Why is retail doing so badly in the US

[Huntn]

As already mentioned, in the U.S. is online shopping.

But is not perfect, you hear the stories of mechanics trying to order parts online, pay the money, just to find out vendor don't really stock the parts and the waiting list is 6 months! but most other items are commodities so hopefully they don't follow the cars parts.

I hate going to the stores to find out they really don't have the item, GGGRRrrr, drove all the way down there and...
In the U.S. is about Just-In-Time, no renting big warehouses to store the stuff. In other countries they still like their bazaars. OTOH I have resisted Amazon Prime, to me that's First World problem, I got other things I can be doing for the average package to arrive, send it to me free shipping that's my moto.

There is this thread:

The Amazon Effect

Amazon appears to rule the retail environment. Years ago in another thread, I mentioned this in a now closed section of MRs. I told you the story of spending 3 hours driving all over town looking for a specific kind of swim trunks for lap swimming and no one had them in stock. Amazon did...

forums.macrumors.com

There I told the story of spending 3 hrs searching local retailers for some lap swimming, swim trunks that no one had, going to a battery specialty store that would take 5 days to get house phone batteries I needed, and a plumbing supplier for a vent cap (not in stock), where Amazon had them the next day. Most of my shopping is Amazon, no one can beat their selection.

In my current bathroom remodel, I have mostly bought through a local hardware/lumber retailer, but still a lot of the small stuff like like tile drill bits, putty knives, drop clothes, Amazon still has a better selection, I can usually get tomorrow, especially if the local store costs 30% or more
I also purchase from big corporate retailers like Walmart, Costco and other entities like online Etsy or even eBay that suppprts independent sellers, using online delivery if it is free or reasonably priced,. You might accuse me of undermining local retail, but the fact is, Amazon, like Sears, and JCPenney before it, had a better idea.

These days the local Mall has nothing that pulls me into it. They seem to be dying.

The Capitalism aspect is what do all these people do as retail drys up? I’d love to discuss it fully but can’t here, but I will say the sad fact is that these retailers have no obligation to take care of ex-employees, a job for your society to tackle, but it does not seem to want to either, better to just stumble along until a tipping point is reached, domestic markets are seriously damaged, individual buying power collapses compared to costs, wealth is sucked from the system, accompanied by wide spread calamity.

 

[boswald]

Several reasons:
Gas is expensive (still the most used method of transportation here)
Food, necessities are expensive
Theft is up, so the costs are trickling down to everyone else, making everything more expensive
People hate lines
People hate fumbling with tap-to-pay
People are impatient

Online is often cheaper
Alternative marketplaces are often MUCH cheaper (I can get band shirts on AliExpress for a fraction of the cost here)
Online store inventory is vast
Delivery is often quick
No lines
Discreet shipping
Easy returns
No suicidal employees (been to a Walmart lately? The morale is lower than a sink hole).

Just off the top of my head.

 

[Scepticalscribe]

Some very good points have been made by @Apple fanboy, @chrono1081, @boswald, and @Huntn, among others.

I would argue that the convenience of online shopping, falling - and stretched - incomes, poor - or inadequate service from traditional stores/shops, changed habits (a tendency that has accelerated even more since the pandemic), have all contributed to this.

However, these are also choices that people make: For all of the undoubted ease and convenience of online shopping, some of these businesses - such as Amazon - treat their staff appallingly and atrociously; this matters to me, and is one of the main reasons I no longer buy anything online, least of all from Amazon - and haven't done so for several years.

 

[unkl bob]

How can Amazon fill the need of all these stores? Unless people are shopping at other online websites.

You are correct. They can't fill them all. But they can come VERY close.

 

[weckart]

Yes, but when was the last time you felt a personal connection with a clothes retailer or had an actually pleasant shopping experience there?

Literally every time I find something I like/need in TK Maxx and pay half of what it would have cost on Amazon/ASOS etc. I get to pick exactly the one I want from the rail and don't have to worry about flaws, missing buttons etc because I have already inspected it and am happy with it. There is something to be said for instant gratification and not having to worry because the wrong size/colour/item has been sent in the post or it has something wrong enough with it for me to have to go through the whole palaver of returning it and waiting for a replacement to arrive.

You pays your money and you takes your choice as they say.

 

[Huntn]

You are correct. They can't fill them all. But they can come VERY close.

Frankly it’s amazing how much Amazon carries, it is a super department store retailer. I don’t say this out of admiration, just observance.

 

[Huntn]

Some very good points have been made by @Apple fanboy, @chrono1081, @boswald, and @Huntn, among others.

I would argue that the convenience of online shopping, falling - and stretched - incomes, poor - or inadequate service from traditional stores/shops, changed habits (a tendency that has accelerated even more since the pandemic), have all contributed to this.

However, these are also choices that people make: For all of the undoubted ease and convenience of online shopping, some of these businesses - such as Amazon - treat their staff appallingly and atrociously; this matters to me, and is one of the main reasons I no longer buy anything online, least of all from Amazon - and haven't done so for several years.

My impression is that most small retailers in the US, the business model is based on non-livable wages. It could be my memory is skewed, but maybe it’s always been like that? The best treatment besides being treated respectfully, is living wages and benefits, like quality of life and medical. 🤔 A friend of our’s son works in fast food, and when he acts as assistant manager, he gets a $1 or so an hour raise, which strikes me as onerous. I think he’s making about $17/hr.

I distinctly remember business entities under President Obama losing their minds when there was talk of a $10/hr minimum wage, the CEO of Pappa John’s Pizza was on a rampage about how this would raise the cost of a pizza by $.25!!! These kinds of business leaders have lost sight of what it means to promote a healthy society, instead just worried about themselves and their precioussss profits.

 

[Scepticalscribe]

My impression is that most small retailers in the US, the business model is based on non-livable wages. It could be my memory is skewed, but maybe it’s always been like that? The best treatment besides being treated respectfully, is living wages and benefits, like quality of life and medical. 🤔 A friend of our’s son works in fast food, and when he acts as assistant manager, he gets a $1 or so an hour raise, which strikes me as onerous. I think he’s making about $17/hr.

Completely agree.

I distinctly remember business entities under President Obama losing their minds when there was talk of a $10/hr minimum wage, the CEO of Pappa John’s Pizza was on a rampage about how this would raise the cost of a pizza by $.25!!! These kinds of business leaders have lost sight of what it means to promote a healthy society, instead just worried about themselves and their precioussss profits.

Again, agreed.

Some of Amazon's practices and their appalling and atrocious treatment of their staff - not permitting bathroom breaks, and there was a recent horrific story whereby supervisors prohibited a staff member who had been trained to give CPR from going to the assistance of a colleague who had suffered a collapse (and who subsequently died) - instructing staff to "ignore" their deceased colleague, who lay on the ground, and to continue working around him instead - is disgusting, disgraceful, is utterly inhumane, and is an ethics-free and morally rotten universe, to my mind.

Personally, I prefer not to reward such egregious conduct by giving any business to such a company.

 

[Apple fanboy]

Frankly it’s amazing how much Amazon carries, it is a super department store retailer. I don’t say this out of admiration, just observance.

If you supply Amazon it really isn’t! They pay 90 days after you supply them.
You pay for shipping there.
You pay for shipping if they decide to return it (they ALWAYS have return rights).
You have to do all their admin on their systems.
If you want to promote your product you pay them to do it (but they see the benefit).

Don’t even get me started on FBA!

 

[turbineseaplane]

Private Equity, consolidation, lack of antitrust enforcement ... to name just a few things combining to create the conditions.

 

[Harddrive]

Malls with retailers pulling out makes for less traffic in other stores left.
Less people working in said store which leaves no one to ask or find what you are looking for.
Shelves or bins not restocked or empty space where product should've been.
Charging more than your competitor by a substantial margin.
So they basically did it to themselves.

 

[weckart]

Frankly it’s amazing how much Amazon carries, it is a super department store retailer. I don’t say this out of admiration, just observance.

I suspect a fair amount of the niche stuff is tantamount to drop shipping. When you spot a less than swift despatch date, then Amazon has to procure that item first, which, to be fair, it can often get hold of in a few days. It can't have everything in its warehouses. It is more blatant with the Marketplace sales that Amazon is often just a middleman, which washes its hands of any issues that arise from the sale.

 

[Huntn]

If you supply Amazon it really isn’t! They pay 90 days after you supply them.
You pay for shipping there.
You pay for shipping if they decide to return it (they ALWAYS have return rights).
You have to do all their admin on their systems.
If you want to promote your product you pay them to do it (but they see the benefit).

Don’t even get me started on FBA!

I am not defending Amazon business practises, but will say, they built it, and the vendors came. I can’t say how long that will last.

 

[Madhatter32]

It's the business cycle really. Rural small retailers gave way to more efficient "five and dime" regional stores (Woolworth) then to even more efficient urban national retailers (Mongomery Ward) then to suburban convenience national retailers with disruptive technology (the Sears catalogue) then to bigbox superstores with supply chain / logistical superiority (Walmart) then to the e-commerce technology digital store (Amazon).

This is creative destruction on clear display, which clears the way for better innovation, more profitability, higher productivity, and more consumer choice. The benefits are many -- especially to the consumer in terms of choice and price -- and general huge productivity gains throughout the economy.

Although, like with any economic system, there are burderns. For example, as other have noted, employees have not been a winner and these downsides, as a matter of policy, have not been mitigated (through retraining and other kinds of programs). That is more an indictment about policy than the system though -- which is a discussion that is propbably outside the parameters of this forum.

 

[Apple fanboy]

I am not defending Amazon business practises, but will say, they built it, and the vendors came. I can’t say how long that will last.

It’s a monopoly. You can either work with Amazon or go out of business.
It will last indefinitely.

 

[conmee]

Well yes plenty of online alternatives.

Name 5 things you can’t get online (product not services).

1) Vital organs 2) Weapons-grade plutonium 3) Weed

Probably others, but I can't think of them at the moment.

 

[Huntn]

It’s a monopoly. You can either work with Amazon or go out of business.
It will last indefinitely.

For the record, I'm against monopolies, but I don't know if this is. It's like a huge department store, with vendors just like most before it. In the US, Sears and Penny's were catalog by mail vendors, and not everything they sold, they made...

 

[adrianlondon]

I’m recently back from a short holiday in Tokyo.

The area (roughly) between Shibuya and Shinjuku has many small, independent shops. We bought clothes that are local brands, often only sold in that one particular small shop, that aren’t available online.

I don’t know the economics of it all, and I do wonder how they stay profitable, but the area was bustling and most places had quite a few customers.

As a Londoner, I remember Covent Garden, Fitzrovia and part of Soho being like this, but no longer.

 

[Apple fanboy]

For the record, I'm against monopolies, but I don't know if this is. It's like a huge department store, with vendors just like most before it. In the US, Sears and Penny's were catalog by mail vendors, and not everything they sold, they made...

Oh it is. Did Sears control prices the way Amazon does. Or fine vendors for this and that.
We all live the ability to pay less and get next day delivery (so yes hypocrisy I know), but Amazon had now got to the stage where you can not compete against them. Their market share is huge. To the point that more stores both online and physical will continue to close because Amazon is taking all the business.

I won’t even touch on the taxes that they don’t pay, but it really isn’t a level playing field anymore.

 

[theluggage]

The area (roughly) between Shibuya and Shinjuku has many small, independent shops. We bought clothes that are local brands, often only sold in that one particular small shop, that aren’t available online.

Yes, you can't "blame Amazon" for the replacement of distinctive shops with huge chains selling the same goods, large supermarkets selling limited ranges of books, hardware etc. (taking day-to-day business from smaller specialist shops) or the shift from high streets to large out-of-town malls with free parking.

All of that was well advanced before the online shopping boom - and removed many of the advantages that physical retail could have offered over online box-shifters. I'm not going to cry bitter tears over the demise of "big-box" store chains selling the same goods at the same prices with minimal in-store expertise.

Even the remaining big stores often have limited in-store stock, and often offer bigger ranges online - but as soon as you have to order for later delivery it's so easy to check out the competition...

Even when Amazon started with books and records... yes, it was bad news for that little genre-specialist bookshop or eccentric independent record shop where you could spend hours browsing & maybe find some hidden gem - or order anything and have them get it in within a few weeks - but the reality for many people by then was going to an indistinguishable Waterstones/HMV/Virgin store and choosing from whatever was on the record companies'/book publishers' current catalogue (subject to stock). Amazon's original service was way better than that, good discovery tools, good recommendations, most things available to be delivered with in a few days. Ok, since then, enshirtification has set in, but its still pretty good for books.

To the point that more stores both online and physical will continue to close because Amazon is taking all the business.

On the other hand, I've bought stuff via Amazon marketplace from independent retailers and specialist importers halfway around the country who I'd never have found before - sometimes "fulfilled by Amazon" sometimes shipped direct from the store. It's unlikely that those retailers would have had that sort of national reach and publicity without someone like Amazon to handle ordering and logistics.

Yes, Amazon need better regulation to curb monopoly abuses and make sure they offer sellers a fair deal, and probably pay a bit more tax, but the model of having a few, huge, Amazon-like logistics outfits isn't fundamentally bad.

 

[SalisburySam]

The other side of higher prices is the more insidious, less talked about declining value of income. This inflation also raises prices significantly (as well as percentage-based taxes), and is an adjunct to shrinkflation in which prices are maintained or even raised but quantities delivered are reduced. One example: a standard can of tuna fish used to be 7.5oz here in the US. Today, for a higher inflation-adjusted price, you get 4.5 oz. Not only do these quantity reductions add to costs, they upset long-standing recipes that called for the previous amounts.

 

[Apple fanboy]

Yes, you can't "blame Amazon" for the replacement of distinctive shops with huge chains selling the same goods, large supermarkets selling limited ranges of books, hardware etc. (taking day-to-day business from smaller specialist shops) or the shift from high streets to large out-of-town malls with free parking.

All of that was well advanced before the online shopping boom - and removed many of the advantages that physical retail could have offered over online box-shifters. I'm not going to cry bitter tears over the demise of "big-box" store chains selling the same goods at the same prices with minimal in-store expertise.

Even the remaining big stores often have limited in-store stock, and often offer bigger ranges online - but as soon as you have to order for later delivery it's so easy to check out the competition...

Even when Amazon started with books and records... yes, it was bad news for that little genre-specialist bookshop or eccentric independent record shop where you could spend hours browsing & maybe find some hidden gem - or order anything and have them get it in within a few weeks - but the reality for many people by then was going to an indistinguishable Waterstones/HMV/Virgin store and choosing from whatever was on the record companies'/book publishers' current catalogue (subject to stock). Amazon's original service was way better than that, good discovery tools, good recommendations, most things available to be delivered with in a few days. Ok, since then, enshirtification has set in, but its still pretty good for books.



On the other hand, I've bought stuff via Amazon marketplace from independent retailers and specialist importers halfway around the country who I'd never have found before - sometimes "fulfilled by Amazon" sometimes shipped direct from the store. It's unlikely that those retailers would have had that sort of national reach and publicity without someone like Amazon to handle ordering and logistics.

Yes, Amazon need better regulation to curb monopoly abuses and make sure they offer sellers a fair deal, and probably pay a bit more tax, but the model of having a few, huge, Amazon-like logistics outfits isn't fundamentally bad.

Yes but Amazon are taking the bigger profit margin than the retailer.
Amazon marketplace is just a race to the bottom to win the buy box. But leaving very little profit margin for the seller.
Yes good for the buyer (for now). But then as stores close your choice becomes more limited (expensive).

 

[theluggage]

Yes but Amazon are taking the bigger profit margin than the retailer.
Amazon marketplace is just a race to the bottom to win the buy box. But leaving very little profit margin for the seller.
Yes good for the buyer (for now). But then as stores close your choice becomes more limited (expensive).

Sure, better regulation is required, but with consumers now used to armchair shopping and next day delivery you're not going to be able to put back the clock, esp. when the squeeze started as soon as you could pick up the phone and order with a credit card.

Don't know about the US, but although I can't think of anything else quite as all-encompassing as Amazon in the UK, there are plenty of other, maybe more specialised, online stores to choose from. I think people are starting to wise up to the fact that Amazon isn't always cheapest & you sometimes have to wade through a lot of near-identical junk. I usually check around. However, many things I have bought on Amazon I would not have found in nearby stores.

Where there is a good, local, expert-run shop (esp. a proper hardware store) I will support them. However for, say, electronics and appliances the majority of the larger "bricks and mortar" stores are owned by the same group anyway.