Tag Archives: Online retailing

Brick-and-Mortar Meltdown Gets Costly for Big Retailers, and Results May Vary, by Wolf Richter

Online sales are both making and breaking the retail trade. From Wolf Richter at wolfstreet.com:

Ecommerce and the globalization of retail crush distribution channels, wholesalers, local retailers, large retailers, prices, and margins. 

Walmart, Macy’s, Best Buy, Home Depot, Nordstrom, etc. — they all spend vast sums of money building out their ecommerce sites and their fulfillment infrastructure. And the big lump-sum figures are starting to show up in their regulatory filings.

Other major retailers didn’t take the threat of ecommerce seriously, and didn’t have the funds to take it seriously, as they were squeezed by the private-equity firms that owned them, and just put up a website, hoping for the best: Many of them have gone bankrupt. This includes notably, Toys R Us, Sears and Kmart, Bon-Ton Stores, Borders Books, Claire Stores, Sports Authority, Limited Stores, and Payless Shoe Source.

Now the brick-and-mortar survivors are scrambling furiously to get on top of this existential threat that many had blown off for years as irrelevant to their business, thinking that this whole ecommerce thing was overblown, and that ecommerce is only a small part of retail, that it was too small to worry about, etc. etc.

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E-Commerce is Wiping Out Mall Retailers One by One. Here’s the Data, by Wolf Richter

The shift from department stores to online is one of those epochal business developments, like mass production or credit cards. From Wolf Richter at wolfstreet.com:

Department store sales hit a new record low in the data going back to 1992.

E-commerce sales in the fourth quarter soared 12.1% from a year ago to a new record of $132.8 billion (seasonally adjusted), the Commerce Department reported this morning. For the whole year 2018, e-commerce sales blew through the $500-billion level for the first time, reaching $513.6 billion, up 14.2% or $64 billion from a year ago.

Not seasonally adjusted, e-commerce in Q4 jumped to $158.5 billion, 11.2% of total retail sales. E-commerce sales have doubled over the past five years.

E-commerce includes sales by the online operations of brick-and-mortar retailers, such as Macy’s, Walmart, and Best Buy, along with the sales of online-focused retailers, from small operations all the way up to Amazon.

People still say that e-commerce accounts for only 11.2% of total retail sales and therefore doesn’t matter. But this metric is misleading because e-commerce doesn’t yet seriously compete with a number of retailers, including gasoline stations, new and used auto dealers, and grocery and beverage stores. These three categories alone account for 52% of all brick-and-mortar sales.

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