chip- I Did ask the owner if he had a preference for shippers, and he said definitely UPS or DHL over FedEx, which dovetails with my own experience ordering cabinetry hardware for our business.
Thankfully Macy’s, like all crony capitalist corporations, can use fraudulent US SEC-approved (Swindlers Excuse Commission) non-GAAP accounting methodology to cover up their ailing operations. It works wonders for the likes of Hewlett-Packard, Sears, JC Penny, IBM, Tesla, and many others.