Big-box retail outlets have been shutting down at a rapid pace, and the reason likely lies with the stunning growth of online retailers such as Amazon.
Consider, for instance, that Amazon’s stock is eight times greater than the S&P 500 Department Stores index, which continues to sink daily, suggesting that “shoppers are turning away from” traditional retail,” according to the Associated Press.
As of Friday morning, the index was in the $120 range, whereas Amazon’s stock price hovered in the $900+ range (Chart 1):
According to four additional charts provided by Zero Hedge, the trend becomes even more clear once we start analyzing department/merchandise store sales and growth.
For instance, the chart below shows department store sales having dropped precipitously in the past ten years (Chart 2):
Likewise, the chart below demonstrates that non-store retail sales have been increasing rapidly as their department store counterparts’ sales have been declining (Chart 3):
In the next chart, a similar trend can be seen in regard to the annual growth (or lack thereof) between the two competing sectors (Chart 4):
And in the final chart below, total online sales are slated to surpass total general merchandise sales in a matter of only a couple years (Chart 5):
Sadly for big-box retailers, the news continues to get worse and worse.
For instance, NBC News reported Friday morning that “shares of Macy’s, Kohl’s, Nordstrom, J.C. Penney and Sears [fell] between 6 to 16 percent Thursday after” the stores announced disappointing earnings.”
“This could be the worst performance for the retailers since the Great Recession,” said Ken Perkins, president of research firm Retail Metrics LLC.
Except that we are not in a depression. Nor are we being led by a bumbling idiot with zero real-world business experience (*cough* Obama *cough*).
So what’s the deal? Again, it boils down to the advantages online outlets like Amazon possess over their big-box counterparts. Plus, even when the giant’s competitors try to switch over to the online world, they still wind up being eaten alive:
“Amazon is gobbling up most of the industry’s online growth,” Bloomberg explained last month.
The fact is that we are upon a new age, and that the technological advances of this age are changing industries in an inexorable way. Moreover, these changes are affecting more than just the retail world: instead of hailing taxis, Americans call up an Uber or Lyft, for example.
The thing to understand is that this isn’t necessarily a bad thing. Change can be good, especially when it benefits consumers like you and me. Plus, who wants to travel to a crowded retail store with annoying music when we can just order something off the Net, right?