Amazon is Dominating the Retail Industry

By Madison Kemp

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Photo by David Ryder/Getty Images

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Source: MKM Partners

Since its humble beginning on July 5, 1994 in Seattle, WA, the exclusively online bookshop, Amazon, was bound to grow and branch out to bigger and better things. Sure enough, it did just that and more. The once simple platform quickly evolved from retailing books into a digital enterprise, able to engulf companies and have shared power over industries. It’s fair to say that Amazon is essentially “eating the retail world,” as MKM Partners analyst Rob Sanderson claims.
Sanderson’s chart (above) shows Amazon, in categories the company is associated with, growing its market, with sales on the decline for store based retailers. It’s become apparent in our society that online consumerism is taking over. In fact, sellers such as Target, Toys ‘R’ Us, Macy’s, and many others are threatened by the online buying frenzy.
Keep in mind, Amazon isn’t solely responsible for killing struggling stores. Bad leadership and strategic mistakes have damaged companies like Sears and JCPenney as well. Nonetheless, if businesses can’t find a solution fast, they could easily be overrun by Amazon.
As shoppers begin to rely on Amazon more and children choose smart devices over toys, Toys ‘R’ Us has struggled to keep their sales steady resulting in the company planning to close about 180 U.S. stores as part of their reorganization plan to re-emerge from its September bankruptcy. Six months after filing for bankruptcy, Toys ‘R’ Us announced that it will close its remaining 735 U.S. stores, putting about 30,000 employees out of work. Its last U.S. stores are expected to be closed by the end of the year. “This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years,” Chief Executive Officer Dave Brandon said.
And with only 1% control over the grocery industry, currently, Amazon is bound to raise that percentage, threatening both small and large supermarket chains with its recent purchase of Whole Foods. The inclusion of Whole Foods is taking Amazon’s physical presence to a new level, extending its influence far beyond the land of the internet.
In addition, it’s recently opened two grocery drive thru stores in Seattle, where customers can pick up their online orders. Along with that, their convenience store, named Amazon Go, uses sensors to let shoppers exit without stopping to checkout with a cashier. Charging their credit card right when they leave, and sending them a receipt via their Amazon Go app (which you need downloaded to shop, sort of like a Costco card).
While retailers are being hit hard by this monster of a corporation, the bookstore industry felt the effects of Amazon’s takeover first. Large chains, such as Borders, faded once the public realized they could easily just buy their favorite titles and authors online for less. Barnes & Noble is one of the few big national bookstore chains that are hanging on (by a thread), but its days may be numbered.
The situation for B&N isn’t completely dire just yet, because the chain “has a decent amount of cash with little debt”, as reported by Barron’s magazine. But now that Amazon is opening physical bookstores across the country, the situation could quickly go foul.
Shopping at a mall may be a great way to catch up with friends, but fighting through a giant crowd during sale season or the dreaded action of fighting for a parking spot is something online shoppers can simply avoid. What it truly comes down to is that physical stores are limited by what they have in stock at that moment. On the flipside, online shoppers can browse for whatever they need at any time of day, even 2 am on a Sunday (if one so desires). The popularity of online shopping will only grow; corporations like Amazon know this and willingly take full advantage of the changing times.

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