As the chart below shows, store closures closely follow major market upheavals, with the shuttering of stores increasing around such disruptions as the Great Recession of 2007-2008 and the coronavirus pandemic circa 2020-2021. The shelter-in-place requirements of 2020 had the greatest impact on retail closures with 15,500 stores closing in 2020 alone.
Many storied brands disappeared, including Bed Bath & Beyond, Borders Books, Circuit City, Delia’s, Hollywood Video, Linens n’ Things, Lord & Taylor, Mervyn’s, Payless, Pier 1 Imports, Sport Chalet, Sports Authority, and Tower Records. At the same time, others, like Blockbuster, GNC, J. Crew, JCPenney, Lucky Brand Jeans, Men’s Wearhouse, Neiman Marcus, Sears, and Sur La Table, survived prominent bankruptcies.
Grayfields
The Covid-19 contagion accelerated the apocalypse, turning suburban malls into “grayfields” — abandoned shopping malls and big-box stores surrounded by vast, decaying parking lots whose initial use has run its course.
America’s suburbs are now saddled with these grayfields. The number of American malls peaked at around 1,500 In the mid-1990s. Today, there are only about 1,150 left. In a story about dying malls, CBS News’ Mark Strassmann noted in 2014 that “ no new enclosed mall has been built since 2006.”
Amazon.com
The chief beneficiary, or malevolent force, depending on point of view, is Amazon.com, which has become a global e-commerce behemoth valued at $1.9 trillion. In 2024, the company is projected to generate revenues of $591 billion, a 15% increase over 2022.
By leveraging its far more profitable Amazon Web Services division, which generated $25 billion and accounted for 17% of Amazon’s revenue in its latest quarter, while roping in 230 million of the world’s top buyers into its Amazon Prime program, Amazon.com is winning the retail war:
On average, Amazon Prime members siphon off $1,400 annually from brick-and-mortar stores. Prime members also spend more than non-members, who spend an average of $600 annually. They also tend to be less price-sensitive, relegating less desirable shoppers to the likes of Target and Walmart.
The company has also spent vast amounts of money on building a global infrastructure of warehouses and a delivery fleet of trucks and airplanes dubbed Prime Air.
More importantly, in 2012, Amazon acquired industrial robot developer Kiva Systems LLC for $775 million, effectively putting the company in control of critical industrial robot technology. According to an analysis by Deutsche Bank, adding robots to one new warehouse saves Amazon, 20% of $22 million in operating costs. Today, there are 750,000 mobile robots at more than 300 Amazon fulfillment centers worldwide, saving the company about $7.5 billion annually.
Walmart is trying to claw back market share from Amazon, acquiring a host of marketing and e-commerce optimization start-ups, including Torbit, Inkiru, OneOps and Tasty Labs, after forking over $3.3 billion for e-tail startup Jet. In 2020, the Bentonville, AR-based retailer introduced Walmart+, a membership program that offers free expedited shipping for an annual cost of $98 or $13/mo.
Walmart’s revenue strategy is under scrutiny from Wall Street, with the business valued at less than a third of Amazon’s, although earning about the same revenues and half its net profits:
Amazon.com vs. Walmart Comparison
Source: 24-Jul-24 *Finance.Yahoo.com, Macrotrends
If a lesson can be learned from the battle between Amazon.com and traditional retail, it’s that clicks are annihilating bricks.
Ubertrend: Digital Lifestyle
Photo of Borders at the former AOL Time Warner Center in New York on Jun. 13, 2004 by Michael Tchong.
