The Amazon Effect Wreaks Havoc on Retail
Over a dozen major retailers have closed hundreds of stores and laid off thousands of employees as retailers simply can’t keep up with the modern shopping landscape.
Dubbed the “Amazon Effect,” the shift from brick-and-mortar stores to online options has been a huge factor in a lot of these closures across the country and the world. Consider the list below.
Since the beginning of the year, Abercrombie & Fitch Co. (NYSE:ANF) has closed 60 stores, nearly 10% of its business.
American Apparel, Inc. closed approximately 100 locations this year, its last few remaining stores.
bebe stores, inc. (NASDAQ:BEBE) is closing all of its stores this spring.
BCBG filed for Chapter 11 reorganization bankruptcy this February and revealed that it would have to close 120 retails stores as a result of the filing.
hhgregg, Inc. (OTCMKTS:HGGGQ) is going out of business and closed 220 of its stores.
And the list goes on.
Payless Inc (NYSE:PSS), J C Penney Company Inc (NYSE:JCP), RadioShack, rue21, inc. (NASDAQ:RUE), Sears Holdings Corp (NASDAQ:SHLD), and many other retailers have been hit hard by the new, fast-changing shopping paradigm. Part of the problem, beyond Amazon.com, Inc. (NASDAQ:AMZN) and other e-commerce companies coming in and eating away shares of the market, is that these companies grew too fast in the 80s, 90s, and 00s as the mall boom spread across America.
But not all companies are suffering like those mentioned above. Some have been able to adapt to the new online-centric shopping world.
Wal-Mart Stores Inc (NYSE:WMT), for instance, has been quite successful with an introduction of a robust online shopping experience. Being able to compete for customer dollars online is likely the only way for these retailers to stay in business at this scale. If companies are unable to create an appealing online option to draw in customers, then there is little hope that they will be able to stay open for long.
The retail crisis is the most detrimental to smaller and poorer communities, which rely on revenue and employment from these stores in order to help bolster their communities. If they continue to fall off at such an alarming rate, then smaller communities may have difficulty balancing their budgets moving forward, which could then exacerbate another issue that is widespread across the U.S.: municipal bankruptcies.
“Hundreds of stores closing as retailers face ‘Amazon effect,’ other challenges,” Richmond Times-Dispatch, May 22, 2017.