Retail Wars

Paula LaBrot

You work hard for your money, so I want to alert you to the new trends large business are following to attract your dollars. There is a retail renaissance emerging. The thing I like about this retail awakening is that giants like Amazon are finally going to get some competition. Concentrated power is something I do not like or trust.

 A LITTLE HISTORY

People have shopped from stores forever. It may have been off the back of a donkey, a stall in a bazaar, a roadside stand, a boutique or a big box store, but people have exchanged goods for compensation person-to-person since the beginning of man’s existence.

In America, there was no one better at long distance shopping than Sears & Roebuck who started catalog sales in 1893. The U.S. Mail and the Pony Express were early network delivery systems. Sears added brick-and-mortar stores in 1925. But Sears, who has filed Chapter 11 bankruptcy, failed to embrace the kind of digital tools that have made Amazon number one.

Amazon is swallowing up…oops, I mean “partnering with,” or buying up all kinds of other enterprises. These include Whole Foods (groceries), Amazon Studios (television shows, movies, comics), Audible (largest producer of audio books, newspapers, magazines, radio programs), Create Space (publishing, distributing content publishing), Goodreads (online community of book lovers), Woot (online deal-a-day retailer), IMBd (Internet Movie Database, including Pro, which allows users to network), Zappos (online shoe retailer) and more. That’s a lot of concentrated power.

Amazon is even opening its own brick-and-mortar stores, like Amazon Bookstores. It’s so ironic. First, they put all the other bookstores out of business and now they have their own. (How I treasure our Barnes and Noble at the Commons!) They are also headed to expand into financial services. According to investmentnews.com, “Technology companies see financial services as the “last mile” of commerce. They already dominate the search and advertising side of things, but finance still controls payments, rewards and consumer loyalty.”  So…Amazon owns the first wave.

HERE COMES THE COMPETITION

Who are the business gearing up for competition?  First is Walmart who has that brick-and-mortar giant, Amazon, in their sights. They have purchased Jet.com. Tomsguide.com reports, “Jet is to Amazon what Costco is to Walmart. Both retailers offer low prices on everyday items (and more), but Jet promises bigger discounts for members who buy more than one item. Jet’s grocery delivery service is also free to access for now, while Amazon charges $299 a year for its Prime Fresh program, which offers free delivery on orders above $50, while Jet.com only requires a minimum spend of $35 before giving you free delivery. Amazon offers a yearly Prime Program for $99 that provides free two-day shipping on eligible items and access to a large video library for free streaming. Jet doesn’t appear to have a similar media streaming program. Jet offers free delivery on orders $35 and up, and most products ship within three to five business days.” This has forced Amazon to reduce its non-Prime free two-day shipping from $50 to $35. Fast, free delivery is a big customer “must” for online shopping.

Most of all, “Jet will now have access to the buying power of Walmart which is unparalleled by any company on Earth. It will have access to all of the Walmart distribution centers (DCs) that are scattered around the U.S. and Canada, most of which ship to consumers for Walmart.com,” according to Dan Halliday of Walmart. Walmart is getting upgraded software that tracks sales every minute of every day, so they can identify national and local spending trends and keep their shelves re-stocked. Amazon collects so much data about its users, which it uses to generate more sales. Walmart will now do that as well. Walmart will be hosting more than 20,000 Holiday In-Store Parties, especially Black Friday, for its customers along with huge discount incentives. The walls of (to me, at least) sacred Thanksgiving have been breached by retail wars. 

More companies like Target, Costco, Kroger, and Best Buy are following the trend to upgrade their e-commerce platforms as quickly as possible. As they become more advanced, the profit margins of Amazon will fall; the consumer will benefit from the competition.

 WHERE WE STAND NOW

Andrew Lipsman for emarketer.com reports that, right now, e-commerce accounts for 10.9 percent of total retail sales while brick and mortar account for 89 percent. E-commerce has grown exponentially, no doubt, but online retailers will have to open physical stores while brick-and-mortar retailers will have to expand their ecommerce business.

Barbara Thau reports for Forbes, “Brick merchants are buying click merchants because online-only is not a viable retail model, according to “The Death of Pureplay Retail,” a report from digital think tank L2. And, surprise, surprise…according to Thau, brick-and-mortar is the preferred shopping experience for Millennials and Gen Z.

It’s all coming on fast. But listen. Does it ever get any better than walking into Topanga Home Grown, getting a warm welcome, shopping among neighbors, getting great, unique stuff?

Not for me.

Vamos a ver!

 

Paula LaBrot
Paula LaBrot

Paula LaBrot is a 30-year resident of Topanga, a futurist with a special interest in the uncharted waters of cyberspace. plabrot@messengermountainnews.com

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