The Bad News and the Really Bad News for Retailers Fighting Amazon.com – WSJ (Mar 6, 2017)
There are some interesting numbers in here – notably that at its current growth rate, Amazon’s North American retail business could double in size in the next three years, or put another way, that it could suck the same amount of value out of the US retail market in that period as in its entire history to date. Realistically, growth is going to slow a bit, so it’ll take a little longer than that, but the broader point remains: Amazon is vacuuming up tens of billions of dollars of additional retail spend each year, and that has to come from somewhere. Given how small a share e-commerce still has of total retail spend in the US, that means it’s largely going to come from brick and mortar retailers, who have been suffering as a result. Some retailers have been able to recover a little lately in sales growth, but largely at the expense of margins, while one or two retailers have managed to find niches that seem somewhat immune to Amazon’s encroachment. We’re not going to see brick and mortar retailers take this all lying down, though, and one of the most interesting things to watch in the next couple of years will be how effectively these companies can pare Amazon’s growth back if they’re willing to be aggressive enough on margins. I suspect we saw a little of this in Q4, when Amazon’s growth rate dropped a few percentage points, but we might see more of it going forward.
via WSJ
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