The Amazon Effect

You probably see it all over the place: the empty storefronts, the local shops closing. It’s largely considered the “Amazon Effect”. What started out as an online book distributor out of Jeff Bezos’s garage is now a retail giant from which you can have your groceries delivered and watch original film and television programming. There is perhaps nothing that cannot be found online at Amazon, delivered to your door (sometimes, even the same day). You don’t even have to leave the comforts of home!

As the convenience of online shopping is taking over (and, it’s not hard to see why…no long lines at stores, not being able to find what you need, just the overall annoyance of having to deal with people), there is no doubt that its hurting brick and mortar businesses.

And, it’s not just your locally-owned mom-and-pop stores that are feeling the weight of Amazon; such major retailers as Macy’s, J.Crew, Michael Kors, True Religion, and Staples, among others, have closed over 5,000 of their brick and mortar locations. Meanwhile, Amazon ended 2017 having done $178 billion in net sales.

This certainly isn’t a recent phenomenon. As Amazon began as an online book retailer, it was the Barnes & Noble’s and Borders’ (who closed their doors, entirely in 2011) of the world that first felt the crushing blow delivered by Amazon’s business model of shipping books directly to your home, often for cheaper than you could buy them in a bookstore.

Amazon also turned out to be a lifesaver for financially strapped college students, who could purchase their books online for far less than what it would cost at the student bookstore. While Barnes & Noble still exists, both online and as brick and mortar store, it is projected that by 2022, they will have closed 197 stores.

Who Lives, Who Dies

Borders closed, all together and PayLess and RadioShack have filed bankruptcy. Meanwhile, even though other retailers like Barnes & Noble and Macy’s have been closing some of their brick and mortar locations, they are not gone for good. So, why are some retailers managing to survive and others are not? Basically, it comes down agility.

Borders were too late to the dance regarding e-commerce and they were too heavily invested in selling CD’s, which went the way of the Dodo after Apple brought us iTunes. Barnes & Noble, on the other hand, saw the writing on the all regarding the power of Amazon and the popularity of online shopping, earlier enough to change some of their strategies, keeping them afloat. Macy’s was able to make that same adjustment, completely overhauling their website and mobile shopping experience.

But, what does this mean for the smaller, locally-owned independent retailers? Retail giants like Macy’s have the means to purchase warehouse spaces online order fulfillment. They have the funds to weather a couple of bad quarters. What about your local mom-and-pop bookshop or boutique?

Again, it comes down to agility. While perhaps not in a position to purchase warehouse space and begin taking online orders, they can offer something that online stores, or even your large box stores cannot. And, that is a more personalized experience.

New York City has a famed bookstore, The Strand. With the rise of Amazon and the closing of many brick and mortar stores, many a New Yorker has feared that someday the New York City icon may close their doors. However, this is likely to not happen because going to The Strand is an experience is on of itself. Yes, it’s a piece of history that has been around forever, but they also offer staff that is knowledgeable and helpful.

Unlike some other bookstores, you can walk into The Strand not knowing exactly what you are looking for, and one of the employees will know what it is without even having to look it up. They can make recommendations for you, based on what you have read and like. Other than a library, how often do you find that?

Creating an experience that goes beyond simply being a place in which to walk in and buy something, a place where you can have your questions answered and feel welcome can be a key into helping smaller retailers survive.

Is Amazon Entirely to Blame?

It’s easy to blame Amazon for the downturn in brick and mortar shopping and the empty storefronts. And, while there is truth to that, they aren’t entirely to blame.

Since the economy recovered from the 2008 recession, rent prices skyrocketed, up 60% in many areas. Whether you are feeling the Amazon Effect or not, that is a significant increase in expenses in only 10 years.

Could There Be A Renaissance?

Not all may be lost for the smaller retailer. While the ease of online shopping is clearly here to stay, the younger generations are far more concerned with issues of corporate social responsibility, products that are locally-made and/or ethically-sourced, and items that are unique.

This is yet another way in which the smaller retailers can step up and fill that need. While a large retailer like Macy’s may have had an easier time adjusting to online shopping, they may have a much harder time meeting the needs and wants of younger shoppers who want items that are not mass-produced in sweatshops.

None of us are ever going to stop shopping online, entirely. But, we can help right the ship by being conscious of supporting our local shops. Yes, the Amazon’s of the world are job creators, but they are creating jobs for the people who live in the areas where their offices and warehouses are…the local shops are creating jobs for the people who live there in your town or city. And, those local shops are exactly the kinds of places that give your city the special flavor that makes it different from the city a few hours away.