The Prophecy of Amazon Disrupting Small Businesses Has Come True
Amazon is positioned to be one of the biggest beneficiaries of the broader collapse in retail, as it attracts new customers who are stuck at home and are now turning to the platform for essential goods.
For as long as I can remember covering retail technology, the retail sector has feared Amazon. As for indie retailers they always felt they could not compete against the big guy, in this case, Amazon. With the Great Shutdown of 2020, all that fear has come true in the prophecy that Amazon will disrupt retail and small businesses.
Nearly 7.5 million small businesses are at risk of closing their doors permanently over the next several months if the coronavirus pandemic persists, according to a survey by Main Street America. Two rounds of bailouts for small businesses may not even be enough.
Amazon is convenience personified, but what is it doing to capitalism? Plainly said, nobody’s buying clothes right now. So stores are filing for bankruptcy. The pandemic is causing Amazon demand to swell, as millions of small businesses don’t know if they will have a future.
The coronavirus outbreak has accelerated the collapse of already struggling brick-and-mortar retailers. Thousands of retail stores are expected to close in 2020, and major chains are starting to go bankrupt.
Neiman Marcus could file for Chapter 11 as early as this week. J.C. Penny, Macy’s and even Nordstrom’s could be just behind. The death of the mall and independent retail is very real. And, for the record, the retail apocalypse is not a myth.
So how are the big box retailers doing? For Amazon, Walmart, Kroger’s and Target, this isn’t so bad after all. Amazon is positioned to be one of the biggest beneficiaries of the broader collapse in retail, as it attracts new customers who are stuck at home and are now turning to the platform for essential goods.
JCPenney is reportedly eyeing bankruptcy and experts say other department stores and mall brands may soon follow as coronavirus decimates the retail industry. Retail is not far behind hospitality, travel and restaurants in the financial collapse and debt bubble of the Great Shutdown of 2020.
These are industries that will be decimated, where the likes of Amazon grow in marketshare literally in a few weeks, never to be caught up again.
Make no mistake, Amazon is hiring when millions of retail workers don’t know if they will have a job to go back to in the summer of 2020. Amazon has “primed” the retail sector with its E-commerce delivery machinery and nearly unlimited liquidity where it can significantly eat into the future when a global crisis hits. Amazon is scary, and retail should be afraid. Because we need Amazon, but we don’t need the rest of retail for the most part.
I’m not a retail analyst, but in terms of the future of work in the retail sector, the writing is on the wall. Experts say to expect beleaguered fellow department stores and mall brands to follow suit, as retailers continue to hemorrhage money amid shuttered stores and plummeting spending during the coronavirus.
Amazon is joining Walmart in being the biggest employer in the United States, so just try to regulate it. American business has become technology companies like Amazon, which prop up even the failing stock market.
The old fears of retailers and small business owners have basically come true. If Amazon dominated the retail market before the coronavirus pandemic began, there’s good reason to believe it’ll emerge from the crisis even stronger. Goodbye and farewell brick and mortar retail.
Dallas-based luxury chain Neiman Marcus is expected to file for bankruptcy as soon as this week, according to a Reuters report. The question is, how many more will follow? Amazon has such dominance that retail events that used to mean something have just morphed into a cyber week dominated by Amazon and those brands able to follow an E-commerce playbook.
This week, Amazon went a step further and actively pushed consumers not to buy things they don’t need by not promoting items, not showing you what others bought and other tactics all to slow consumption.
They did this because even they couldn’t keep up with demand. This while regular stores were closed. The consumer stopped, we stayed home. But Amazon or our time spent on Amazon didn’t freeze.
If the retail sector once feared Amazon, think about what Amazon is becoming to the consumer. It’s the first place we go now before Google, Facebook or anywhere else when we need something. The move does highlight just how much control Amazon has over the purchase path and consumer behaviour.
A single share of Amazon’s stock now costs $2,375 U.S. This company has more than three quarters of a million employees.
Department stores, which have long been mired in an uphill battle against declining foot traffic and slumping sales, were already about to fall with thin operating margins.
But the Great Shutdown will have many retail victims. Retail is the natural selection of the times, when consumer buying represents 70% of the U.S. economy. Amazon is like American capitalism and its future foretold.
Here is an economy on the brink of riots, starvation and massive poverty. But isn’t it ironic that Amazon is swelling in the ruins? According to the Main Street American survey, around two-thirds of entrepreneurs said they may have to shut forever if business disruption continues at its current rate for up to five months.
Matthew Shay, National Retail Federation CEO has been especially tongue tied during this period, and it shows you how out of touch the retail sector is.
The prophecy of Amazon disrupting retail is coming true, and those small businesses and their market share is now being transferred to Amazon’s piece of the pie in the pandemic. The macro event only stimulates verticals that feed Amazon’s present and future profits.
We have been disrupted by our appetite for comfort and convenience, while our communities are fading in the great machinery of American capitalism’s next phase.
If America hits rock bottom it will be 30% unemployment, a U.S. poverty rate that will increase from 12% to 19%, the worst in at least 53 years. But Amazon, it will thrive in our suffering while business owners must start from scratch.
Welcome to the American dream of technology monopolies. Retail and the department store are becoming unrecognizable, and the pandemic is hurrying disruption by fair means or foul.
While around 57% of small businesses saw revenue drop by 75% or more due to Covid-19, according to Main Street America, Amazon has never been stronger.