How Amazon Killed The Department Store, In Five Charts

Tyler Durden's picture

At the end of April, we observed that "The Retail Bubble Has Now Burst" noting that "A Record 8,640 Stores Are Closing In 2017." We discussed that while there are many reason for this troubling collapse of one of the anchor industries underpinning America's economy, one stands out: the relentless growth of non-store, i.e. online retailers, among which one stands out: Amazon.

The following five charts demonstrate how Amazon took on one of the most venerable sectors of the US economy, one which employs nearly 16 million workers... and won.

No growth in department stores in the past decade:


Department stores vs Internet shopping total sales:

And annual growth, or lack thereof...


At the current pace, online sales will surpass total General Merchandise sales in the next 2-3 years.


Finally, the market cap of Amazon alone is more than 8 times the entire US department store index.

 

End result: $81 billion in the bank and rising.

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aliens is here's picture

I don't care for Amazon but good that they killed dept stores. I am sick of looking for a check out only to be helped by a 3rd world trash with an attitude.

Haus-Targaryen's picture

You would think some of these entities shareholders would wise up, do some math and voluntarily liquidate outside of bankruptcy. 

Might be better? 

VD's picture

remember, AMZN lost money for its first 80 quarters. something a mom & pop shop could never do. the larger retailers are finally after years of being battered by a ponzi schemer starting to fail en masse.

 

& AMZN pe ratio currently at 178.....

Took Red Pill's picture

That's the Walmart strategy. Undercut the competition even if you lose money. Then, when they're out of business, raise your prices.

PrayingMantis's picture

 

... amazon (as well as ebay) had made retailing and merchandising so much easier for my small business ...

... free one-day/two-day shipping with Prime) ... don't have to drive and waste gas to face nasty clerks ... and big bulky items gets delivered to  my door ...

... no nonsense free-of-charge returns ... all I do is print the RMA, slap it onto the box that it came with, take it to the nearest postal joint and promptly taken care of ... all free ...

... sometimes, no tax even (if outside local tax jurisdiction) ... and lots of item comparisons to choose from whether domestic, north american, asian or other sources ...

... and, as a small business owner, I could compete worldwide through amazon and ebay without incurring warehousing and other overhead expenses like rent, etc., ... and still have that extra time to waste posting inanities and other senseless comments here at ZH ;) ... (btw, that's where I draw the line ... no fecesbook, no twit postings, no other social-media timewasters for me  ... ;)

 

... the bottom line is, I have control of my bottom line ...

... and what would stop dept stores and retailers to do what amazon and ebay are doing when their dear leaders and CEOs (who gets paid million$ plus benefits and perquisites which get added to the price of higher-priced items they're attempting to sell) should know that online retailing and merchandising would be the wave of the future?

... adapt to survive ...

... if they failed to see that writing on the wall, department stores and retailers don't deserve to exist ...

 

... my two-cents ...

.

Gaius Frakkin' Baltar's picture

I have an idea... how about in store rating systems where customers can scan a product with their smartphone and see what other people are saying. You know, so customers can actually choose what is less shitty and will last a few extra months before falling apart.

Now give me my million dollar consulting fee, you dumbshit retail CEOs.

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Still Losing Money's picture

what's to stp tem? how about the need to MAKE A PROFIT TO STAY IN BUSINESS, which wall st has said ebay/amzn don't have to do

Oh if you PAY FOR PRIME your shiping isn't free, you prepaid it with your prime fee

ejmoosa's picture

Sounds reasonable until you understand that Wal-mart will ALWAYS have competition.  Wal-mart's profit margin is 3%.  So when do you see that expanding?

 

 

eforce's picture

Service at Amazon just seems to be getting better, first free next day delivery 7 days a week, then free same day delivery...

Fuck the high street, paying parking fees, waiting in lines.

BarkingCat's picture

Fuck Amazon and fuck Bazos.

If I am going to buy Chinese shit, I will bypass that bold headed fuck of a middleman and buy my Chink shit directly from them.

Shipping from China is quick enough for stuff I don't need today.

BarkingCat's picture

Fuck Amazon and fuck Bazos.

If I am going to buy Chinese shit, I will bypass that bold headed fuck of a middleman and buy my Chink shit directly from them.

Shipping from China is quick enough for stuff I don't need today.

Froman's picture

You are absolutely 100% correct, you can buy stuff off of Alibaba and it is generally at your door within 7-10 days and you can pay them via PayPal...and no sales tax.

Still Losing Money's picture

all at a loss, but heh, it'sAMZN  they don't have to make a profit, just kill off every other retailer. and when retail is all gone and all you have is AMZN, what will you do when AMZN tells you no you can't have that item cause the SJWs say so

ImReady's picture

I bought a backpack through Amazon last week. It shipped from Japan and was sitting on my doorstep 3 days later(Free prime shipping) ! Fucking amazing!

The Ram's picture

Wall Mart's profits are directly tied to how the (principally) Asian economies are willing to indirectly subsidize US consumers through FX manipulation.  This is a big issue because the Asian economies will eventually have to throw their own economies under the bus to keep America stocked in 'affordable' shit.  The American middle class is being decimated one family at a time, so how do you keep Asia and the US state and local governments solvent?  That's the real question.  Either the US government or the Asian governments are going to have to subsidize (massively) a broke America.  Big Questions!!

DPLETTENBERG's picture

You don't need 5 charts to see why Amazon is so successful. They just make it easy to buy stuff. 

Still Losing Money's picture

even at a loss and tax free sometimes, which brick and mortar retailers can't do

ejmoosa's picture

Yes this is another aberration of the artificially low interest rates.  It's kept too many businesses aflost that should have been gone.

post turtle saver's picture

I'm sure county and municipal govts just love this... now that their commercial property tax and sales tax revenues are drying up... gee, why are residential property taxes going up so much, I wonder... the govt maw must be fed, it's not like they're gonna cut back their budgets or stop spending, heaven forbid...

aliens is here's picture

They can get the 3rd trash to paid up after all they have to pay for the benefits somehow.

garypaul's picture

Someone should point out that those charts are PERCENTAGES of a pie that is SHRINKING overall.

CoonT's picture

Just like the alt-right replacing the MSM; Amazon didn't kill department stores....department stores, killed department stores!

 

Called 6 places the other day, looking for Diatomaceous earth. 5 had no idea what I was talking about (even though it was listed on their damn websites) and the other one said all their stock was recalled until ???

 

Jumped onto Amazon. Click+click+click= 1 day shipping to my front door!

 

Fuck You, department stores.......and fuck you Hillary (just because)

meditate_vigorously's picture

Retailers killed themselves by allowing their companies to become financialized. Once the stock is more important than the business, the whole enterprise fails.

Still Losing Money's picture

*&^ cough eddie lambert sears*^% cough*&^%

Semi-employed White Guy's picture

Same could be said about pretty much every US industry.  Fucking Manhattan parasites!

Philo Beddoe's picture

Just bought something today on Amazon. No traffic, retarded sales clerks and fat asses to navigate. 

duo's picture

Have you ever had your foot run over by some lardass in a scooter? Hurts like hell.

Silver Savior's picture

Hey I am a salesclerk but I don't think I am retarded at least yet. It's the customers who make sales staff retarded from there insane requests all the time.

Shitonya Serfs's picture

Yes, insane requests: How does this work? Or, what's better about this product vs. that product?

Yep, insane questions to ask. I know you have to pick your nose or check your phone constantly. Sorry.

Silver Savior's picture

Sorry to say but 99% of the sales clerk at my store know nothing about the products and are just guessing. Perhaps your better bet would be to use your friend Google and look at some reviews or something and make an informed choice. But I will always be glad to show you where the item is. In my opinion I would always go with the cheapest model of anything. 

Nothing pisses me off more than questions like those.

#1 I don't know.

#2 it is not possible to know everything about every product.

#3 As a consumer I go with the cheapest stuff.

#4 I got a lot of shit to do

#5 I don't like talking to people.

lol.

 

Shitonya Serfs's picture

I do use Google and Amazon. That's why your career choice is coming to an end soon. Same with checkout clerks.

I worked tech sales in the 90s. I was able to research the different products with no Google. It was called magazines and instruction manuals.

Fuck you are lazy. You have nothing to do, well maybe a lot of "shit" to do, but nothing productive.

And the answer is not the cheapest product, it's the best product. Could be the least expensive or the most expensive, or something in between.

"Show me where it is"..ha, doubt you even know that much.

Silver Savior's picture

I get that a lot. Thank you. I myself like cheap products. I don't like to spend money so it's kind of awkward recommending an expensive product I myself would not buy in a million years. Retail was not a career choice they were the only kind of jobs around. I been in retail long enough to like be a manager or something. That would be cool. They hate talking to people too. 

But really though. I had enough of the public. They suck. I just don't see why people such as yourself think we are know it alls or that we are catch alls. We know nothing and are just trying to survive on the peanuts of the trickle down nomics.

Yeah management sounds fun I could be hella lazy and laid back. Sorry I am very frustrated with consumers. Nothing personal. 

ejmoosa's picture

Too many choices is the issue.  Buyers never feel good when they go for an item, and then there are 6 or more variations.  There's been a lot of research on this.  No matter what, the customer leaves doubting they made the best choice.

 

 

duo's picture

Have you ever had your foot run over by some lardass in a scooter? Hurts like hell.

E.F. Mutton's picture

Apart from Bezos being yet another Preachy Left Wing Cunt, I do love Amazon.

Living in the boonies, I can get anything delivered in 2 days, instead of a 35 mile drive to the nearest city.  And I read instead of watching TV, so getting books is really easy.

Consuelo's picture

 

 

If you can have UPS/FedEx ground deliver AMZN packages in (2) days, I would respectfully submit, you are anywhere BUT, the 'boonies'...    Worse, you're likely (2) Minutes from your friendly neighborhood .gov Goon squad raid...    But hey - I know what you mean ---

medium giraffe's picture

Amazon didn't kill the department stores, the Fed killed the consumers.  Amazon also has a global presence, Macy's not so much.  This is like comparing apples to scuba gear.

Philo Beddoe's picture

Amazon and online certainly aided in the eventual trash heap of the old bricks and mortar players. Yeah, the Fed gave that extra big layer of fucking to tap the consumer on many fronts as well. 

Juggernaut x2's picture

I can't see how AMZN lowering their free shipping minimum to $25 like they just did is going to help their bottom line.

Hal n back's picture

AMZN not too concerned with bottom line-now--when they put all the retailers out of business, then amzn has a monopoly.

Problem for AMZN is it cannot run the table, or it is unlikely too--so they need WMT and other biggies to raise prices.

 

spastic_colon's picture

bezos should be sucking china's ding ding for all the phony items they sell.....plus they are charging tax in many states now so I dont care about 2 day shipping when i can go to a local retailer.....on top of the fact that if you do a bit of homework you can likely find better deals direct from the online version of the retailer you're shopping.

Defiated's picture

...bought 3 pr of 'drumsticks' from amazon.....Free Shipping....came in a large box that would hold 3 dozen prs of sticks...not sure how

profitable some of these sales are.......

markitect's picture

They arent.  They make their profit on the datacenter side.  All that computer power can be leased out when not being used, cloud services.

Stan522's picture

Amazon separates their business units at the products to sell. They are willing to go after something at a loss until they consume it all. This is inevitable for all segments of retail. It drove book stores out of business.

Silver Savior's picture

I don't really like Amazon. It just never stuck with me. I bought like three things off there in my life. A radiator and a one Troy ounce silver Britannia and coffee pot. And that was because I had a gift card. The layout is cluttered. Things on there that I am interested in are very expensive. And the site is just overall confusing.

Hal n back's picture

Like Uber, competing on price alone is not the best business strategy. Convience of buying on line and getting in 2 days? Amazons competition has created their structures and are catching up fast.

Amazon has already picked the low hanging fruit.

 

SunRise's picture

How Amazon, via The Federal Reserve's Low Interest Rate Policy, Killed the Department Store

Deep Snorkeler's picture

Amazon will destroy the entire retail world.

Bricks/mortar stores and supermarkets are old Antiques Roadshow hilarity.

1. No pressure shopping, ads blocked

2. Tax free

3. No shipping charges

4. Driverless delivery trucks

5. No cost returns

6. Profitability and free cash flow don't matter.

 

spastic_colon's picture

tax free in only some states.....check it out.....your state is prob next.