Online Sales Soar at Fastest Rate in Years. Why?

Which part of Brick-and-Mortar is crumbling?

This is where retail sales are booming: E-commerce sales in the fourth quarter soared 16.9% from a year ago – the largest jump since Q1 2012 – to a new record of $119 billion (seasonally adjusted), according to the Commerce Department this morning. E-commerce includes sales by the likes of Amazon but also by the online operations of brick-and-mortar retailers, such as Walmart and Target.

Total retail sales – e-commerce and brick-and-mortar combined, but excluding sales at restaurants and bars – in Q4 increased 5.7% year-over-year. This was the hottest quarter since 2012, when US retail was bouncing back from the Great Recession.

And retail sales without e-commerce – an approximation for brick-and-mortar sales on their own – rose 4.7%.

But there are sectors whose sales are not – or at least not yet – conducted online: gas stations, auto dealers, and grocery and beverage stores. These are the “online-resistant” sectors. The remaining sectors are under all-out attack from e-commerce. And sales at the “under-attack” sectors grew only 4.0% in Q4.

None of these numbers are adjusted for inflation. Note that the consumer price index increased 2.1% from a year ago.

So here we go.

This chart shows the surge of e-commerce sales. They’ve more than doubled over the past five years from $58.2 billion in Q4 2012 to $119 billion in Q4 2017. Even during the Financial Crisis, sales dipped only briefly; by Q3 2009, e-commerce was setting records again:

Many observers keep pointing out that e-commerce still accounts for only a negligible part of retail sales. In Q4, the e-commerce share of retail was still just 9.1%, though up from 8.2% a year ago.

The chart below shows brick-and-mortar sales versus e-commerce sales. Note the long and hard beating that brick-and-mortar retail took during the Great Recession, from which it didn’t recover until Q2 2011:

Is the online-effect on brick-and-mortar overblown?

There are large brick-and-mortar sectors that are still considered “online-resistant” due to the physical nature of their merchandise, state franchise laws that protect dealers, ingrained consumer preferences, and other factors. The three biggest of these sectors account for 51% of retail sales:

  • New- and used-vehicle dealers and auto-parts retailers: 26% of brick-and-mortar retail.
  • Grocery and beverage stores: 15% of brick-and-mortar retail. Despite the efforts by Amazon, Costco, Safeway, etc., online grocery sales in the US reached only about $14 billion in 2017, or 1.9% of sales at grocery and beverage stores. This will change, but slowly.
  • Gasoline stations: 10% of brick-and-mortar retail. They will hold out until electric cars become a bigger thing.

The remaining 49% of retail are under attack – and those “under-attack” retailers are typically the stores that populate the malls. The “under-attack” retailers combined generated $575 billion in sales in Q4, up 4% from a year ago, even while e-commerce sales soared nearly 17%.

This difference in growth, playing out now for over 20 years, has allowed online sales to grab an ever larger market share from the under-attack retailers, reaching 20.7% in Q4, up from a share of 18.4% a year ago. This chart shows the share of e-commerce sales as a percent of the sales at “under-attack” brick-and-mortar retailers:

Some sectors have already been decimated by e-commerce, such as book stores and toy stores. Others have largely been wiped out, such as music stores and video stores.

Department stores are hanging on by the skin of their teeth. Sales peaked in 2001 and have since plunged 34%, despite inflation and population growth. These chains include the most iconic names in the US, and they’re closing stores as they go and laying off workers, year after year. They’re getting crushed by e-commerce:

It boils down to this:

The pressure from online retail is focused on 49% of brick-and-mortar retail. While online retail accounts for only 9.1% of total retail, it accounts for 20.7% of under-attack retail, which are largely the mall retailers. And online is going to expand its share inexorably.

Brick-and-mortar retailers that are investing heavily in their online business are experiencing soaring sales at their online entities (Walmart, Macy’s, etc.), even as they’re grappling with declining same-store sales at their physical stores, and as they’re shuttering them and laying off people. Retailers that have failed to build a thriving online business will have trouble, or have already fallen into bankruptcy.

But there is still plenty of room for brick-and-mortar retailers if they invest in their stores, perfect their merchandising, and offer customers a satisfying experience. And discount stores whose primary appeal is low price – unaffected by the high costs of shipping to retail customers – will likely thrive, given that a large part of the US population is perennially struggling to make ends meet.

But online retail will continue to surge and take share away from under-attack sectors. This is not a sudden event but a structural process that has already stretched out over 20 years and will continue to cause upheaval in the retail sector for many more years.

In the ensuing meltdown over the past two years, many brick-and-mortar retailers were doomed by the private equity firms that had acquired them. Here’s an astounding list. Read…   The Private Equity Firms at the Core of Brick & Mortar Retail Bankruptcies

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  97 comments for “Online Sales Soar at Fastest Rate in Years. Why?

  1. Robert says:

    I began buying online ALMOST EXCLUSIVELY — when I made trips to stores that were always ¨out of what I required¨. Wasted time and gas. Being frustrated and angry because what I needed was in the B&M stores ¨usual¨ inventory, but, yet, never there !

    o I learned that Chinese stuff is not always, or even usually, junk.
    o I learned to discern quality (hint: always read the bad review first)
    o I have always been a price memorizer, so getting good prices is easy for me.
    o There are techniques that I learned to get discounts with some small effort and leave it in the¨Cart¨ tactics.
    o I only buy online now, and I am 99% happy with buying /what I need/ online. I am not a shopper personality type. I buy necessities only.

    All the good mom´n´pop stores of the post WWII age are now gone, and I mourn their passing.

    Money is tight for us, and I am glad for this online replacement for the stores hose passing I mourn.

    • interesting says:

      I hate online buying. I’ve only done it a handful of times and was disappointed every time. The technical books I wouldn’t have bought had I been able to go to a book store and look thru them. The banquet table that took 3 attempts to drop off and even claimed was shipped and received but wasn’t but showed up beat to shit with scratches on the top surface. the wall chart I ordered that looked nothing like what I thought i ordered.

      And yes ALL Chinese made stuff, for me anyway, is total crap and falls about within the first month.

      I “shop” online but I wanna purchase in person. I’m too broke to keep getting the opposite of what I thought I was getting. And i have an anecdotal story about a friend who bought a TV over the holidays. The thing showed up but didn’t work and seeing how she was busy over the holidays she didn’t notice the 10 day return policy….totally her fault but she has a $400 TV that doesn’t work. I’ve not followed up on that fiasco but I think online shopping is going to get to a point where many will say enough of this. “SOME” things will gravitate to online shopping but………I don’t know of anything yet for me.

      • interesting says:

        <:-{ damn, I wish there was edit functionality. ya'll can just deal with the typos.

        • Robert says:

          Me too. I had a couple in mine.

          (1) bad review(s)
          (2) stores (w)hose passing

          So it goes.

          BTW, my online experience is real, and polar opposite to yours. Strange.

      • RoseN says:

        Maybe “Interesting” and Robert are both right, but I tend to side a bit more with Interesting. The Internet can work if you know what you’re buying or you’re getting something that just can’t be found elsewhere (e.g. a replacement battery for my Sony ereader.) But I’m fed up with buying things sight unseen and not being 100% satisfied. If I change my mind when I’ve bought local, I nearly always return it. I don’t think I’ve ever returned an item I’ve bought online, and I know I haven’t always been 100% satisfied.
        I sometimes wonder if the pendulum will swing the other way and people will go back to in-store shopping.

      • Jon says:

        It seems as though you just don’t know what you are doing online or how to properly shop online. This is the heyday of online shopping, just wait until Amazon corners the market and starts raising prices and stops offering free returns within 30 days. I buy everything online but I know the good days are coming to an end slowly. Enjoy it now while it lasts.

        • Jeff says:

          On that note, the good days as far as is concerned are already over. They used to price things online the same as in store, and offered many regional items that weren’t available at my local store at a local store price. Vernors soda is an example.

          If you spent $35, shipping is/was free. So they were losing money on every transaction of low-priced items due to the shipping costs they were eating.

          They’ve now done away with a number of items from the website and adjusted online prices upwards for low-priced items that are available in store.

          However, they do still run some great closeout sales. For example, in October I bought a 4 cu ft fridge for half of the prior sales price, so it was $70 shipped to my house. I’ll speculate that it was stock meant for kids heading off to college that hadn’t been sold by the time everybody was at school.

          Anecdotes, but hey, that’s what I’ve got.

        • RoseN says:

          I have an example from today that contradicts your theory that everything can be bought online if you just “know what you’re doing”.
          I bought a Garmin GPS because I was attempting to do without cell data and just use a stand-alone GPS for my navigation needs. I paid $199 for a device that has excellent reviews on several sites. Testing it out today, the software appears to be crap. Compared to using a cell phone, it’s so tedious to enter in an address, and the software doesn’t show the route like a cell phone does. I’m not even sure if my selected address is in the correct city! There’s no way I could have known this without trying it out myself at a store. I can ship the item back but I will have to pay for both the initial “free shipping” and the return shipping. They’ll also deduct a 15% restocking fee. This mistake will possibly end up costing me $45!
          In many ways, I hate online shopping!
          Please tell me how I might have avoided this issue.

        • Wolf Richter says:


          How is that different from buying the thing at a local retailer, taking it home, trying it out, and finding out that you don’t like it? So you take it back to the store… If you buy it online, you send it back. Often the label to send it back is already in the box.

        • RoseN says:


          For me, it’s different in several ways:
          (1) It’s possible that the local store will let me try it out at the store, and in this case, I would have avoided the purchase and associated hassle of returning altogether. In the good old days, that’s how it used to work, especially for a more expensive item. I mean, isn’t that partly the point of a brick and mortar store? Companies understood that people would want to touch and try out an item before purchasing. I guess I’m missing that customer service touch.
          Additionally, I think online reviews more and more cannot be trusted. Plus, not everyone wants to spend hours sifting through these reviews on a computer.

          (2) I don’t have to deal with shipping charges with my local store. I believe in this case I’ll have to pay for shipping both ways for an item I’m not keeping. The item was $199 at both Best Buy and other online establishments, but and I went with B&H because I could avoid the $18 CA sales tax. I’m starting to not balk at the sales tax and instead consider it a kind of insurance when buying expensive items sight unseen.

          (3) I find that some of these online-only businesses can be stricter with return policies whereas a big store like Best Buy often doesn’t charge restocking fees. Between the shipping and restocking fee, the amount really adds up.

          4) For larger items, it can be a pain to pack them. For example, I can return a vacuum to Best Buy with the product overflowing from the box, and they don’t flinch. Packing a box seems like such a pain to me, especially if I’m not getting the goodie!

          In short, you take more of a chance when buying an expensive and especially big item sight unseen on an online-only store.

          I’m puzzled that many on this site never seem to have this experience. (Maybe I’m indecisive and return a lot.)
          I’m sticking with physical stores for some items!

        • RoseN says:

          I wanted to add that B&H will not charge me a restocking fee and will only charge for return shipping ($10.95). This is good, but I think I’ll have to keep notes of the policies of online-only establishments. I think people still fall back on brand trustworthiness.
          In my example, with a return, I would have come out $10.95 ahead if I purchased at Best Buy; if I kept the item, I would come out $18 ahead because B&H charged $18 less.
          I know many would say try out the item at Best Buy and buy online from someone else, but I don’t feel that that’s ethically sound.

        • RoseN says:

          One more point.
          I attempted to print out the return label, but my printer drummer needs replacing soon, so I may have to reprint the label at Fedex. This online returning just feels more complicated, and I have to think about it too much.

          I push back on this idea that online shopping is best for all items. I find in life that making blanket statements about things is rarely useful.

    • Mike Earussi says:

      Exactly, retain store sales are declining because of the store’s practices themselves, like no longer carrying high quality merchandise or not having enough of a selection.

      I also prefer shopping at a local store but have gotten tired of being offered nothing but cheap Chinese “shit” that falls apart in a matter of days or is even broken out of the box.

      For instance, Sears made it’s reputation on offering high quality products at a mid range price, but when new management took over and started replacing their good quality items with lower quality ones at the same (or even higher) price I went elsewhere.

      So when I see an article like this one that blames mall stores decline primarily on online competition I cringe because I see it just as a convenient excuse for their own real failure of trying to cheat their customers and then suffering the consequences of that.

      People only change their comfortable buying habits when they’re forced to. I hate buying clothes online because they virtually never fit right and so would prefer to buy them in a store where I can try them on. But when I’m only offered cheap garbage locally I’m forced to go online.

      If the Sears today was still the same Sears of 30-40 years ago they’d still be making plenty of money and not close to bankruptcy as they are now.

  2. mick says:

    Online retail represents around 10% of total retail sales. Big percentage growth is easy when you’re so small. Brick and Mortar’s double digit drops in revenues easily overcome the uptick in online sales.

    This narrative is used endlessly to try to hide the collapse of the consumer economy, so people will watch stores disappear and malls empty out, and yet still think everything is fine.

    • Gary says:


      Good points, and I would add that this mixing of the “online” operations of brick-and-mortar stores with their regular operations can lead to misleading conclusions.

      If I see something on the Walmart website, and order it to be picked up at their store, is that really and online sale or just a glorified form of catalogue shopping?

      • Wolf Richter says:

        If you order it online and pay for it online, it’s online – no matter how you physically obtained the merchandise, whether it was delivered or whether you picked it up somewhere, such as at a locker, a drop-off location, or at a store.

    • Wolf Richter says:


      Did you even read the article? 51% of brick-and-mortar (gas stations, auto dealers, and grocery stores) are “online resistant” due to various factors. No one is going to fill up their car online. But 49% of brick-and-mortar sales are totally under attack. Online represents 20.7% of their sales. A number of retail sectors have already been wiped out, including music stores and video stores. Other sectors are getting crushed, including book stores, toy stores, and department stores. Look at the charts!

  3. Paulo says:

    Here is a niche example. I am a builder and currently completing a cottage for a rental. The future tenant cannot negotiate the 27″ stair rise without a railing, despite very shallow steps and 4′ wide treads. (Crippled up and a very old 77er). Normally, I would just make some bracket hardware out of stainless, but I am out of stock and don’t want to be hung up with 18′ of leftover flat bar. I need some brackets, now. The retail offerings are over-priced crap and only suitable for interior applications. Marine products might as well be made out of pure gold. So, I ordered brackets from the States, online. Solid brass. Even with duty and shipping, I still save mucho dinero, plus no driving.

    Big Box has done it to themselves. When they moved into our nearby city they wiped out specialty tool and hardware stores. Their store brand tools and hardware are of lower quality even though at first glance seem to be the same product. They are not. So, I now almost always order online and save driving around and being waited on by 20 year old kids who don’t know anything.

    I live on Vancouver Island. My brackets are coming in from New Jersey. What a world. I didn’t even go to the stores for comparison. I just booted up their products on the computer and read the reviews. I have yet to be disappointed buying online and it gives me a chance to visit with the Postie when she drops it off at my house.

    • Bobby says:

      Yes, the handrail is a requirement in the building code for anything over two steps. Good thing your installing it! if your tenant fell you would be legally liable, if sued.

    • TheDona says:

      Paulo – I tried to buy my plumbing fixtures, sleek Toto toliet and decorative hardware from the “upscale” hardware store in town but they would have had to order everything, it would take 3 weeks and I would have to pick it up. Same with my electrical fixtures at the gorgeous lighting store. Wrote the descriptions/part numbers down and ordered online for half the price and presto delivered to my door. These are the kind of stores that are really going to be hurt…they offer nothing more than being an expensive showroom.

    • and what you are doing adds to deflation. deflation has a nasty effect on profits, however corporate profits have never been better, because companies like Amazon may lose money on every transaction but they will do more transactions than anyone. once the boost in added business meets up with declining profits then the wheels come off.

    • Mike Earussi says:

      My point as well. The people who own/manage the stores today don’t want to admit that their customers can tell the difference between good quality products and garbage–but we can.

      I quit buying from Radio Shack when I found out that almost every product I bought from them either did not work out of the box or fell apart within a few weeks. That’s why they went out of business, not from online competition.

      Online is succeeding because it’s successfully fulfilling a need. Its unfortunately becoming the only place where you can still buy high quality merchandise anymore since the local stores refuse to no longer carry any.

  4. Sporkfed says:

    Get ready for higher property taxes to compensate for the lack of
    local sales taxes.

    • and what happens when a collapsing housing (asset) bubble deflates those ‘higher’ property taxes? ecommerce works because the sellers are STILL not collecting state sales tax. That was the greatest ripoff in history to brick and mortar, and it explains in great part why Bitcoin is a mania, buyers and sellers will risk volatility in order to deal in any product or service they desire without paying sales or use tax on the transaction. tax avoidance phobia will lead to the dissolution of government and the privatization of just about everything.

      • HB Guy says:

        Online sales tax collection depends upon where you live. California has collected it via Amazon and other large retailers for at least two years, as have other states. There are also efforts in Congress to authorize states to collect sales tax from online sales within their borders and a case before SCOTUS this session may further broaden state tax collection efforts.

        • alex in san jose AKA digital Detroit says:

          Yep I was paying my state sales tax from 03 on. Yes, earlier, 1997 to then, it was more of a “suggestion” but at least with the big boys, Amazon and Ebay and so on, state sales taxes are being collected. As for little guys, say you’re a fly fishing expert and master fly-tyer, selling your flies all over the country, you may get away with state sales tax evasion … or will you…?

        • 728huey says:

          I have had to pay sales tax in Illinois for all my purchases online and even through mail order since the late 1990’s. In fact Amazon killed their associates (affiliate ) programs for all people living in Illinois because of this.

  5. IdahoPotato says:

    I buy 99% online now. Macy’s, Home Depot, Costco, you name it. Amazon is not often the best value.

    Even if I am driving by the store, I order online and pick up at the front desk. Plus I get a percentage back from discount sites like Ebates for buying online.

    I HATE shopping and this is a boon.

  6. roddy6667 says:

    Retail sales (without online) are up 4%?
    Sales are measured in dollars, not units. They are not counting how many shirts, shoes, lawnmowers, etc are sold, they are counting the money in the till. Inflation is up over 4%, if you don’t use the government’s Bernie Madoff methods. So retail sales are actually down, counting items manufactured and sold sold in the real world.
    This is another reason why the gov’t likes inflation. They can make all kinds of claims like the title of this article and take credit for the “recovery”.

    • Wolf Richter says:

      Why don’t you go and lambaste your own lovely and honest government in China (where you so happily live) for releasing fiction instead of economic data. Are you worried that they come after you if you do?

  7. Stephen Sadd says:

    Look, If Amazon sold missiles and delivery to Washington I would go right ahead with a sale! Aussie

  8. zoomev says:

    “auto-parts retailers” are resistant? This has to be one of the most endangered segments of B&M. I use to have online Motorcraft parts business, and now as a consumer I’m all in on online parts.

    I literally just purchased a evaporative emissions valve and didn’t think twice about driving 5 minutes down the street to AZ. I saved $14 on an $80 part even with $3 shipping and didn’t have to leave my couch.

    Last September I bought an old F150 that was nice enough and cheap enough I splurged and bought a Ford racing traction lock differential from amazon prime for $260 free 2 day shipping (20-30 lbs). Would never ever have dreamed of that in the 80’s and 90’s.

    My local repair shop has no problem when customers bring their own parts. Labor is higher as it should be, but it’s still a huge savings.

    • Wolf Richter says:

      Most of the auto parts in the US are sold via service shops where these parts are installed: service departments at auto dealerships, repair shops and tire shops (chains like Big-O-Tires or independent shops), or at retailers (Walmart Auto Care Centers), etc. etc. This is a huge business.

      Selling parts to retail customers who then install those brake pads, swap out the engine block, or replace those tires on their own is a very small segment of it. This small segment, as you said, is not “online resistant.” But the entire massive auto repair and service business buys parts through wholesale channels and retails them to customers when they get their vehicle serviced or repaired.

      • zoomev says:

        Just theorizing….

        I believe the entire model is changing. When enough repair shops accept customer purchased parts, that will become customer ordered parts that are dropped shipped to the repair shop (is already happening to some with tires due to companies like Tirerack). For repairs that can wait for a day or two shipping it’s going challenge the entire local wholesale warehouse to repair center model. Those pieces of real-estate will be in the same trouble as Macy’s.

        All you really need locally is a co-op repair center. A group of skilled technicians, the building, lights, heat, etc… They don’t need to manage any purchases. Of course this may take 10-20 years to play out.

        • The value proposition says:

          Not going to happen – and still have quality. Why? Because most people have no idea what a quality part is, or if a part will work with their car. An experienced mechanic will order the correct part for the simple reason they don’t want the customer coming back because it failed, and they then have to do warranty work re: free.
          I would cringe if I was a mechanic, and someone came to my shop wanting me to install some part from Rock Auto or similar on the car, and then warranty my work. Part fails, I look like an idiot….or worse…

        • Kaleberg says:

          I’m guessing it will be like bringing wine to a restaurant. Odds are they’ll be more than glad to let you do so, but they’ll charge a corkage fee to cover the cost of service, the glasses and so on.

          I’m sure some will complain, but if you bring your own wine and glasses, why not bring your own food and plates? Why bother dining out at all? If you bring the part and the installation kit and guide, why bother with a repair shop?

      • Not sure you have that right. Before the rollout of auto parts stores there was two tiered pricing. The retail customer paid full, the mechanic or contractor bought wholesale, then the Auto parts/Home Improvement stores (which is where contractors buy) broke up this subsidy to service contractors. I think everybody pays the same for parts. While an auto dealer might install a part at their cost, (they have buying power) and they sell those parts as well, like any retailer they have a markup but its not like the wholesale/retail spread in the old days which applied to independent service contractors, to the detriment of retail buyers.

        • Wolf Richter says:

          When an auto dealer does a job in the service department, the dealer pays wholesale price for the part. The customers pays retail for parts and pays for labor, which are usually listed separately on the ticket.

          The dealer charges the customer full-pop retail for the parts. Labor is generally billed at the shop’s hourly rate (for example $80/hr) times the hours allowed for that type of job (per Chilton’s Labor Guide, for example).

          So a part might cost the dealer $20, and it’s billed on the ticket to the customer at $35. The tech (who is really fast) worked 0.5 hours to replace the part, but Chilton’s says the job takes 1.0 hour. So the ticket will show parts for $35 plus 1hr of labor for $80, plus maybe “misc shop supplies” plus sales tax on the part, etc.

          “Parts & Service” is a big and very profitable part of the dealership business. We had about 100 techs working in shifts, 24 hours a day, 5 days a week plus Saturday till 6 PM, and the amount of parts they installed was huge. Every part was marked up from our cost (wholesale) to full list price.

    • Scott says:

      During the cold weather last month, my mother’s battery wouldn’t start one morning and she had to get it replaced. Car batteries cannot be shipped via US mail, FedEx or UPS for safety reasons; however, in the past I have ordered and maybe paid for a replacement online and picked it up from the store. There maybe other autoparts that are under similar restrictions or too inconvenient to ship online (would any one buy wiper fluid that way).

      My mother, being older, saw that the local Sears had it in stock and went to the store to have it replaced. When she went there it was $40 more expensive than online and did not include installation. When she asked why it was higher, they told her Sears was trying to boost online sales and that if she ordered it online now (she was in the store), she couldn’t get it until the next day. It was an insane process and goes along way towards explaining why no one shops at Sears anymore.

    • alex in san jose AKA digital Detroit says:

      Zoomev – no kidding! The guy I work for occasionally has me order some car part or another on Amazon because I have Prime and it makes the shipping typically free. The last dingus he had me buy was somewhere around $35 and I think locally it was around $100.

    • Prairies says:

      This has been common practice for backyard mechanics even before online sales. The dealerships and service centers still have guaranteed work with the cost of tooling for parts the require a computer program or simple alignment tools.

      Shops have survived 80 years of do it yourself mechanics, what hurts them is fewer cars on the road. The carmageddon is their fear, not the set of brake pads every 5 years.

  9. Bead says:

    Online selection is much better and it’s also cheaper because Amazon doesn’t care about margins. Supposedly they’re making some money with their cloud instead.

  10. raxadian says:

    Mall or shopping centers is a bad business that is doomed to die as soon as buyers start to priorize price. Online sales make it so people don’t even have to look for that local store that6 has better prizes than the mall on a particular item they want.

    Unlike you know malls, that you need to drive into and regulations usually force to be it miles outside the town or city. And old malls that predate those regulations are in most cases abandoned or falling aparts. Malls are a relic of a cheap fuel era when people love driving their cars everywhere and driving to a mall was a part of the US culture and also showing off.

    • alex in san jose AKA digital Detroit says:

      There are two large malls in my county (I’m not counting the really-really big one lol) one’s on the #23 bus line and one’s on the #22 and I’ve still not gone to either one. I dunno I just don’t go to malls and was pretty much over them by the time I was 30.

  11. MC01 says:

    Is there any company out there which is experimenting with an original way to bring online to grocery sales as well? Or are delivery costs such a big obstacle?
    The “drive through” initiatives by French chains such as Carrefour and Casino (you order online and pick your order at an automated kiosk outside the store) have not exactly been smashing successes and in many places the infrastructures are already rotting away, sure proof the experiment will not be repeated, at least not until a few years have passed and the failure has been forgotten.
    And Amazon has not exactly been forthcoming with data about Pantry, possibly because it’s basically a doomed experiment. While Amazon can well afford to hoist things up the flagpole and see if somebody salutes them, Pantry was so ill conceived from scratch I cannot but wonder if it weren’t merely a quick ploy to dazzle shareholders and especially the media whose job these days seems to be suckering retail investors into going all in on stocks.

    Yet that grocery pie is simply too large to be left to brick and mortar. It’s enormous and usually the first thing inflation hits, and hits hard… have you bought tangerines or tea this year yet?
    This means not just an enormous, barely tapped market segment but the promise that inflation will steadily grow your corporate earnings without having to sell a single extra loaf of bread.
    As it will take years for credit markets to normalize and present investors with anything remotely similar to pre-2008 yields, anybody with a remotely appealing idea to bring groceries directly into people’s houses is going to find a sympathetic ear and some capital.

    I would happily invest into a well thought online grocery scheme… it cannot be any riskier than lending money to deep junk rated companies at under 5% yield.

    • TheDona says:

      MC01 – Yes the grocery delivery is heating up big time as is order online and pickup (Walmart and Kroger has this). Target recently acquired Shipt delivery for their groceries which is interesting as several other grocery chains use them. So yeah the grocery deliver arena is ramping up.

      For the naysayers…remember the milk man, small town grocery would deliver in a box, small town pharmacy would delivery, Schwans truck, Omaha steaks?

      History of American cooked meal delivery here :

      None of these concepts are new by any means.

  12. Vinman says:

    The disadvantage of the Malls is that the rents are so retailers often have much higher prices than free standing stores . Sears , Jc Penny and Macys are often anchor these Malls and all three are struggling . Unfortunately people use these stores to try on clothes and check out other products and than they go online to buy the products much cheaper than they could at these stores

    • The value proposition says:

      Good point. The brick and mortar retail segment may enjoy a resurgence when / if the RE bubble finally pops. The biggest expense (besides employees) that a retail store has is its rent. For years, these owners of commercial RE have been able to charge enormous rents on spaces that are Class B and C properties. Class A is pretty well out of reach for anyone not listed on Wall Street. Cost of living has effected everyone in many ways. We should all hope for a little deflation in the future.

  13. james wordsworth says:

    Key point about B&M. We are over malled to start with but now with even a small drop in in store sales, the impact on the bottom line is big, because that drop was probably where they made the profit after paying workers, rent etc. A 10% drop can be the difference between profit and loss as for the most part fixed costs of running the store are “fixed”.

    • MC01 says:

      That’s the chief reason mall operators have largely shifted their operations outside the US.
      Lateral Properties Group has announced plans for a new maxi-mall in the UK, which will feature over 650,000m² of leasable area. By comparison the largest US mall (King of Prussia in Philadelphia) has just 259,000m² of leasable space and not a single one of Asia’s mega-malls gets to 560,000m² of leasable space. While the UK is already home to the largest shopping mall outside of Asia (intu MetroCenter in Newcastle-upon-Tyne), it’s seen as not yet fully malled by developers.
      However there’s a small fly in the ointment: they have online sales in the UK as well. And in China. And in Malaysia. And in The Philippines. And in Germany. And in Italy… you get the idea.

      One can safely say most of the world is overmalled. The area where I was born in Northern Italy is literally carpeted with them and each time I am there it seems they are planning to either build a new one or enlarge an existing one. The catchment basin remains the same, real wages are contracting (according to the Italian government, not me), they have Amazon there as well yet they keep building the things. And it’s the same everywhere.

      • ML says:

        I think you will find the Lateral maximall is 600,000 sqft which is about 55,742 sqm. That is approximately 25,000 sqn smaller than Brent Cross shopping centre which was the first US style mall to have been built in Britain.

        Lateral’s prelets include Primark which as I understand doesn’t do on-line. The others are Marks&Spencer which is way past its shelf-life and Boots which is nearly there.

        The UK has numerous malls that are past it or mostly leased to retailers that are failing. The market is polarising between the top malls and the rest.

  14. Arnold Ziffel says:

    Many manufacturers are now entering online shopping and competing with the retailers. I just bought jean directly from Levi that were 20% cheaper than retailers and got free shipping.

  15. Hg says:

    Wolff, did you just ad hominem attack a commenter as being a communist? I’ve been a reader for years and started commenting myself at your behest as you spoke so glowingly of your little community. You’ve been going down hill with your anti bitcoin crusade (I can handle a difference of opinion). But now I think I’ll just turn you off.

    • Michael says:

      There were no personal attacks in Wolf’s reply. I think your suggestion that the content of this blog is “going down hill” is quite inaccurate. I have been following Wolf’s work since Testosterone Pit and I believe his writing is only improving.

      i think it’s quite appropriate to identify if a reader’s perspective is colored by their own nationality. There are lots of fake news alternatives for you to spend your time on. Good luck.

    • Wolf Richter says:


      1. I didn’t call anyone a “communist.”

      2. Even if I had, for folks living in China (as is the person you’re referring to), it might be a compliment since that word is part of the ruling party’s name, “Communist Party of China.”

      3. I have another article up my sleeve (working on it) that will be published this weekend, which will fit right into your accusation of “anti bitcoin crusade.” This one will be about the total destruction of the “blockchain stocks.” So enjoy.

      • Jaco says:

        LMAO!!! Can’t wait — I despise the notion of any type of digital currency….

      • Night-Train says:

        As we said in the 60s, Right On! The whole crypto world is full of promotional “information”. Glad to see Wolf providing another perspective. The crypto crowd is acting like a cult. And true-believers don’t wish to be challenged.

      • The Chinese are social communists, (and sometimes Stalinist social communists) but economic capitalists. I’ve always wondered why the GOP social conservatives haven’t made an issue of this? W Bush tried to get their government to allow more churches. They do allow mosques in Eastern China where there are 200M Muslims. That may be a matter of expediency. The Chinese government has also backed off the persecution of Buddhists in Tibet, which is why the Dalai Lama really wants to get out and speak to the world.

    • RD Blakeslee says:

      A comuppance for a resident of China , including reference to his governance, is an “attack on a communist”?

      Bit of a stretch, IMO.

    • Silly Me says:

      Well, if you have been a reader here, you managed to do it unnoticed…

      At this point, you are attracting unwanted attention.

    • alex in san jose AKA digital Detroit says:

      If he were calling me a communist, you can relax, I consider it a compliment.

      And yeah, bitcoin sux.

    • HowNow says:

      It was an uncharacteristic reply, but Wolf’s work on this website and his diplomacy is unrivaled, imo. Cautioning readers about Bitcoin is a public service!

  16. Mike B says:

    I know for me at least a factor in this is that I just don’t want to deal with having to be exposed to my fellow Americans and for all of the factors others here have listed. Millennial “sales” clerks who don’t know jack and don’t care, stores being cluttered and poorly maintained and often not having what I’m looking for, dealing with parking and just driving in general, the typical rudeness and self centered cluelessness of people. Etc etc etc. I would sooner eat ground glass than go to a shopping mall. Let’s face it, living in this country has generally become a pretty unpleasant experience. If I can just order the same crap on line and have it show up on my porch or at my office and not have to deal with the general public, great! I’m all for it.

    Now having said all that, I don’t consider myself just some grumpy old misanthrope (at least not entirely) I still love going to the local farmers market, which I can ride a bike to. I still love going out to dinner with close friends, I still engage with activities I enjoy, cycling, hiking, etc. I just refuse to deal with all of the other BS. Online shopping facilities that.

    • Wolf Richter says:

      I now buy even furniture online. I dislike shopping with a passion – it’s a huge waste of time for me. Why spend many hours going from place to place and not find what you want if you can do the same in minutes and often get a better price? And I’m not a millennial that grew up with the internet.

      If you buy furniture online (for example a couch), you might need to know how to use a power drill and a screwdriver and be able to read instructions printed on paper (to attach the legs to the couch), but hey, I did grow up with those.

      • Pat McKim says:

        What doesn’t come out of this analysis is that stores enable to look at the item and inspect it and decide if it is what they want if it is well made enough to buy. I have done a large renovation on my home in the East Bay. I appreciate being able to use the expertise of many people in viewing the options in stores. I don’t have a lot of traffic out here and there are many retail options. I feel obliged to buy something in the store to provided the customer service to help me make a buying decision. I fear the day when we all have to buy from megalomanic BOZOS and Amazon.

        I the late ’90’s during the last TECH bubble, like today, everyone was web crazy. Commerce One and Arriba were going to make all commerce for Business to Business transactions. That whole market place failed. Why? One of the big reasons was that both buyer and seller wanted to be able to communicate directly. Had this communication stopped, innovation would have slowed if all customer feedback was limited to the web and not a more traditional sales transaction.

        Amazon works well for completely commoditized products where the buyer knows exactly what he is buying, but when you don’t there are problems. Many people like shopping because the like the opportunity to look at options. One store I love is HomeGoods because they have great prices, good selection, and often you see stuff you might not have known of. there are other stores like that as well. I often find Ace Hardware better than some of the big box stores because you get good sales people, but the Home Depot does employ a lot of knowledgeable retirees.

        Good luck on buying furniture online. You can’t tell the exact color and you have no idea of the finishing quality. For example I won’t buy veneer woods because they don’t hold up and I want to see the grain of the wood I do buy. That is impossible online. I don’t know what your home looks like, but I like high end furniture that shows workmanship.

        The same thing is true in clothing. when someone buys a broad cloth shirt they’ve bought before its fine, and if they buy something for $25 it probably okay, but if you are buying a sport coat or suit, good luck. Alexander Julian once told me he hated to put his shirts in packages because he wanted the buyers to feel his fabrics.

        Amazon is great for commodities. Books are good, although I find that has much better prices for used books than Amazon. I have bought small furnishing through Amazon and am usually disappointed and have to return them. The process of many searches and culling through options online, then having to go through the purchase process, then either making sure your box isn’t stolen from your doorstep, or even gets there, and then having to box it up to ship back and then look for another is much more time consuming — both from time used and time elapsed. I think getting out of the house and interacting with people is good. I think buying locally from local people is good. I like being in the community. i enjoying interacting outside of the Internet.

        There is another option online. When I bought I all new door knobs for my house I bought from a smaller distributor online with good pricing. I talked to the owners and he overcame some doubts. I had found something similar at Home Depot but they didn’t have what I wanted exactly. I found what I wanted in a search. The purchase was substantial, and I got good customer service from a small online company. This was a good compromise.

        But I do fear the day when I can’t go into a store and see, touch and feel, and maybe even listen to the product. Oh yea, sure, I’d buy a stereo online sight unseen. Stores are necessary and there is something parasitic about buyers that use the stores for information and decision making and then buying online. If everyone did this, it would put the costs on the local store side and the revenue and profit on the online side, but that isn’t sustainable, but I don’t think many think of that, and that selfish attitude and the lack of potential future feedback–in both directions–scares me.

        This tre

        • Wolf Richter says:


          In my book, “online” does not equal “Amazon.” I buy as little from Amazon as possible. I spread it around. I buy furniture from furniture retailers, I buy appliances from appliance retailers, I buy china from a kitchenware retailer, etc. I do my little part so that Amazon doesn’t become a monopoly.

          If, as you’re describing, there is a shop that can provide good advice, explanations, and recommendations, it is selling a service in addition to the merchandise. So this is an entirely different thing. I have a hardware store like this within walking distance – knowledgeable employees, great selection, etc. You can go there and get an education. They always have everything I’m looking for. I always go to that place. They know how to fight off the internet.

          BTW, you’ll get over your anxieties about color etc. when you buy online. Most of the time, it works out fine — unless you’re dealing with difficult shades that look one way in daylight and another way under an LED lamp, and that have to harmonize just so with other difficult shades…. But if there is a problem, you can return it.

    • Silly Me says:


    • Night-Train says:

      And your point is………

      • R2D2 says:

        Point being that Mike B had said he doesn’t want to deal with general public; and if educated people are this dumb and annoying, then imagine how dumb and annoying the general public has to be.

    • Deno says:

      And what is most amazing is to be able to tell if someone is college educated by just watching them wash their hands or stand in a hallway.

  17. TheDona says:

    Is this really any different than the Sears catalogue innovation which at one time was know as ” The Consumers Bible”? More choice at better prices. Imagine how many stores they put out of business.

    The Free Rural Delivery Act of 1896 meant delivery directly to the farmer. This obviously had huge impact on private delivery carriers and also on the Town Mom and Pop as rural folks didn’t have to come into town and purchase.

    In 1906 Sears opened a catalogue order fulfillment center which was at that time the largest business building in the world. Think of all that business taken away from B&M.

    Seems like Amazon took a note from Sears original direct to consumer playbook.

    • OutLookingIn says:

      These original “online” (catalogue, postal, phone, etc.) were in on the ground floor of retail “off premise sales”. Unfortunately there were none who had foreseen the potential, nor the internet in the future.
      Just in Canada alone; Woodward’s, T.E. Eaton’s, Woolworth’s, all had thriving catalogue departments. Now all these retail entities are gone.

  18. Double Top says:

    Barnes and Noble seems to be prepping itself for purchase by a p/e concern? Why else whould they be firing all the full time workers?

    Too bad, one of the last book stores you can actually go to. I give it two years before the new management shucks it like a clam. It would be amazing if a book company were actually run by people who like books.

    • Kaleberg says:

      I remember when Barnes & Noble had one store not far from Union Square in Manhattan. They also had a used book annex around the corner. Starting in the 1980s, the economics changed and it made sense for them to open branches around the city and around the country. Some of it was the rise of the suburbs enabled by new roads and new automobile infrastructure. Some of it was new financial mechanisms to pay for opening a large number of stores in a single push. Some of it was computerization that made it possible to manage such a broad scale entity. Some of it was the publishing business effectively financing their inventory.

      There was a whole trend. I think of it as the second stage suburban experiment. It wasn’t just B&N. Macy’s had one store on 34th Street. Bloomingdale’s had one store on 59th. Almost overnight, they had dozens of stores around the country. It took a certain set of conditions for this to take place, and these conditions have been changing. Online retail is only part of it. Another big chunk of it is financial leverage. Opening dozens of stores meant borrowing money to build and acquiring other chains. Borrowing meant loan payments and an inability to finance in a crunch. Acquisitions meant carrying goodwill on their books which served as an anti-lever requiring markdowns during economic slow downs.

      If you actually look at the stores, they are probably making money from their store operations. If you look at their finances, they are in serious trouble. Each individual problem meant a squeeze, but their books were included the loans for fast expansion, for acquisitions and as a result of those acquisitions losing value. Look at the SEC filings for the public chains. It’s like the newspapers who went through a similar expansion-acquisition cycle and have been downsizing for over a decade now.

      The suburban experiment is in trouble. All the infrastructure was built on credit and set to amortize in 30 years. Unfortunately, the government can’t raise taxes high enough to actually cover the maintenance and reconstruction costs, let alone expansion. This has made driving a much less pleasant and more time consuming experience. The suburbs were never really economically viable, but that’s what the shareholders, I mean the taxpayers, wanted. The malls and big boxes were similar, but in the private sector.

      I’m not sure what we are going to see as a result. The better off suburbs will continue to get their subsidies, but the less well off suburbs will be forced to urbanize or collapse. The businesses built around them will be faced with similar pressures.

  19. Matt P says:

    The first chart shows 2000 twice.

    • Wolf Richter says:

      Thanks. I checked into it. It’s one of those Excel things. The dates are quarterly (Q1-Q4 2000 show as “2000” on the chart). The data series begins with Q1 2000. But on some charts, “2000” shows up twice for whatever reason. When I change the beginning of the data series to Q2 2000, the first “2000” disappears and the chart looks correct (minus Q1 2000). So that’s the workaround for now until I figure out what causes this.

      • Matt P says:

        Yeah, excel does weird things with series sometimes. Was just showing you that someone actually looks at them.

  20. Todd says:

    What becomes interesting is the advent of Amazon delivery.

    I do use Amazon (and others). But, what sold me on online was easy returns via UPS (not USPS!). So simple! And so many UPS stores with attentive workers (again, not like USPS) to make the deal swift and “free.”

    Now, with Amazon delivery, I wonder what becomes of that feature that was quite a benefit.

    And, I wonder what happens to UPS, USPS, and FedEX!?!?

  21. Setarcos says:

    On last car purchase, happened to avoid the testosterone pit. I was searching inventory along the east coast and found a dealer with the make and options i wanted. While reviewing the site, a chat box popped up. Simply wrote what I was interested in and asked for a call back. 3-5 minutes later my phone rang. We quickly (maybe too quickly) arrived at a price and I said deliver it today and we have a deal. They drove the car 250 miles and the car was in my driveway later that day. Plenty of testosterone I guess, but atleast no visit to the pit.

    • Javert Chip says:


      There are several websites allowing you to “build” the exact car you want (model, options, trim, wheel size, etc) and shows the resulting MSRP (Mfg suggested retail price).

      Other websites use your car model (eg BMW 5 series) and MSRP (which includes your options) to generate an analysis showing all prices paid for your exact car (it’s an amazingly wide range of prices!), and how many people paid each of those prices.

      The analysis looks like a bell curve – along the bottom is the price paid, along the vertical axis is the number of times someone actually paid that price. The top of the bell curve is the average price paid. Having this information is a huge help when shopping for a car.

  22. Hg says:

    Thanks for clarifying Wolff, I didn’t know Roddy6667 actually lives in China so it seemed like you were trolling him. Still you don’t address his point just sticking out your tongue.

    • Wolf Richter says:

      He tries to post of lot of pro-China propaganda, and has been for years, most of which I block. I suspect that he is getting paid for them — that he is part of the “50 cent party.” This was a reference to that. He knows it.

      He also posted some informative and interesting comments that I and other readers appreciate. But in this case, he has no clue about retail sales in the US, and so it’s a waste of time for me to argue with someone who lives in his own world and says that all the numbers in the US are fake. Q4 was one of the strongest retail quarters in recent years. This has been clear from the revenue reports from retailers. It has been clear from many other data sources. It has been clear from consumers’ credit card balances which skyrocketed.

  23. cdr says:

    Online shopping is great. My standard of living increased many times over because of it. Especially when Google and what it allows you to find out are mixed in.

    For example, I am currently rewiring my 1st floor with Cat6. I currently have 10 keystone outlets using CCA wire (copper clad aluminum). While rated highly in Amazon reviews, a ‘wire snob’ would think of it as suitable for garbage bag ties. So, even though it currently works great, being retired with lots of time, I decided to redo it with solid copper 23AWG and add a couple of outlets. Next came ‘how to terminate the wires’. After internet research, I decided to replace my basement ends with rj45 rather than the current keystone + patch cable. While looking neater, the ends will basically remain in one place in the switch without being patched about ever again. In theory, once a plug is put into the switch, it will never be touched again unless there’s a big issue down the road. Thus, no need for a patch panel to shoulder a workload of changing connections repeatedly. Project cost to rewire: about $100. Value to house: maybe 10x more than that. (patch panel snobs … go away)

    Without Amazon for the wire and Google for the info, my home network would be barely adequate and mostly wireless. YouTube taught me how to do the hard work. Only a few items involved are available locally or locally for the right price.

    The moral: internet shopping lowers cost and improves living standards immensely.

  24. Hg says:

    Wolff, thank you for taking time to address my concern. I believe I owe an apology, darn it. I am sorry.

  25. Night-Train says:

    I ordered 2 items from a NY merchant Monday night and received them Thursday afternoon. With free shipping to boot. And I am in Alabama. Not bad

  26. prepalaw says:

    I buy most everything on line. And, I buy used items whenever possible from individuals, not companies. Used fly rods; camera lenses; used clothing – Patagonia quilted outerwear – wash it and wear it.

    Out of more that 800 transactions in the past 5 years or so, I have had maybe 3 or 4 problems. All disputes resolved in my favor. Online individual sellers cherish their reputations and do not want negative feedback posted.

    Most all used items are better condition than expected. 95% of my purchases are via Ebay. I only buy via Amazon when I can not source the item elsewhere at the same price.

  27. mvojy says:

    Brick and mortar has turned into the showroom and where you can try it before you buy it ONLINE. It is said that our bookstores and video stores are gone. Technology wants us to rent or pay monthly access for what was cheaper in its B&M model. I like owning my books and movies, not renting them for 24 hours for a few dollars. Not to mention the lost tax base when commercial properties go unoccupied which shifts property tax burdens onto residential.

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