How Much Longer Can Most Retail Businesses Last?
This year has been bad for many real estate investment trusts because it is now becoming more clear than ever that the internet is killing retail businesses at a fast pace. Developers actually creating new retail buildings or even being able to keep occupancy in some areas is nonexistent. Im not talking about all businesses because there are some that will stay alive simply because of the products they sell, but for the most part people who thought they would never buy all their products online at now transitioning over. How much longer can many of these retail businesses hold on?
Much of this has to do with companies like Amazon going to war with every business out their that sells anything that they list on their site. They have even killed manufacturers with their own in house brand as well. Amazon is winning this war at a rapid pace especially with newer generations ditching the shopping mall in favor of the digital one. In fact the amount of shopping malls that have literally turned into ghost towns is astonishing. There are channels on youtube completely dedicated to exploring basically abandoned or fully abandoned malls.
The biggest problem is Amazon isnt like prior businesses that might have coordinated sales, like Ebay. For example Ebay doesnt actually sell anything themselves, but rather just coordinates the seller and the buyer, while Amazon takes the opposite approach. Amazon actually will own much of the product they sell and place it as the number one option, so even if you are a retailer on Amazon, you often are at a great disadvantage. The products that amazon has themselves also continues to grow and eventually they will push most of the third party sellers off the site.
The biggest reason that people prefer online sites like Amazon is because the price is just too good to compare to retail. Amazon often offers 1 day free shipping on many items or 2 day free shipping with prime. They are continuing to further expand their logistics network so same day or 1 day is going to become the standard. Its crazy to believe but Amazon seems to be fully dedicated to offering the same experience without leaving your house. This is the second level of what we saw when places like walmart killed mom and pop businesses for the most part.
Some places might hang on more than others because they offer a niche product or a product that people want to actually hold or try on before they purchase it, but there will come a day when even those places might not be able to fight back. I personally like that I am getting the options of how I want to shop, but I fear that many of these big companies like Amazon are getting too big for comfort. With no competition we will be the ones who suffer, but as it is they are fighting a total war, trying to leave no survivors.
-Calaber24p
It's inevitable, but you're right to wonder if it will impact consumers at some point.
I can foresee Amazon driving out the competition and eventually jacking up prices because there is no competition. Or perhaps that won't happen because of other online retailers.
Either way, local retailers are mostly screwed...
Thats what ultimately scares me about one company having a monopoly, but if they did that eventually more businesses would enter again. I think they would rather have their hand in everything and keep the power.
With amazon wanting to get into every kind of business with could have a monopoly one day. I’m not sure if they will wipe out hardware, drug stores, grocery and clothing stores. People still like shopping.
that first image is from a mall that is being knocked down a few miles from my house if i am not mistaken. Metro north mall in kansas city. It is pretty much a pile of ruble now.
yep. found it http://www.thisisinsider.com/photos-abandoned-metro-north-mall-kansas-city-2016-11#but-it-was-shut-down-in-2014-4
kinda cool seeing something so close on steemit
Wow thats awesome, such a small world!
Amazon's razor-thin margins make it virtually impossible for many mom-and-pop retailers to compete. Take a look at Toys-R-Us going under recently. They just couldn't compete having to pay sky-high rents in major metropolitan areas. Times are changing.
well , Toys-R-Us went under because they had a huge debt load , but surely competition from e- commerce did not help them stay afloat.
This is very true.
I think having a storefront is just so hard these days for many things. The stores that survive with storefronts have niche businesses or customers. If walmart didnt kill their margins already, online businesses like amazon will.
Well, the technology is developing at a very high speed and it pulls business with it. You can tell whatever you want but it's much easier to buy stuff with sometimes better quality with lower price through the internet. Even with all that you have firms that bring the shipment to your address. Digital world is new world and whether we like it or not we have to adapt to it through time.
I don't think Aamazon will kill all retail. If Amazon is enjoying a competitive advantage now it is because retail rents are too high. Once they decrease to a more reasonable level , retail will grow back. However better stay away from mall REITs , that's for sure
Reits holding many of the malls that went under got decimated in the last few years and many people are staying out of reits in general because they cant avoid exposure to retail.
I like Amazon fo the type of things that they sell. I think local stores need to start focusing more on the old style of business. More local fresh or hand made or artisan type business. You're never going to compete with Amazon on typical goods. The local money will be made for business that are local and for business that start to get to know their customers and integrate as part of the community. Malls are going to have a tough time surviving if they don't reinvent themselves.
I feel like you’re right...it’s inevitable. It makes me sad to see technology yet again...in an effort to make things easier (and profit, in the case of Amazon) fading out yet another way humans interact with one another...face to face. I was so sad to read, just recently, that Toys r us may close all of its US stores in the near future. Sure, I can go on to Amazon and get the toys for lower prices...but I don’t get the same joy of seeing the excitement on the faces of my kids when we walk into that toy store! The only thing I can hope...is that maybe more local...mom and pop type stores will prosper...due to people wanting the actual real life shopping experience...and actual human interactions.
Amazon are starting to become a 'too big too fail' organization, their power is rather frightening to be honest. Not to mention Bezos has entrenched himself in Washington now too..
Good post. Its nice content in the blog. Thanks for sharing.
I like the post as well , nice content .
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