By Mark Esposito, Weekend Contributor
By any standards it’s been a bloodbath. Nine straight quarters of losses at Sears and it’s stock plummeting 15% this year alone. It’s cousin, K-Mart on life support after contributing to the near $1 billion loss for the holding company that owns both for the first half of this year. Over at Target, still reeling from customer outrage at its data breach, things weren’t much better. Profits plunged 62% last quarter compared to the same period last year. On Wednesday, Target cuts its profit predictions again to avoid a wholesale run against its stock as Wall Street expectations continue to drop. It’s stock is off 5% this year. At that flagship of retail, Walmart, seas are swirling as the giant reports flat sales and financially reluctant shoppers. Most of its growth is coming from smaller stores though its superstores maintain the sales course for the massive chain. Company earning grew at a snails pace of 2.8% this year despite massive sales promotions and even deeper price cuts. J.C. Penney remains the old man of retail continuing its post-no coupon strategy recovery but an an anemic pace. The best that can be said is that its “operating income for the quarter was a loss of $70 million which represents a $325 million or 82 % improvement over last year.” Whoopee! Even consumer electronics big leaguer Sony announced plans to close most of its retail outlets in the U.S.
What’s causing the meltdown? Part of the woes spring from online sales which are growing at a fever pace.Online shoppers in the United States spent $69.2 billion in the fourth quarter of 2013, up 16.1% from approximately $59.6 billion for the fourth quarter of 2012. Projections show 9.5% annual growth through 2018 and the the dollar growth from the actual 2013 figures of $263 billion is now forecast to be $414 billion by that time. That would make ecommerce account for almost 11% of total US sales.
“There are not a lot of solutions [available] to retailers except to introduce dynamic pricing in stores,” says ecommerce analyst Sucharita Mulpuru. Consumers are increasing the use of mobile devices to compare prices. Mulpuru points to data revealing that the price premium consumers are willing to pay to store retailers to get a product right away isn’t large. “When a price in store is 1% to 5% more than what a consumer could buy the same product for elsewhere, 52% of consumers in Forrester’s Lifecycle Survey said they’d buy it there. That percentage drops to 18% when the price is 6% to 10% more.”
What does this mean for American workers? The picture isn’t pretty with lower numbers of workers needed to maintain retail ecommerce sales, the market for new hires who traditionally have gravitated to brick and mortar retail jobs is shrinking. And with less brick and mortar required, commercial construction will surely lag. The rise of ecommerce likely also means a rise in urban blight as more and more retailers will shutter stores. This year alone Staples announced closing 240 stores in direct response to online competition. Typically, these stores sit vacant for more than a year.
The effects go beyond the economy too as less brick and mortar means less state sales tax revenue leading to decreased government services. It also has direct impacts on employment taxes paid by workers.
Still there is opportunity in retail as smaller companies take up the slack in niche markets. TJ Maxx and Marshall’s sales have skyrocketed around 13% in the last month catering to cost conscious consumers seeking designer goods at discount prices. Even some old line staples like Macy’s is reporting impressive second quarter earnings with similar results at Kohls.
Entrepreneurial ventures may see more hospitable climates as retail landlords continue to offer incentives to get commercial tenants to fill the record vacancies causedby the 2008 economic downturn. This creates opportunities for small businesses which have traditionally been the driving force in reversing economic hard times.
Like most economic news, it’s a mixed bag, but surely one to watch.
~Mark Esposito, Weekend Contributor
By the way and for better or worse, the views expressed in this posting are the author’s alone and not necessarily those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays of art are solely the author’s decision and responsibility. No infringement of intellectual property rights is intended and will be remedied upon notice from the owner. Fair use is however asserted for such inclusions of quotes, excerpts, photos, art, and the like.
laser Thank You for the information.
i see it works the same whether its politics or banks put a little money on a candidate promise more get your people into the office then move on to the next step. its why the so called billionaires or council of 300 which can be found on line. notice its all the same people involved? seem to never lose any money. everyone but them loses especially on swindle (wall) st. you dont make it anywhere with permission from them and to get permission from the axxholes you have to become one of them. thank GOODNESS we have honest people like you and jt and many others who fight the good fight to right the wrongs to bad that by the time the wrong is found the money is gone into their personal bank accounts and the little people are forever screwed losing everything they worked their lives for and the court cases linger on forever of course thats due to them owning the judges in every court. along with all the high offices, big banks, and retail
Amazon Prime saves one a great deal of money on shipping and it allows you to watch some great stuff on Amazon Instant Video. I buy a great deal on Amazon, but only when the price is right. Sometimes find the product at a cheaper price at other online stores. Quite a few have very low shipping rates or even free shipping with an order over a certain amount. I love shopping now and I do have to watch my pennies, so bargains are a must for me. Christmas shopping is a breeze, I recall standing in long lines in a hot store with a winter coat on and grumpy checkout people, a nightmare. I even order most of my groceries online from Peapod, I absolutely love their grocery delivery service. It’s great taking one’s time checking prices and looking at ingredients. The best thing is delivery and no dragging in heavy grocery bags, worth the tip to the delivery guy.
Squueky, After reading the Coulter book maybe SWM and Elaine would appreciate a review in case they’re looking for a new read.
Darren,
You make a very valid point…. However, the consumer is supposed to pay what is called a use tax voluntarily to the state… A number of authorities are going after tobacco vendors… Why, because it’s a federally controlled product, which opens the door to other vendors.
Darren, A college roommate of my daughter just moved to Seattle to work for Amazon. He loves the city. But, you guys get screwed having to pay sales tax w/ Amazon purchases, don’t you?
Well, I just ordered an Ann Coulter book online. No sales tax. No gasoline and no getting dressed up to go to book store where I will end up buying more books than I meant to, plus buy a latte and one of those hard little biscuit thingies. New copy will be delivered to my door. And, I can already read the beginning on my Kindle.
Contrast this with me trying to buy a new laptop from Best Buy last year. I called them and never did get thru to a person. While I was on hold forever, they kept playing music that was not designed to soothe, and make the wait easier. Oh no, they had some nerve jarring crap on that they would interrupt every 30 seconds or so to tell me how much they appreciated my business. That music was designed to make a person hang up and not tie up their phone.
FWIW, I called Office Depot, got to talk to a person immediately, went to the store and bought my lap top there.
Squeeky Fromm
Girl Reporter
squeeky – I download/upload my books from the library. Cheaper.
One good thing about e-Commerce is if the vendor doesn’t have a significant nexus in the state, the purchaser pays no sales taxes. Couple this with buying by the case the savings can be large.
Sears CEO Eddie Lampert certainly made things worse for the company.
BarkinDog, why don’t you just be more graphic and post a picture of you sitting in your outhouse! You must’ve been one of those kids in need of praise every time you got off your potty, crying if no one was around to notice. There are scatological sites for folks with your compulsion. I mean, really!
@NickS
I am glad you liked it! Somebody at Zerohedge must have been less amused at that one, and others. But it is still a great contrarian type site to find out information before it becomes general knowledge. So is Naked Capitalism, which is much more of a progressive site.
Squeeky Fromm
Girl Reporter
And I am Sear ious.
Sears. The key to both topics which commingle here without the Christian mingle thing. Retail sales bought on-line and shipped to your home; retail sales bought on line and shipped to a store for you to go pick up; catalogue purchases by U.S. Mail and a nice Sears Roebuck Catalogue; the Sears Roebuck Bible which perverts the Sixth Commandment about thou shalt not kill; and lastly, toilet paper.
Fifty years ago one sat in the outhouse, did the poop routine and read the Sears Roebuck catalogue and filled out the purchase form to order by U.S. Mail. Then, when done with the pages one does not read, one tears out the page and wipes the rear end. The page then goes down into the bottom of the outhouse. One could also read the Sears Roebuck Bible in the outhouse but one never wiped with pages out of that.
Over time Sears could not in their stores keep up with trends and always has a dull sign, dull window displays and not empty parking lots. People stopped buy from the catalogue.
In more recent years people began the Amazon routine and if one went Prime then shipping is part of the once a year Prime price. Sears takes another blow and looses more customers.
One can now buy toilet paper on Amazon.com. Sears Roebuck Catalogues are obsolete. The Sears Roebuck Bible still holds sway. One can tell by the comments we get on this blog about some real issues of legal importance like when The People of The Great State of Texas, in unison (Y’all Can) kill a human and call it “an execution” and “capital punishment”. Yeah, they recite the Sears Roebuck Bible.
Well, I got a Sears Roebuck Bible the other day at the Goodwill Store. I took the toilet paper out of the outhouse and tore off sheets from the Good Book and stapled them at the toilet paper rack. I noticed this morning that the Sixth Commandment was one of the first to be employed. If ya know what I mean jelly bean. And this is how BarkinDog gets around to a legal topic of interest on a Sears kind of day.
I am with raff on the general philosophy. For smaller items, especially those hard to get or easily shipped, I order online. And if the local purchase includes coping with a seven-acre parking lot and 50,000+ square feet of floor space? Forget it. There are very few things that are so urgent they won’t wait a few days.
Always read the reviews. Even if there are just a few folks complaining about their expensive new Deluxe Limited Edition Whizcallit going belly up after three weeks, it is probably a good idea to buy it locally from a dealer that has a good refund/replacement policy.
I like to have a personal relationship with the businesses I deal with. That way if something happens I know who to go to. I buy nothing on the web.
No bricks and mortar; no jobs. Welcome to the 21st century.
Squeeky, I did a spit take w/ your bawdy poem. What an addition you are, woman!
Thanks for the comment retrieve (who ever did such)!
Another timely issue Mespo. The big box retailers who want to survive will need to heed the advice you noted above. The price difference has to be small for any of us to fight the crowds(during the holidays) when we can sit at home and order it online. I do prefer to buy some big ticket stuff in person when I have not purchased that type of item before. It gives me a chance to kick the tires, so to speak. I am with leej on Wal Mart. I avoid it whenever possible because of the way they treat their employees. Give me Costco whenever possible.
Getting a degree in engineering is not as easy at it sounds these days. College costs are beyond staggering. Way beyond staggering.
All B.S
Rebuttal
http://www.democraticunderground.com/1201342
The example of Sears as a struggling “brick and mortar” retailer provoked a sad smile here. After decades of converting from mail order catalog giant to shopping mall department store chain, Sears is now losing out to Amazon, a glorified catalog?
Oops.