Amazon.com is not going to put all retailers out of business.
The “death by Amazon” trade is well known. The prices of many retailers are in the bargain bin, especially those with exposure to shopping malls. For some, it will be “turn out the lights.” But for the survivors, there is a silver lining: less competition and better terms as tenants. Meanwhile, nearly all retailers are converging towards the omni-channel model: online, in-store and BOPIS (buy-online-pickup-in-store).
Spurred by Covid-19 and lockdowns, 2020 was a banner year for retail bankruptcies. Department stores were particularly hard hit, with J.C. Penney, Neiman Marcus and Stage Stores all filing Chapter 11. The oldest department store chain in the U.S., Lord & Taylor, also cried “uncle.” Survivors like Kohl’s and Nordstrom are clear beneficiaries, yet their stocks were caught in the maelstrom. In fact, both were unceremoniously removed from the S&P 500 after the worst of the selling had passed.
The untold business story of 2020 has to be the resilience of the omni-channel approach. Across the board, the best-positioned companies saw their e-commerce revenue take up much of the slack from closed stores. Many retailers also have footprints in suburbs and states that benefit from migration out of the cities and high-tax states like California.
The cherry on the sundae: many retailers are run by entrepreneurs with significant ownership stakes.
“Adversity removes the fragile and spares the robust.”
— Kevin Duffy