Retail is for suckers…
America is addicted to retail. We are consuming machines. But the web has slowly turned ‘Brick and Mortar’ retailers into what Josh Brown calls – ‘Bricks and Mortuaries’. E-Commerce is not some new threat to traditional retailers. Amazon started in 1994. It was in 1984 that NPR dove into the idea.
Other than an Apple store a Nike store or a bad movie, I don’t go to a mall. In five to ten years, I would not be surprised to see a mass market ‘Prima Cinema‘ disrupt the movie theatre experience (long $NKE, $AAPL and investor in Prima).
The Census Bureau reports that the four specialty retail categories representing total sales of just over $600 billion grew by only $5 billion between 2007 and 2011 (the last date that this level of detail was reported). That’s less than one percent over four years. The e-commerce players increased their cumulative sales in these categories by $35 billion over the time period. This means that the cumulative sales of brick-and-mortar retailers shrank by $30 billion in just four years!
When Wall Street is involved, death does not come quickly. Take a look at Best Buy:
I can’t explain 2013. I know Best Buy can’t as well.
In the nine weeks to Jan. 4, Best Buy’s sales excluding newly opened or closed stores fell 0.9% in the U.S. The company said the discounting it employed to win those sales took a heavy bite out of its operating margins. The report prompted a selloff in its shares, which fell nearly 29%, or $10.70, to close at $26.83 on Thursday.
Best Buy said on a conference call with analysts Thursday that expanding its online presence will be a top priority in 2014. Chief Financial Officer Sharon McCollam said the company will invest more in online marketing and customer databases this year to catch up with its competitors.
“We were out-competed from an online marketing standpoint,” she said.
In 2013, Wall Street and Best Buy executives worked some stock market and financial magic that crushed shortsellers. That magic has come to an end. They had no real plan for the relentless web and Amazon. The last line below from the CFO is an LOL. Best Buy was not out-competed in 2013. They have been flanked, out-classed and are being squeezed to a slow death. I shudder at what they plan to do with your data.
Interesting year ahead in retail and E-Commerce for sure.